Choose Between ABM vs Demand Gen: A Practical Guide for Marketing Leaders

76% of marketers achieve higher ROI with ABM vs Demand Gen strategies than other marketing approaches. Modern sales processes now just need 6-10 decision-makers to close each deal, which makes choosing the right marketing strategy more complex than ever.

B2B brands are quickly accepting new ideas around account-based marketing, with 67% already using it. At the same time, demand generation continues to show impressive results. Top-performing companies generate over 10,000 leads monthly. Each approach serves a unique purpose. ABM targets specific high-value accounts, while demand generation creates broad market awareness.

Marketing leaders don't have to pick a universally "better" approach. They must select a strategy that matches their business goals and resources. This piece will help decision-makers assess both account-based marketing and demand generation to make an informed choice for their organization.

Understanding ABM vs Demand Generation Fundamentals

Account-based marketing (ABM) represents a fundamental change in B2B marketing strategies. Companies that use ABM identify and participate with specific high-value accounts instead of casting a wide net for leads. ABM treats each target account as a "market of one" and creates individual-specific experiences that match each client's needs.

What account-based marketing means in simple terms

Account-based marketing is a strategic approach where marketing and sales teams work together to find and connect with specific high-value accounts that line up with their ideal customer profile. Traditional marketing targets broad audiences, but ABM puts quality before quantity by focusing resources on accounts that could bring the highest value. Marketing and sales departments need to work as one team. They create campaigns that strike a chord with each account's unique challenges and pain points.

ABM started in the early 1990s, but recent technology has made it more available and effective. Today's ABM uses cloud CRM systems, B2B marketing platforms, and AI tools to create individual-specific experiences at scale.

What makes demand generation different

Demand generation builds awareness and interest in products or services for a wider audience. This approach educates potential customers and guides them through their buying trip, whatever company they're from. Teams use various methods to build relationships with people who might want the solutions they offer.

The heart of demand generation marketing has five simple steps: bringing customer profiles together, running AI-driven campaigns, creating content for different touchpoints, turning awareness into leads, and driving revenue. Brand visibility comes first. Then leads flow from that awareness, and prospects become customers.

The biggest difference shows up in the funnel approach. Demand generation follows a traditional funnel model. It starts with many people and narrows down to qualified prospects. ABM does the opposite. It begins with specific high-value accounts and develops custom strategies to reach them.

Key strengths and limitations of each approach

Each strategy has its own advantages based on business goals:

ABM Strengths:

• Higher ROI - 76% of marketers get better returns with ABM than other marketing strategies
• Better sales-marketing alignment through team targeting
• Bigger deals - 58% of ABM practitioners closed larger deals
• Individual-specific customer experiences that work better

ABM Limitations:

• Takes substantial time and resources to do right
• Hard to expand beyond a few accounts
• Needs advanced technology and expertise

Demand Generation Strengths:

• Easy to expand to reach broader markets and build brand awareness
• Generates more leads
• Works better for companies launching new products or growing their market
• Builds long-term customer relationships through educational content

Demand Generation Limitations:

• Often brings in lower-quality leads that need more screening
• Hard to track how specific campaigns affect results
• Sales cycles can run longer than targeted ABM approaches

The main difference between these approaches lies in their focus. ABM targets specific named accounts with quality interactions. Demand generation looks at markets and industries to bring in more leads. ABM usually connects with accounts already looking for solutions (bottom of funnel). Demand generation tries to create interest among those not actively searching yet.

Most organizations don't need to pick one over the other. They should choose what matches their business goals, target audiences, and available resources best.

Assessing Your Company's Marketing Readiness

Marketing leaders must review their organization's readiness before picking between ABM vs demand gen strategies. This gives a clear picture of which approach lines up with their current skills and business realities. Getting into three key areas will give an explanation about the best strategy to move forward.

Evaluating your current sales cycle length

The sales cycle—the time from original contact with a prospect to closing the deal—works as a key indicator when picking a marketing strategy. Companies with shorter sales cycles get better results from demand generation. Longer cycles work better with account-based marketing approaches.

Here's the quickest way to calculate your average sales cycle length:

1. Identify all stages in your sales process from lead generation to customer acquisition
2. Add the total number of days in the sales cycle for all successful conversions
3. Divide by the number of successful conversions

This calculation shows how well your sales process works. Companies should look at this metric by segment (customer size, industry, lead source) to spot patterns that might affect their strategy choice. Cold calling and other outbound methods take longer than inbound approaches because customers are less ready to buy when you first reach out.

