Growth Marketing vs Demand Generation: What Are the Differences? (2024)

Growth marketing vs demand generation - which strategy should you focus your efforts and resources on first?

To answer this question, you need to have a thorough understanding of each approach, its goals, and how it aims to achieve them.

And that’s exactly what you’ll learn in this article, as we’ll:

Break down both demand generation and growth marketing.
Explain their key differences in detail.
Help you figure out when to use one and when the other for best results.

What is growth marketing?

Growth marketing is a holistic and dynamic strategy that focuses on the entire customer journey - from acquisition to retention - with the ultimate goal of driving sustainable business growth.

Unlike traditional marketing, which usually focuses on top-of-the-funnel activities such as brand awareness and lead generation, growth marketing addresses every stage of the customer lifecycle.

As a result, growth marketing has a few unique characteristics that make differentiating it from traditional approaches much easier, such as:

Reliance on experimentation - Growth marketers often employ A/B testing and other data-driven methods to determine the most effective strategies for optimizing user engagement and conversion rates. This experimental mindset lets marketers quickly identify what works and what doesn’t.
Continuous improvement - Instead of focusing all their efforts on a single, large-scale campaign, growth marketing is more intent on deploying smaller-scale strategies, which they constantly test and refine over time.
Specific tactics - Growth marketing aims to cover all stages of the marketing funnel, from lead acquisition to nurturing and final conversion, which is why it uses a wider variety of techniques compared to traditional marketing, including:

A/B testing, i.e., testing different variations of content, ads, landing pages, and more, to identify what drives the highest conversion rates.
User acquisition strategies, which encompass developing targeted campaigns to attract new users, often leveraging channels such as social media, SEO, and paid advertising.
Retention campaigns to keep existing customers engaged, such as personalized email marketing, loyalty programs, and in-app messaging.

The one thing that makes growth marketing an important strategy to include in your marketing arsenal is its impact on long-term customer growth and revenue.

By optimizing every touchpoint in the customer journey, growth marketers increase the efficiency of their marketing efforts and foster stronger customer relationships.

Consequently, this leads to higher customer lifetime value (CLTV), improved retention rates, and more predictable and scalable revenue growth.

What is demand generation?

Unlike growth marketing, which encompasses the entire marketing funnel, demand generation is a strategy with a much narrower focus.

Demand generation aims to create awareness of your brand, nurture leads, and ultimately convert them into loyal customers.

Therefore, at its core, demand generation focuses on building awareness first and foremost.

The goal is to ensure your target audience knows who you are, what you offer, and why they should care.

Beyond awareness, demand generation emphasizes nurturing leads, which is critical for turning initial interest into genuine intent to purchase.

By providing valuable, relevant content and experiences that address specific pain points or needs, marketers can move prospects further down the funnel, fostering a stronger connection to the brand.

Finally, the end goal of demand generation is to convert prospects into customers.

This requires a carefully thought-through approach that aligns marketing and sales across levels, ensuring that leads are captured and effectively guided toward making a purchase.

Demand generation involves a mix of strategies that enable marketers to achieve these goals, such as:

Content marketing - Creating and distributing high-quality content, such as blog posts, white papers, and videos, that educates your audience and drives engagement.
Lead magnets - Offering valuable resources, like eBooks, templates, or checklists, in exchange for contact information, which helps capture leads for further nurturing.
Social media engagement - As everyone’s on social media today, it’s an excellent place to drive brand visibility and build meaningful contact with potential customers.
Webinars - Hosting educational or informational webinars that provide value to attendees while subtly positioning your products or services as solutions to their challenges.

Just like growth marketing, demand generation has a crucial role in your overall sales and marketing strategy.

Namely, demand generation helps keep your brand top-of-mind for potential customers by maintaining a steady flow of valuable content and engagement opportunities.

This consistency ensures that when prospects become ready to make a purchase, your brand is one of the first they consider, increasing your chances of achieving conversions.

How do growth marketing and demand generation approaches differ?

Given their different goals, growth marketing and demand generation significantly differ in focus, overall approach, and outcomes.

Let’s look at each strategy a bit closer.

Growth marketing

Growth marketing is proactive and experimental by nature.

As such, it is characterized by a fast-paced, data-driven approach where marketers constantly test and refine their strategies to achieve quick wins.

The primary goal is short-term optimization, that is, maximizing conversions, boosting engagement, and improving customer acquisition metrics as quickly as possible.

As a result, growth marketing often centers on specific, measurable goals, such as increasing website traffic, improving click-through rates, or enhancing user retention.

