“ABM” and "demand gen" are two terms that get thrown around a lot in sales. But what do they truly mean?

While they both fall under the lead generation umbrella, understanding these strategies can be the key to finding new opportunities and making your marketing efforts even more fruitful.

So, in this article, let me demystify these terms and give you the inside scoop so you know which approach is the right fit for your business.

What Is ABM?

ABM (or Account-Based Marketing) is a smart marketing strategy that zones in on specific high-value accounts or companies.

Instead of casting a wide net and hoping to catch a few fish, ABM is like going straight for the big, juicy fish you know you want.

In ABM, your marketing and sales teams join forces to find key accounts that perfectly match your business. Then, the magic happens when you create personalized and tailor-made marketing campaigns just for these special accounts.

ABM is about understanding these target accounts on a fundamental level – knowing their industry, their unique challenges and what keeps them up at night. Armed with this knowledge, you serve up marketing messages that are not just relevant but downright irresistible.

ABM doesn't rely on one-size-fits-all marketing. Instead, it's a mix of different marketing channels.

You might send personalized emails, create targeted ads, dish out content that speaks directly to your target accounts and even have one-on-one chats with the decision-makers in these accounts.

And the ultimate goal of ABM? Build strong relationships with these key accounts, boosting your revenue and making sure these customers stick around for the long haul.

So, if you're aiming for those big wins, ABM is where it’s at.

What’s Demand Gen?

Unlike ABM, which targets specific high-value accounts, demand gen (or demand generation) takes a broader approach. The focus is on creating awareness and interest across a wide audience.

In this approach, you don't need to know each potential customer's favorite color or their birthday. Instead, you use various marketing tactics to capture the attention of a larger group. These tactics might include things like online advertising, social media campaigns, content marketing and more.

Imagine you're a company that sells running shoes. Instead of zeroing in on a few specific runners, you create awesome content about the benefits of running, share it on social media and run online ads targeting fitness enthusiasts.

You're hoping that this broader approach will catch the attention of anyone interested in running, no matter their background or shoe size.

So, suppose your goal is to build a bigger brand presence, increase overall leads and fill your sales pipeline with a variety of potential customers. In that case, Demand Generation might be the strategy for you.

ABM vs. Demand Gen: Key Differences

Now that you have a good grasp of what ABM and Demand Generation are, let's explore how they differ.

1. ABM Focuses on Specific Accounts

As mentioned, ABM goes after specific accounts – typically those that will spend big money.  For example, imagine you work at a company that sells project management software to big businesses.

In ABM, you'd choose a few big corporations that could be perfect customers. These are like the big fish in your customer sea. You'd study what these companies need, who makes decisions there and what problems they have.

Then, you'd make marketing just for them. One of my most favorite real-world examples comes from Gums, who created and printed a legit comic book for the T-Mobile CEO.

Now, instead of focusing on just a few accounts, demand gen tries to get lots of different customers interested.

For instance, if you're selling a new phone app for small businesses, demand gen means you create ads and content that can attract all kinds of small businesses, not just the giant ones.

2. Demand Gen Measures and Scores Leads

Another big difference between ABM and demand gen is how they handle leads and figure out which ones are most likely to become customers.

I mean, ABM already knows they have a high-quality target. But since demand gen brings in so many fresh leads, you need a way to separate the bads, the goods and the greats.

That’s where techniques like lead scoring are pivotal. Lead scoring gives points to each lead based on what they do.

Did they visit your website? That's a point. Did they open your email? That's another point. The more points they get, the more interested they seem. The ones with the most points are the ones your sales team goes after because they're like the big fish in the pond.

Using my project management software company example – demand gen would be about attracting all kinds of businesses to your website.

Some might just look around, while others might request a demo or sign up for updates. Each of these actions earns a lead some points.

The leads with the most points are like the golden catches and your sales team can focus on them.

3. ABM Shortens the Sales Cycle

ABM helps you concentrate on a small group of perfect customers for your business.  Instead of spending time on customers who might not be interested, you focus on the ones who are most likely to buy.

By paying special attention to these customers right from the start, it's as if you're already cooking with the best ingredients for a delicious meal. You can create messages and offers that fit them perfectly, and you can ultimately move them down your sales pipeline smoothly. And you don't have to spend a long time convincing people who aren't a good fit.

In simple terms, ABM is like a rocket booster for your sales efforts. It helps you reach your goals faster and with less hassle.

4. ABM Requires Sales and Marketing Working Together

ABM needs your sales and marketing teams to work closely together to succeed. Marketing identifies the special customers (e.g., "target accounts") and creates messages and campaigns just for them. Then, your sales team jumps in to talk directly to them.

In demand gen, on the other hand, the sales process changes when prospects turn into MQLs. So, there isn’t the same requirement for sales and marketing synergy.

5. ABM Builds Relationships with Target Accounts as Part of Its Business Plan

A key aspect of ABM is creating lasting connections with your target accounts – getting to know them while building trust and rapport over time. Marketing and sales teams collaborate to engage with these accounts in meaningful ways.

By contrast, demand gen tracks lead responses on their company's CRM or another automated system. These tools help keep tabs on how leads interact with your business, such as which emails they open, which sales rep they interact with and any number of data points.

While it still lets you personalize your approach, it doesn’t reach the same levels as ABM by its nature.

When Should You Use ABM or Demand Gen?

Deciding whether to go with Account-Based Marketing (ABM) or demand generation depends on your business and who you want to reach. Here are the main things to think about:

Use ABM When:

  • You have a small list of special customers you really want to leave a good impression on.
  • Your offer needs a personal touch to sell.
  • Making strong, long-lasting friends with key customers is super important.
  • You don't have tons of money or people to spend on marketing, so you want to focus on just a few customers.
  • You want to speed up the time it takes to make sales.

Use Demand Generation When:

  • You want to reach a lot of different people and get lots of leads.
  • Your offer is for all sorts of customers.
  • You have the resources and people to handle lots of leads.
  • You really want to make your brand well-known and get lots of customers quickly.
  • Your business doesn't need super personalized marketing because people decide to buy pretty fast.

Remember, it's not about one being better than the other; it's about picking the one that's right for your business goals.

Account-Based Marketing vs. Demand Generation: Which Will You Choose?

Really, the "ABM vs. demand gen" discussion boils down to quality vs. quantity. Are you feeling like a fine-dining experience or going to an all-you-can-eat buffet?

ABM is like treating a few special customers to a fancy dinner. It's all about quality. You choose a handful of customers and give them particular attention, like a top chef preparing a gourmet meal. Your marketing and sales teams work closely together to make it perfect.

Then demand gen is more like the buffet, serving a lot of people with a variety of dishes. It's about quantity. You cast a wide net to get many potential customers, but your approach is not as personalized. And your marketing and sales teams might work more independently.

The choice depends on what fits your business goals and resources. Whether you're savoring every bite or filling your plate, it's all about finding the right recipe for success.