Short sales cycles show a smooth sales process and strong product-market fit. This metric helps predict sales figures—you can estimate future numbers based on current leads weeks or months ahead.

Analyzing your customer acquisition costs

Customer acquisition cost (CAC) shows how much money you spend to get each new customer. You can find this by dividing total marketing and sales expenses by the number of new customers in a specific period.

Your CAC calculation should include all these costs:

• Employee salaries
• Advertising spend
• Production costs
• Marketing technology
• Sales software

Many companies only count obvious expenses like ads. A detailed look at all costs gives you the real CAC number. This stops you from setting wrong prices or making unrealistic growth plans.

Good CAC numbers vary by industry. Most companies should aim for a customer lifetime value (LTV) to CAC ratio of 3:1 or 4:1. This ratio guides you toward profitable customer relationships.

Auditing your existing marketing infrastructure

Modern marketing needs regular checkpoints to review resources and support, unlike old strategies with clear start and end points. You should check your marketing setup and team alignment before starting ABM or demand generation.

Your marketing infrastructure review should cover:

• Marketing technology stack: Get into your CRM, content management, and marketing automation systems. These tools track conversion rates, sales cycle length, and other key metrics.
• Cross-departmental alignment: Ask key stakeholders early about projects that need help from other teams or technical setup. Use a RACI (responsible, accountable, consulted, informed) framework to set clear expectations.
• Analytical capabilities: Review how well you can measure and improve channel performance. Strong analytics help you find what works and fix what doesn't in ABM or demand gen.
• Stakeholder communication: Plan regular checkpoints and identify who needs updates from the start. Clear, ongoing communication reduces problems during implementation.

Quarterly infrastructure audits help line up your marketing capabilities with strategy goals. Bringing up budget needs right away saves time by avoiding programs that ended up hitting money problems.

Success with ABM or demand generation depends on having strong infrastructure, knowing your numbers like sales cycle and CAC, and getting all departments on board from day one.

Matching Strategy to Business Goals

The best marketing approach depends on how well your strategy lines up with your business goals. Smart marketing leaders know that ABM and demand generation each have their place. Neither approach works better than the other across the board—they just serve different revenue goals.

When ABM lines up with revenue objectives

Account-based marketing works best when companies target high-value accounts that need customized attention. Companies with successful ABM strategies see a 90% or higher engagement rate with their targeted accounts. ABM becomes the right choice in several business situations:

• Going after enterprise deals with long, complex sales cycles
• Working in industries with just a few major players (like aerospace)
• Selling products that need big investments from customers
• Focusing on getting the most value from each customer over time

ABM builds strong relationships by offering customized experiences and exceptional value to targeted accounts. This strategy treats each key account as a "market of one" and builds lasting partnerships that create steady revenue.

When demand generation drives growth targets

Demand generation shines when businesses want to reach more customers. This strategy helps achieve different growth goals:

• Getting new products or services in front of more people
• Breaking into new industries where few know your brand
• Creating a steady stream of qualified leads at scale
• Cutting customer acquisition costs across bigger market segments

The numbers tell the story - 45% of top-performing teams see demand generation as a strategic way to grow. Plus, 22% of organizations call demand generation crucial to company growth and weave it into their revenue strategies.

Setting realistic expectations for each approach

Marketing teams should set clear goals and measurements for their chosen strategy. A well-laid-out approach shows how marketing helps reach company goals—like boosting revenue and ROI—and helps leaders focus on projects that matter most.

These steps help make it work:

1. Create SMART (specific, measurable, achievable, relevant, time-bound) goals that match business priorities
2. Review marketing results against these goals monthly
3. Marketing leaders should check KPI performance weekly

Many companies find success by mixing both approaches. They use ABM for key accounts while running demand generation for their broader market. Industry experts say, "It's no longer about choosing between the two—instead, it's about integrating them into a cohesive approach".

Marketing plans work best when they connect straight to business goals through a clear roadmap. The plan should stay flexible enough to change as markets shift.

Decision Factors Beyond Company Size

Several key factors help determine if ABM or demand generation will get better results, regardless of how big the organization is. Marketing leaders can make better strategic decisions by understanding these differences.