So, to achieve these goals and ensure that the entire funnel is optimized for pushing prospects further down toward conversion, growth marketers run A/B tests, experiment with new channels, and tweak campaigns continuously to uncover what drives the best results.

In addition to testing and experimenting, growth marketing involves other tactics and approaches, such as:

Creating highly targeted campaigns for each customer segment, leading to higher engagement and conversion rates.
Referral programs that enable you to create a strong lead acquisition pipeline using existing customers.
Improving user onboarding experiences to improve overall user experience and boost retention rates.
Email marketing to attract, engage, and nurture leads throughout the funnel.
Loyalty programs like special discounts or exclusive offers to long-term customers to improve customer retention.
Paid advertising and retargeting campaigns to engage and re-engage leads.

While this focus on short-term success makes growth marketing ideal for startups or businesses looking to scale rapidly, it could also lead to overlooking the wider picture - the importance of establishing a strong brand presence.

Demand generation

In contrast, demand generation takes a more nurturing and long-term focus.

While growth marketing seeks to optimize every touchpoint quickly, demand generation is about laying the foundation for sustainable brand growth over time.

It involves building awareness, nurturing long-term relationships, and guiding prospects through the buying journey to convert them into loyal customers.

Therefore, the main goal of demand generation is to create consistent and enduring demand for the brand across markets, which requires a more strategic approach that focuses on the entire customer journey - including post-purchase engagement.

This is why demand generation efforts are typically slower to yield results.

At the same time, they are crucial for establishing a strong brand presence and nurturing leads that may need more time to be ready to convert.

Some of the most widely used techniques that help raise brand awareness and generate demand include:

Content marketing and SEO are the best combination for establishing thought leadership within the industry and gaining potential customers’ trust.
Webinars can also position you as an industry leader and let you directly engage and interact with leads.
Social media engagement adds a more personal note to how leads interact with your brand.
Customer testimonials to build trust by showcasing positive experiences other people have had with your brand.
PPC campaigns to display your brand in front of potential leads.

Which metrics matter in growth marketing vs demand generation?

To track the efficiency of demand generation and growth marketing, you need to keep a close eye on vital metrics and KPIs.

The difference between growth marketing and demand generation goals and focus translates into the metrics you need to track for each.

Namely, growth marketing is often more short-term, focusing on quick optimizations that can drive rapid business results.

As a result, its key metrics can provide immediate feedback on how a certain strategy works, enabling marketers to quickly refine it.

On the other hand, demand generation has a longer-term focus, aiming to build a steady stream of qualified leads and ensure sustainable growth over time.

Therefore, its metrics are critical for understanding the cumulative impact of marketing efforts on the sales pipeline and overall business growth.

Here’s a quick overview of the key metrics you must monitor for each strategy.

Growth marketing metrics

As mentioned above, growth marketing is typically focused on rapid experimentation and optimization, which requires tracking specific metrics that provide immediate insights into the effectiveness of various tactics.

Therefore, some of the most important metrics and KPIs include:

Customer lifetime value - CLV measures the total revenue a business can expect from a customer throughout their relationship with the company. In growth marketing, understanding CLV helps marketers identify the most valuable customer segments and tailor their strategies to maximize ROI from these segments.
Customer acquisition cost - CAC calculates the cost of acquiring a new customer. Growth marketers closely monitor CAC to ensure that their acquisition strategies are cost-effective and sustainable. A low CAC relative to CLV indicates a healthy growth strategy.
Conversion rates - Conversion rates track the percentage of users who take a desired action, such as signing up for a newsletter, making a purchase, or downloading an app, converting from a prospect to a qualified lead or a paying customer. This metric is critical in growth marketing, where the goal is often to optimize specific touchpoints in the customer journey to increase conversions.

Demand generation metrics

Demand generation, on the other hand, emphasizes building brand awareness, nurturing leads, and driving long-term growth, which is why it prioritizes metrics that track the effectiveness of these activities over time.

Key demand generation metrics include:

Marketing-Qualified Leads - MQLs are leads that have shown a sufficient level of interest or engagement to be passed on to the sales team. Tracking the number and quality of MQLs helps demand-generation teams understand the effectiveness of their lead nurturing efforts.
Lead-to-customer ratio - This metric measures the percentage of leads that ultimately convert into paying customers. A high lead-to-customer ratio indicates that demand generation efforts effectively nurture leads and guide them through the sales funnel.
Pipeline contribution—Pipeline contribution assesses the impact of marketing efforts on the overall sales pipeline, including the number of opportunities created and their revenue potential. This metric helps demand generation teams demonstrate the direct impact of their activities on the company’s bottom line.

