What is the difference between lead generation and demand generation?

Lead generation focuses on capturing contact information from potential customers - getting names, emails, and phone numbers into your CRM. Demand generation is broader - it creates awareness and interest in your product category before asking for contact information. Demand generation builds the audience; lead generation converts that audience into identifiable prospects.

What is a qualified lead?

A qualified lead is a prospect who meets predefined criteria indicating they are likely to become a customer. Marketing qualified leads - MQLs - have engaged with marketing content like downloading a whitepaper or attending a webinar. Sales qualified leads - SQLs - have been vetted by sales and confirmed to have budget, authority, need, and timeline for purchase.

How much does a lead cost?

Cost per lead varies dramatically by industry and channel. According to HubSpot, the average cost per lead across industries ranges from $30 to $200. B2B SaaS leads typically cost $50 to $200 through paid channels. Organic channels like SEO and content marketing have lower per-lead costs but require upfront investment in content creation.

What Is Lead Generation?

Lead generation is the marketing process of attracting potential customers and capturing their contact information - typically email addresses, phone numbers, or company details - so that a sales or marketing team can nurture them toward a purchase decision. A lead is any person or organization that has expressed interest in your product or service by taking a specific action: filling out a form, downloading a resource, signing up for a newsletter, requesting a demo, or providing contact details in exchange for value. According to HubSpot's State of Marketing report, 61% of marketers rank generating traffic and leads as their top challenge, making lead generation one of the most critical functions in any growth-stage company.

How Does Lead Generation Work?

Lead generation follows a funnel-based model:

Attract. Drive traffic to your website, landing pages, or content through channels like SEO, social media, paid advertising, email outreach, and content distribution. The goal is getting potential customers to your owned properties.

Capture. Convert visitors into leads by offering something valuable in exchange for contact information. This could be a free tool, template, ebook, webinar, free trial, or newsletter subscription. The exchange mechanism is typically a form, chatbot, or signup flow.

Qualify. Not all leads are equal. Qualification processes score and categorize leads based on their likelihood to purchase. Factors include company size, industry, budget, engagement level, and buying timeline.

Nurture. Move qualified leads toward a purchase decision through targeted email sequences, personalized content, product demos, and sales outreach. Nurturing bridges the gap between initial interest and buying readiness.

What Are the Main Lead Generation Channels?

Inbound Lead Generation

Inbound strategies attract leads who are actively searching for solutions:

Content marketing and SEO. Blog posts, guides, and resources that rank in search engines attract organic traffic from people researching solutions. According to Demand Metric, content marketing generates 3x more leads per dollar than paid search.
Social media. Organic social content on LinkedIn, Twitter, and other platforms builds awareness and drives traffic to lead capture pages.
AI search visibility. As more buyers use AI search tools to research products, being cited by ChatGPT, Perplexity, and Gemini becomes an inbound lead generation channel. GEO optimization drives this visibility.
Referrals and word-of-mouth. Existing customers recommending your product to peers. Often the highest-converting lead source for B2B companies.

Outbound Lead Generation

Outbound strategies proactively reach potential customers:

Cold email. Targeted emails to prospects who match your ideal customer profile. Effective at scale when personalized and relevant.
LinkedIn outreach. Direct messages and connection requests to potential buyers on LinkedIn.
Cold calling. Phone-based outreach to potential customers. Less common in SaaS but still effective in certain industries.
Paid advertising. Google Ads, LinkedIn Ads, Meta Ads, and other paid channels targeting specific demographics, industries, or search queries.

What Are the Key Lead Generation Metrics?

Cost per lead (CPL). Total marketing spend divided by number of leads generated. Average CPL ranges from $30 to $200 depending on industry and channel. According to HubSpot, organic search has one of the lowest CPLs while events and trade shows have among the highest.

Lead-to-customer conversion rate. Percentage of leads that ultimately become paying customers. B2B SaaS companies typically see 2% to 5% lead-to-customer rates, while e-commerce sees higher rates because the purchase decision is simpler.

Marketing qualified lead (MQL) rate. Percentage of total leads that meet quality thresholds for sales follow-up. A high MQL rate means your targeting is effective; a low rate means you are capturing unqualified traffic.

Time to conversion. How long it takes a lead to become a customer. B2B sales cycles average 3 to 6 months. Tracking this helps optimize nurturing sequences and forecast revenue.

How Has AI Changed Lead Generation?

AI is transforming lead generation in several ways:

AI-powered lead scoring. Machine learning models analyze historical data to predict which leads are most likely to convert, helping sales teams prioritize their outreach.

Conversational AI. AI chatbots qualify leads in real time on websites, answering questions and capturing information 24/7 without human intervention.

Content personalization. AI tools personalize email sequences, landing pages, and content recommendations based on lead behavior and attributes.

AI search as a channel. When potential customers ask ChatGPT or Perplexity "what is the best [solution] for [use case]," the AI-generated answer becomes a lead generation touchpoint. Brands cited in these responses gain visibility at the exact moment of buyer research.

For startups building their go-to-market strategy, lead generation is the bridge between awareness and revenue. The most effective approach combines inbound content that attracts qualified traffic with systematic processes that capture, qualify, and nurture leads through to purchase.