Industry dynamics and competitive landscape

Your industry's nature plays a big role in picking the right marketing strategy. Industries with few major players, like aerospace, get better results from ABM's targeted approach. Markets with many competitors need the wider reach that demand generation offers.

Looking at the competitive landscape shows whether personal engagement or broader market visibility creates better differentiation. ABM's account-specific focus works better in industries where relationships drive buying decisions, such as business services. Companies that bring new ideas to scattered markets do better with demand generation campaigns.

Target customer complexity

The way your target customers buy things directly affects how well each strategy works. B2B buying has become a "team sport" and old lead-focused methods don't work as well anymore. B2B purchase decisions now need more than four people 63% of the time, up by a lot from 47% in 2017.

Buying groups now have 12-18 stakeholders involved on average. This makes ABM a better choice when:

• Products need big customer investments
• Sales cycles take long and get complex
• Multiple departments make purchase decisions

Demand generation works better for products with different use cases or when you just need more leads.

Available marketing resources and expertise

Resource planning might be the most practical thing to think over. ABM needs lots of personalization—49% of organizations handle between 15-100 target accounts every quarter. This hands-on approach needs dedicated resources to create custom campaigns.

Demand generation focuses on automation and volume. About 80% of marketers use technology to get more leads without much extra work. Marketing teams should review their current skills, technology setup, and available expertise before picking either strategy.

Most organizations ended up doing well with mixed approaches. Yes, it is true that 82% of marketers want their ABM and demand efforts to meet, up from 54% two years ago.

Creating Your Strategy Selection Framework

Marketing leaders need a clear framework to choose between ABM and demand gen strategy after completing their initial assessment. A good framework adds structure to decision-making and makes sure choices line up with what the organization can do and wants to achieve.

Building a weighted decision matrix

A weighted decision matrix gives you a numbers-based way to evaluate strategic options using multiple criteria. This tool works really well to compare ABM vs demand generation approaches and their different strengths and limits.

Here's how to create an effective matrix to select your marketing strategy:

1. List both options (ABM and demand generation)
2. Identify key decision criteria (budget requirements, sales cycle length, target complexity)
3. Assign weights to each criterion based on what matters most to your organization
4. Rate each approach against each criterion (typically on a 1-10 scale)
5. Multiply ratings by weights to calculate weighted scores
6. Sum the weighted scores to find the best approach

This well-laid-out evaluation helps you avoid making choices based on gut feel or trends. It makes sure your decision matches your specific situation.

Conducting stakeholder interviews

Your decision gets better when you include views from different people through stakeholder interviews. The best results come from 5-10 internal interviews across departments and 10-20 external interviews with current, lost, and potential customers.

Start by explaining how this helps the organization focus on what customers and the market value most. Then create questions about success metrics, priorities, background, and how people like to communicate.

Listen carefully during interviews and ask for more details when answers seem shallow. The "bridging technique" helps you stay on track while not missing valuable side points.

Developing implementation timelines

Modern marketing strategies need shared work, so implementation timelines should include both tactical goals and check-ins between sales and marketing teams.

ABM implementations need time to select target accounts, create personalized messages, build multichannel engagement strategies, and set up ways to measure success. Demand generation timelines should cover audience development, content creation, lead scoring setup, and improving handoff processes.

Most organizations end up using both approaches. They combine ABM for important accounts with demand generation to reach the broader market.

FAQs

Q1. What is the main difference between ABM and demand generation?

Account-based marketing (ABM) focuses on targeting specific high-value accounts with personalized strategies, while demand generation aims to create broad market awareness and interest across a wider audience.

Q2. How do I know if my company is ready for ABM?

Assess your sales cycle length, customer acquisition costs, and existing marketing infrastructure. ABM is typically more suitable for companies with longer sales cycles, complex B2B products, and the resources to create highly personalized campaigns.

Q3. When is demand generation a better choice for a business?

Demand generation is often more effective when launching new products, entering new markets, or when the goal is to generate a high volume of leads. It's also suitable for businesses with shorter sales cycles or those targeting a broader audience.

Q4. Can a company use both ABM and demand generation strategies?

Yes, many successful organizations implement a hybrid approach, combining ABM for high-value accounts with demand generation for broader market reach. This allows for a more flexible and comprehensive marketing strategy.

Q5. How can I measure the success of my chosen marketing strategy?

Set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) objectives aligned with your business goals. Regularly evaluate marketing performance against these objectives, tracking metrics such as engagement rates, lead quality, conversion rates, and ROI.