How to choose between growth marketing and demand generation?

When deciding between growth marketing and demand generation, you should consider several key factors, including:

Company goals - If your primary objective is to scale quickly and gain market share, growth marketing may be the better choice due to its focus on rapid experimentation and optimization. Conversely, demand generation might be more appropriate if your goal is to build brand awareness and cultivate long-term customer relationships.
Customer lifecycle - Growth marketing focuses equally on acquisition and retention, meaning that it can be used throughout the customer lifecycle to ensure optimal results. Demand generation is more suitable for the top and middle stages, as it helps both raise brand awareness and create interest in your product.
Industry type - Fast-paced, highly competitive industries, such as tech startups or e-commerce, often benefit from the agility and speed of growth marketing. In contrast, industries with longer buying cycles, such as B2B services or high-value products, may require demand generation’s more deliberate and relationship-focused approach.
Sales cycle - Growth marketing is well-suited for shorter sales cycles where quick wins and rapid scaling are possible. Demand generation is ideal for longer, more complex sales cycles where building trust and nurturing leads over time is crucial to closing deals.

However, it’s important to understand that demand generation and growth marketing are not mutually exclusive.

In fact, a hybrid approach combining elements of growth marketing and demand generation can often be the most effective strategy.

For example, a hybrid approach might involve using growth marketing tactics to quickly acquire new leads and then applying demand generation strategies to nurture those leads through the sales funnel.

This lets you capitalize on quick wins while ensuring sustained growth over time.

Overall, when deciding on an approach, you must align your marketing strategy with your primary goals to ensure that your efforts will actually move you in the right direction.

What are some examples of successful growth marketing and demand generation campaigns?

Finally, the best way to understand demand generation and growth marketing is through practical examples of companies successfully deploying them as part of their overall sales and marketing strategies.

Growth marketing strategy: Airbnb

A few years back, Airbnb built one of the most successful growth marketing strategies, which enabled it to increase bookings by 25% in some markets.

The company achieved this by leveraging a tested and tried growth marketing approach - referral programs.

They incentivized existing users by offering them the possibility to earn up to $100 for every person they invited to the platform.

Source

But it didn’t end there.

Airbnb also offered $25 off their first trip to new users who have been invited to encourage them to accept the invitation.

Moreover, Airbnb applied another growth marketing technique - A/B testing.

They experimented with different email copy and design, emphasizing different angles of the overall messaging to see which resonated better with existing and prospective users.

This approach resulted in a significant increase in new users and bookings made on Airbnb, making it a resounding success.

Demand generation strategy: StraightIn

StraightIn is a LinkedIn marketing agency that was looking to drive demand for its services by cutting through the noise of similar solutions.

The agency used several key demand generation tactics - email marketing, social media engagement, and paid ads - in an effort to drive traffic to its website, which was optimized for conversions.

However, although this multichannel approach yielded excellent results, with StraightIn’s website generating thousands of visitors per month, its team quickly realized its strategy had a flaw.

Namely, they were unable to capture most of the leads landing on their website, as not everyone was keen on filling out forms or downloading materials.

This is when they decided to implement Warmly into their system.

Warmly enabled them to identify the companies and individuals visiting StraightIn’s website, in addition to providing relevant B2B and intent data on each.

This way, StraightIn’s team was able to:

Identify website visitors and determine which of them fit their ICP the best.

Pinpoint and prioritize leads most likely to convert based on intent level and focus their nurturing efforts on them.

From that point, StraightIn’s approach evolved into a more hybrid strategy, as its team leveraged Warmly’s intent insights to segment users according to their interest level and add them to personalized outreach campaigns.

Thanks to Warmly’s Orchestrator, they put this process on autopilot, ensuring that no quality leads fall through the cracks.

The results?

An overall increase in email engagement rates.
A reduction in LinkedIn Ad spend.
Closing two deals worth $10k in total in under two weeks.

Next steps

Your primary business goals will be key in choosing between growth marketing and demand generation.

Both are efficient and useful in their own way, with one focusing on immediate results and the other on building long-term relationships.

In most cases, a hybrid approach might work the best, ensuring you won’t miss out on any opportunities.

Ultimately, you know your business best, and with all the info you picked up here, making the right choice won’t be as tough.

Remember, though, that your website is an essential part of all marketing strategies, so it's always a good idea to put effort into unlocking its optimal lead acquisition potential—and Warmly can help with that.

Want to find out how?

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