As an early-stage B2B tech startup founder, you’re likely evaluating various marketing strategies to fuel your company’s growth. Two popular but often misunderstood terms you’ll encounter are demand generation and growth marketing.
Both approaches are essential in their own ways, but they serve different purposes and apply distinct strategies, especially when you're thinking about the need for your first head of marketing. Understanding the differences between these two will help you make an informed decision about the direction of your marketing efforts and the type of marketing expertise your startup needs.
What Is Demand Generation?
Demand generation is the process of creating awareness and interest in your product or service, primarily focused on top-of-the-funnel activities. It aims to build brand recognition and generate a steady flow of high-quality leads that can eventually be nurtured into paying customers.
Demand generation strategies focus on capturing prospects through various marketing channels like:
Content marketing (e.g., blog posts, whitepapers, webinars)
Paid media (e.g., Google Ads, LinkedIn ads)
SEO (driving organic traffic to your website)
Email marketing (building awareness through nurture campaigns)
The goal is to convert potential customers into your funnel early, making them aware of their pain points and how your solution can address them. You get the lead in your database and the opportunity to nurture them through your marketing and sales funnels. Demand gen works well for shorter sales cycles and fewer decision makers in the buying unit. It’s that it doesn’t work for longer ones, but the attribution mechanics become problematic due to the many touches a contact has after the first touch. In addition, you’re dealing with accounts, not contacts, so linking all of the engagement together in a cohesive and actionable way becomes difficult for companies that are in the early stages of creation. .
Key Elements of Demand Generation:
Top-of-Funnel Focus: Most demand generation efforts are aimed at capturing new leads by increasing visibility and awareness.
Long-Term Relationship Building: Demand generation aims for immediate conversion, then focuses on educating potential customers and nurturing them over time.
High-Quality Lead Generation: The ultimate goal is to create a pipeline of qualified leads that are handed off to sales. You’ll also attract leads that aren’t a fit for your offering.
What Is Growth Marketing?
Growth marketing, on the other hand, takes a more holistic, full-funnel approach. While it also incorporates lead generation, it focuses on optimizing the entire customer journey—from initial awareness to conversion, retention, and advocacy. Growth marketing emphasizes rapid experimentation, data-driven decision-making, and iterating on strategies that work to achieve sustainable growth.
For B2B tech startups, growth marketing involves strategies such as:
Conversion rate optimization (CRO) (making your website or landing pages more effective)
A/B testing to optimize messaging, emails, and ad creatives
Account-Based Marketing (ABM) to target high-value prospects with personalized outreach
Customer retention strategies (like onboarding and product education)
Growth marketing isn’t just about getting leads; it’s about ensuring that those leads are quality leads, they stay engaged, and become long-term advocates for your product.
Key Elements of Growth Marketing:
Full-Funnel Optimization: Growth marketing addresses every stage of the funnel—awareness, acquisition, activation, retention, and referral (often referred to as the AARRR framework).
Data-Driven and Iterative: Growth marketers constantly run experiments and use data to iterate and optimize their strategies.
Focus on Retention: Growth marketing puts as much emphasis on keeping customers engaged as it does on acquiring new ones. Customer retention and maximizing lifetime value (LTV) are key.
Key Differences Between Demand Generation and Growth Marketing
1. Scope and Focus
Demand Generation: Primarily focuses on the top of the funnel, aiming to raise awareness and generate leads. Its objective is to get potential customers interested enough to enter the sales pipeline, but it doesn’t necessarily focus on what happens after the lead is captured.
Growth Marketing: Takes a more comprehensive approach that spans the entire funnel. Growth marketing doesn’t just stop at generating leads; it focuses on optimizing every interaction with the customer, from acquisition through to retention and advocacy.
2. Metrics for Success
Demand Generation: Metrics typically revolve around lead volume and engagement. Common KPIs include website traffic, downloads of gated content, webinar registrations, and the number of leads generated.
Growth Marketing: Metrics go beyond leads and traffic. Growth marketers look at activation rates, conversion rates, retention metrics (e.g., churn rate, customer lifetime value), and referral rates to ensure sustainable, long-term growth.
3. Tactics and Channels
Demand Generation: Relies heavily on inbound and outbound marketing tactics, such as content marketing, PPC, and paid social ads. It’s more focused on attracting new potential customers to the top of the funnel.
Growth Marketing: Incorporates a wider range of tactics, including product-led growth strategies, CRO, A/B testing, and customer success initiatives. Growth marketers are just as concerned with optimizing the user experience post-acquisition as they are with acquiring leads in the first place.
4. Time Horizon
Demand Generation: Typically focuses on long-term relationship building, aiming to nurture leads over an extended period. It’s often not as concerned with immediate conversions or results.
Growth Marketing: While also focused on long-term growth, growth marketing tends to prioritize quicker results through iterative testing and rapid feedback loops. Growth marketers are constantly seeking small, incremental wins that can compound over time.
Which Approach is Right for Your Startup?
For early-stage B2B tech startups, both demand generation and growth marketing are crucial, but the stage your startup is in and your immediate goals will dictate which should take priority. Here’s what some people might say:
If you're pre-product-market fit, demand generation may be more important to show quick success in a channel. You need to build awareness, generate leads, and understand which segments of your audience are the most responsive to your product or service. At this stage, you’re focused on filling the funnel with potential customers to validate your offering.
If you've already found product-market fit or have simply found an efficiency that you can scale, growth marketing should become the focus. Now, you need to scale efficiently, optimize the customer journey, and ensure that your leads convert into long-term, paying customers. Growth marketing will help you build sustainable systems for both acquisition and retention.
SUMMARY
As a B2B tech startup founder, it’s important to recognize that demand generation and growth marketing are not mutually exclusive—they are complementary and elements of each one do not exist in a silo. Demand generation will help you fill the top of the funnel, while growth marketing will ensure that you’re optimizing every step of the journey and maximizing your return on investment.
When hiring your first head of marketing, look for someone who understands both the importance of building awareness (demand generation) and optimizing growth (growth marketing). A strong marketing leader will know how to balance both approaches, guiding your startup through the critical stages of early growth and scaling efficiently over time. Realistically, it’s hard to find that ideal candidate who has the experience to run all of these programs. That where BGM can help. We’ve helped more than 100 startups with growth marketing and demand gen strategies.
By understanding the distinctions between demand generation and growth marketing, you’ll be better positioned to build a marketing strategy that drives long-term, sustainable growth for your B2B tech startup.