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The Folly of Inbound Marketing

by Dan McDade  |  
January 30, 2013

First published in 1841, Extraordinary Popular Delusions and the Madness of Crowds is a history of folly by Scottish journalist Charles Mackay. The book chronicles what Mackay called "National Delusions," "Peculiar Follies," and "Philosophical Delusions." Despite its rather sensational style, the book has enjoyed academic support as a work of considerable importance in the history of social psychology and psychopathology.
Subjects in the book included economic bubbles, the crusades, witch-hunts, and the influence the shape of hair and beard had on politics and religion in different times. Present-day writers on economics, including Andrew Tobias, laud the three chapters on economic bubbles.

Mad crowds were responsible for “tulip mania” and the “dot-bomb” eras. Individual thought leaders have been no more accurate than crowds at predicting thefuture:

"I think there is a world market for maybe five computers."
(Thomas Watson, chairman of IBM, 1943)

"There is no reason anyone would want a computer in their home."
(Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977)

"640K ought to be enough for anybody."
(Bill Gates, 1981)

"$100 million dollars is way too much to pay for Microsoft."
(IBM, 1982)

Today, there are more follies and delusions to talk about than there were in 1841. But in this short article, we have time to talk about one: inbound vs. outbound marketing.

Our experience is that companies kill the golden goose by focusing too much time and money on inbound marketing campaigns and not enough time and money on outbound marketing and nurture campaigns.

Before we dig deeper, check out these interesting statistics from close to 150,000 PointClear completed company dispositions on behalf of our clients from 2010–2012 (Jan-Jun):

Remarkably, with the exception of inbound lead rates in 2010, the lead and qualified rates for inbound and outbound are very close from 2010 to 2012. (In 2010, one of our clients drove a substantial number of inbound inquiries—increasing to 40% our completed dispositions from inbound sources as compared to 22% and 11% respectively in 2011 and 2012.)

In the end, lead rates are meaningless unless you convert those rates to sales qualified lead rates:

Most marketers complain that sales reps do not follow up on leads and do not provide specific feedback. Sales reps have this to say about marketing leads: “The leads stink.” Marketing is measured on the number of leads and the cost per lead. Sales is measured on revenue. Client #1 refuses to give up on content aggregator leads because two-thirds of the leads they generate are from that source. Sales reps, in this company, dismiss all marketing leads because they are not going to rummage through 3,117 raw leads to find 40 real leads.

The other challenge with inbound leads is they tend to drive smaller deals with lower level decision-makers as compared to targeted, proactive outbound lead qualification and nurturing programs because more senior executives are not as apt to exhibit the digital body language required to categorize opportunities from inbound marketing—leaving the best, most strategic and most profitable deals for those companies that don’t wait for a prospect to reach out to them.

Don’t just compare your own lead and qualified rates to PointClear’s experience. Measure the actual, fully loaded, cost-per-sales qualified lead by source and measure it over a period of time. In my book The Truth About Leads, I ask the question, “How much should a lead cost?” The answer is, probably more than you think, but probably a lot less than you are paying.

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Dan McDade is the CEO of PointClear, an Atlanta-based prospect development company that helps B2B sales and marketing executives fill their forecasts with sales-ready buyers.

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  • by Alexandra Gibson Wed Jan 30, 2013 via blog

    I agree with you that there needs to be better nurturing of inbound leads, but I think you use inbound in a very limited sense. Inbound should be used to understand interest of an organization, educate, build trust, nurture, and then begin the sales process.

    Leads will not close typically because of marketing alone (especially at larger price points) and a sales process will always be necessary. Too many companies make the mistake of thinking that since they have an inbound marketing program, revenue will automatically grow but there must be a strong sales process to back up that marketing program.

    I would also like to see the data behind the assertion that "inbound leads drive smaller deals".

  • by Steve Sheinkopf Wed Jan 30, 2013 via blog

    Interesting viewpoint. Content marketing does drive a wider and more unqualified net. However, you are not writing checks blasting away on radio/TV for a minority of people who may buy....yet paying for the whole audience

    Good content also helps buyers, because you are proving expertise. It also has longevity unlike advertising and did I mention the cost?

    We have been very successful with Inbound in conjunction with email, Pinterest, Facebook and targetted PPC. At the same time, we have deployed the savings to other departments like customer service......Content if properly executed can help any organization

  • by John McTigue Wed Jan 30, 2013 via blog

    I agree with Alexandra. Both inbound and outbound marketing primarily address the top of the sales funnel (demand generation and lead caprture), while lead nurturing, marketing automation and CRM integration address the middle and bottom of the sales funnel, where lead scoring, segmentation and intelligence assist the sales team in closing more sales and improving the sales process as a whole. A smart marketing department wouldn't look at an either-or between inbound and outbound at the top of the funnel. A mix of both is often the best strategy. Comparing top-funnel processes with mid-bottom funnel processes makes no sense. They are both needed in order to fill the funnel with qualified prospects and move them through the funnel into sales qualified leads.

  • by Carlos Hidalgo Wed Jan 30, 2013 via blog


    The the question of inbound versus outbound at it's core is fundamentally flawed. What marketers should be thinking about is how to best integrate inbound and outbound along the purchase path of their buyers.

    If marketers focus solely on the use of inbound or outbound their marketing becomes tactical instead of strategic - which is where most marketers are today and as a result struggling to have revenue impacts on their business.

    The discussion should not be focused on the tactical, but how do the tactics align to the strategy which is built based on buyer insights.

