Demand Generation vs. Demand Capture: How to Address Both With Your Marketing

We take a closer look at market demand and show you how you can successfully generate and capture it for your business.

Demand, as a general concept, is what drives any business. Demand generation and demand capture both stem from the same notion, but each is focused on attaining different goals. 

Demand generation creates the need for a specific commodity in the market, while demand capture pushes potential buyers along the sales funnel to generate a purchase.

Now that we’ve briefly defined both concepts, let’s see which should be at the forefront of your marketing strategy, why, and how you can make the most of both demand generation and demand capture when attracting and converting new clients.

In this blog, we’ll walk you through: 

• Why generating demand is more important than capturing demand
• Demand generation pros and cons
• How to generate demand
• Demand capture pros and cons
• How to capture demand

Why it’s more important to generate demand than capture it

When you focus on generating demand, you are addressing the market as a whole.

Creating a need for a product is limitless in terms of who will constitute your target audience. When you capture demand, however, that pool shrinks.

The people you need to convert are already aware of their problem and might even know possible solutions to it.

Businesses that reach a specific market cap or revenue face the same difficulties as those that have just taken off.

Their evolution and budget begin to stagnate because they are not creating demand.

To continue growing, they must reach untapped, completely unaware audiences. This is where demand generation comes into play.

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Demand generation puts you in front of a bigger audience with more resources at your disposal. Because it addresses a vast audience that is neither problem nor solution-aware, the concepts you can use to draw attention to your product are limitless.

Image Source: LeadFeeder

With demand generation, your main goal is to educate and provide value to your audience. A content marketing strategy personalised for every stage of the customer’s journey is one of the most potent drivers of qualified sales and meaningful brand-consumer connections.

According to SingleGrain, the average user engages with 3 to 5 pieces of content before talking to a sales rep, but once you earn their trust, 78% of consumers will choose you over another brand.

How to generate demand 

The essential part of the demand generation process is building up awareness around your product. To do that, you need to rethink your KPIs. 

At the end of the day, good demand generation should lead to revenue increase, but there are many other metrics you should be following. Here’s how you can measure whether or not your business is successfully generating demand;

• Reach; impressions; clicks;
• SERP visibility and volume for your brand keywords;
• Lead quality;
• CPC (Cost Per Click), CPM (Cost Per Impression);
• Sales Qualified Opportunities (SQOs) – prospects that have the highest probability of turning into new customers;
• Sales Velocity – measures how fast new customers are coming into your funnel.

As for methods that generate demand, here are the most common:

• Interactive marketing campaigns;
• Content marketing;
• Attending live events;
• Account-based marketing;
• Webinars;
• Podcasts, videos.

Most of these methods revolve around content marketing. With 81% of buyers doing their online research before heading out to the stores, it’s no wonder.

Every stage of the sales funnel requires different types of content, with different messages meant to streamline the customer journey. Content marketing also extends into the demand-capturing process, but the messaging changes. 

Demand capture is focused on closing the deal, while demand generation is about generating awareness.

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Pros of demand generation

When done right, demand generation helps:

• Lower costs per user acquisition 
• Generate better leads
• Boost brand awareness
• Spike conversion rates
  

Cons of demand generation

• Demand generation results aren’t immediate. 
• Marketing attribution software cannot track a customer’s entire journey. Here are only 25 ways customers are interacting with brands that are almost impossible to measure with attribution software. That’s not to say marketing attribution doesn’t have huge benefits, especially since it assigns credit to the touchpoint responsible for conversion. This leads to the next issue:
• Stakeholders will be reluctant to invest in demand generation; because they rely on outdated attribution models and metrics.

How to capture demand

Once demand is generated, you will need to focus on customers who show an interest in your product and incentivise them to buy. 

This is similar to lead nurturing: you will use intent data to create tailor-fit campaigns for your target audience as they move further along the sales pipeline.

Here are the main KPIs for demand capturing: 

• ROI and ROAS;
• ARR, MRR;
• Customer acquisition costs;
• Average conversion rate;
• Win Rate – the percentage of Won Opportunities vs. Total Opportunities;
• CLV (customer lifetime value)
• Marketing cycle length – how long it takes to acquire a new customer.

Demand capturing is an intricate process that relies mainly on how a potential customer comes into contact with your product. 

• What channel did they use to get in touch? 
• Did they reach out as a result of your campaign? 
• How far are they from completing the buying process?

Here is an excellent breakdown of measuring demand capture and using it to drive your revenue strategy.

Strategies to focus on while capturing demand:

• Account-based marketing. Once a user has reached a more developed stage of the customer journey, you can send customised communications that drive his/her decision to purchase. 

• Automation workflows. As your lead pool expands, manually handling each potential client becomes impossible. Automation helps manage prospects with ease, preventing potential slips through the marketing and sales funnel. Connect your CRMs (like Hubspot) to track marketing leads and engage with them on their preferred channels (social media, instant messaging, live chat, VOIP, email, SMS, etc.).

• Shopping ads. Shopping ads boost a prospect’s intent to buy. When someone is looking for a product, a targeted ad can be the final step in pushing them toward a purchase decision. 

• Search Engine Marketing. There is enormous potential in utilising search engine results to promote your product. It creates fast product visibility for clients who are very interested in what you sell, allows you to create ads that target people in the vicinity of your store, or you can also target users who live near your business’ headquarters. 

• Search Engine Optimisation. If you want your website to be featured in a search engine’s top results and increase product visibility, you need to optimise its content according to a predetermined set of keywords. This translates into increased traffic and a boost in CTR (Click-Through Rate), which makes reaching your target audience much easier.
  

Pros of demand capture

• It’s easy to measure. Unlike demand generation, demand capture yields immediate results. 
• It has a lower barrier to entry. It’s easy to get started with demand capturing when you know who to target and what works.
  

Cons of demand capture

Also lower barrier to entry! Costs per acquisition increase as the market saturates with competitors. The effectiveness of your capture channels may decrease as your strategy becomes familiar to the competition and is copied on one or multiple channels.

Choose the strategy that works best for your business

Your business’s optimal strategy should include demand generation and demand capture.

One cannot exist without the other. Depending on your business profile, competitors, and budget, you will need to shift focus to one of the two. 

Since demand capture yields immediate results and is easier to measure, it would be preferable to focus on it initially.

As you progress and possibly find that you reach a plateau in terms of evolution, focusing on demand generation is imperative because it opens up new customer acquisition possibilities. 

The key to optimising your marketing efforts lies in balancing the two without losing sight of the bigger picture, which is why you constantly need to check KPIs on both sides.

videos are engaging and possibly help to drive conversions and sales.

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