In this article we compare and contrast the pros and cons of inbound and outbound lead generation programs.
One of the most pressing challenges of the first 6 months of the pandemic for many professional services and even SaaS firm marketers was the rapid decline in deal activity. One of the interesting trends we noticed when studying the data coming out of our client sites was this unique combination—early stage conversions were down only slightly but late stage conversions were down significantly. Essentially, we were seeing that potential clients were staying engaged with thought leadership, but fewer of them were actually initiating sales conversations.
As a result, many firms were forced to rethink their lead generation activities. In the latter half of 2020 we saw a much greater interest and emphasis on standing up outbound lead generation programs—paid media campaigns and social outreach programs—than in the past. While this is definitely a great trend, I think it’s important to remind ourselves that all lead generation tactics are not created equal. Ultimately, the mix of lead generation tactics you employ will have lasting effects on your sales and marketing operations.
Inbound Programs Infer Authority and Price Premiums
Most consulting firms rely heavily on a largely inbound mentality. Emphasis is placed on developing high quality thought leadership and working to earn placement of that thinking within high profile business publications like HBR or trusted industry journals. Derivative content is self-published on firms’ websites to build a “body of work” around big client issues. The effect of this is, of course, what you’d expect—it infers high authority on the firm’s subject matter experts and enables it to sell from a position of high authority. As a thought leader the firm finds itself in a position where it is essentially qualifying prospects (i.e., sales leaders are often retreating from prospects and inviting them to take a step forward). This whole process, of course, enables the firm to establish a price premium (we’ve actually proven and measured this price premium gap through our thought leadership research). The only real downside to a largely “inbound” program is that lead flow is inconsistent (as we’ve all seen during the pandemic).
Comparing and Contrasting Inbound and Outbound Lead Gen Programs
Outbound Programs Drive More Predictability
However, as previously pointed out, this inconsistency in lead flow became a significant problem in the first 6 months of 2020. I found myself repeatedly saying that “commerce had effectively ground to a halt.” Clients everywhere had essentially crawled into a hole (their house) and they weren’t popping their head out except for food, water, and to watch the occasional webinar. As a result, we began working with our clients to ramp up more and more outbound lead generation programs. To date, we’ve largely relied on a combination of SEM and paid LinkedIn campaigns to drive leads from thought leadership content or to present a very precise solution to an acute client problem by offering a meeting or software demo.
While we’ve definitely found success in these programs it’s worth noting some of the things that make this type of lead generation different from what firms have become accustomed to. To start, paid social media lets you target the specific people you would like to do business with (targeting within LinkedIn is quite sophisticated and it enables you to drill down into the firmographics and demographics we’ve talked so much about over the last 10 years). And, of course, SEM enables you to target specific windows of time when people are searching for problems you know how to solve or solutions you have.
The obvious cons of an outbound program is the hard media costs. We’re seeing cost per lead ranging from just a few dollars on Google up to 100s of dollars on LinkedIn. The less obvious cons are the fact that you’re entering the conversation more from a position of parity rather than a position of authority. The client essentially sees you as AN option to solve their problem rather than THE option to solve it. This, of course, has repercussions on how you approach the sale. Essentially, the power dynamic is reversed. The client has a desire to keep the firm at bay and tread lightly—they’re qualifying you as the provider of a service rather than the other way around.
That said, the pros are also quite obvious—more predictable lead flow and the ability to more directly connect your firm with the ideal clients you’ve spent so much time trying to identify and build solutions around.
So, What Lead Generation Tactics Work Best?
In the end, picking the right mix of lead generation tactics is largely a function of the nature of your firm and what you hope to accomplish. Most SaaS companies rely heavily on outbound programs because they have the need to move much faster than inbound programs will allow. Essentially, they have the need to drive lead activity in weeks and months not quarters and years. Professional services firms, on the other hand, are often much more interested in establishing the position of authority. The longer road is worth it because it enables the firm to be more selective about the client relationships they “let in the door” and demand a premium price to do so.
All that said, going forward, I believe virtually all firms will require a mixture of both. Ultimately, inbound programs enable a healthier sales dynamic, but they’re lumpier by design. However, for any business to be successful over the long haul it needs the ability to deliver a steady flow of the right new business conversations on a weekly, monthly, and quarterly basis now and forever—something that outbound lead generation can much more reliably deliver.