  • by Mike Volpe (@mvolpe) Wed Jan 30, 2013 via blog

    Dan - Clever title and comment-provoking blog post... you must think inbound marketing is valuable. Otherwise you would just be cold calling me (unsuccessfully, because it is literally impossible to cold call me and not get voicemail)!

    A couple comments:

    1) Inbound is about permission. It does not mean you never email or call anyone. It means you attract them first and gain their permission before emailing and calling them, rather than pissing them off by spamming and cold calling. Inbound marketing includes nurturing. Inbound marketing includes qualification. It does not include calling and emailing people who have never heard of you.... that is outbound spam.

    2) You wrote "Marketing is measured on the number of leads and the cost per lead. Sales is measured on revenue." Any company doing sales and marketing that way is doing it wrong. We measure marketing based on the amount of pipeline generated and the cost per new customer, and everyone should.

    3) You also wrote "The other challenge with inbound leads is they tend to drive smaller deals with lower level decision-makers as compared to targeted, proactive outbound lead qualification and nurturing programs." I could not disagree more. We have attracted Fortune 500 customers through inbound marketing and I bet I have leads from 80% of the F500 in my inbound opt-in database. In fact, 100% of our highest value customers and enterprise customers have come from inbound marketing.

    Overall, looking at cot per lead and cost per opportunity is meaningless, you want to look at the cost per customer and especially the cost per new customer as compared to the lifetime value of that customer. and don't forget that for every customer you get through cold calling there are another 99 of your prospects pissed off at you because you cold called them.

    PS: Alexandra - great comment. Agreed!

  • by Dan McDade Wed Jan 30, 2013 via blog

    Thanks for your comments, Mike. Being a long time client and a fan of your company I can appreciate where you are coming from:
    Regarding your first comment (about cold calling you), we don't really cold call anyone. There is a big difference between proactive, smart outbound and cold calling.
    I guess we can agree to disagree whether it is smart to wait for permission. My response to your thought about permission marketing is that not every senior executive wants to be treated like the human equivalent of a pinball, getting your attention only after they have hit the right bumpers and scored enough points. If you are actually waiting for the top 30% of the market to reach out to you without your reaching out to them, you are losing out on a LOT of business.
    I wrote that marketing is measured on the number of leads and that sales is measured on revenue in most companies. I did not say I agreed with that approach. I said that many if not most companies (particularly the large ones) default to that flawed strategy because of a number of things - chief among them is the fact that most leads are ignored by sales and marketing turns raw, unfiltered leads over to sales - that is not my opinion, it is a fact.
    Finally, cost per lead and cost per opportunity is not meaningless. Your own company was guilty of pushing tens of thousands of low-level leads to your sales force until you looked at the numbers and realized that the model was inefficient. There are a number of important metrics to measure beyond cost per customer. As an example, the net present lifetime value of a customer after acquisition cost can be extremely helpful in putting the spotlight on bad marketing spend.
    I agree with Carlos Hidalgo that inbound and outbound is about balance. He is consistent with that assertion and I always agree with him.
    I can tell you that several of our client have measured the return on proactive outbound against the return on reactive inbound and in the end have found that cost per opportunity (yes, Mike, this is an important metric) was lower on outbound taking into account ALL costs. And, the deal sizes were up to three times higher thanks to the ability to target larger, more strategic prospects. That may not be the case for a relatively low-end SaaS solution, but it is the case for larger, more strategic deals.
    Finally, regarding your opinion of our having "pissed off" 99 prospects out of a 100 by calling them - that is naive at best.
    Thanks again for your comment.

  • by Camilla Levinsen Wed Jan 30, 2013 via blog

    I totally agree with Alexandra and Mike. To smooth the conversation internally, I make a clear distinction between when marketing generates responses and when we create leads. I believe in a rounded approach of combining paid, earned and owned media.

  • by Michael Higashi Fri Feb 1, 2013 via blog

    Dan- Great topic & title and comment-provoking, for sure. But it's 'folly' itself - because in my opinion your whole premise is flawed in pitting one versus the other - inbound vs outbound. It takes a mix - with a ton of strategy, discipline and great sales and marketing alignment - for any business to succeed and grow. Not because on one vs the other.

    I won't repeat what's been said - and there are many great arguments both ways -
    but I would like to add a relevant story about a very recent customer win:

    I and a group of marketing colleagues who hadn't seen each other in 10+ years met for lunch. One of my closest friends who sat way across the table from me mentioned she started a new job at a start up and that they "may need some video production services" (my business started as video production and have expanded to a full-blown content marketing agency). My gut told me that that moment was not the right time to start pitching.

    The next week, she inmailed me on LinkedIn and asked for a meeting with her CMO who had gone on his own and checked out my company website and was excited to hear about all of the services we could provide.

    Long story short the $10k monthly retainer we won was closed in 1 week and if it weren't for a mix of inbound methodology, social media presence, sales expertise and good gut instincts it never would've gone down like this.

    In closing:
    No one can fault a marketing and sales process that educates and builds trust via the web. And that is inbound marketing's job.


  • by Dan McDade Tue Feb 5, 2013 via blog

    I am a long-time believer in balance and Camilla hits the nail on the head when she states that she believes "in a rounded approach to combining paid, earned and owned media". To make my point again, however, it is tough to make a living (unless you are at the lower end of the market) depending on earned and owned and eliminating paid.
    These days it seems like it is politically correct to blast outbound, but it is not politically correct to defend outbound's place in the mix. My philosophy is that eliminating proactive outbound from the mix is like "playing solitaire till dawn with a deck of 51" (thanks for the Statler Brothers and thanks, too, for the next line which is "smoking cigarettes and watching Captain Kangaroo - now don't tell me, I've nothing to do")...
    Just sayin'

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