Inbound vs. Outbound Leads: What’s the Difference?
More leads, more clients, and more revenue.
We all want it. All of it.
The question is: what’s the best way to drive more leads, clients, and revenue in your business?
The fastest way is to work with what you already have. Once you’ve exhausted your existing network (for now at least), lead generation is the next step.
When it comes to lead generation, the obvious question is whether to do inbound vs. outbound.
Inbound leads are leads that initiate contact with you directly or through referral channels. It might be that someone found out about you through social media, read your content, or got a direct referral from a friend or colleague.
Outbound leads are developed through proactive, direct contact initiated by you. These are “cold” leads. That is, an outbound lead has not voluntarily opted into any communication with you. You found them when doing a Google or LinkedIn search, used sophisticated scraping methods, or just had a list of dream accounts and decided to reach out to them.
Navigating which one is “best” isn’t a simple decision. At this point, you’re probably wondering, ”Which one should I do? Inbound or outbound?”
The question largely depends on your business model, your customers, and your ability to invest.
I’ll rate inbound vs. outbound leads based on these factors:
Speed of Execution
Trust and Credibility
Investment and Return
Speed of Execution
Inbound Speed of Execution
In a word: slow. Patience is required here.
Inbound lead generation is a slow process if you’re relying on organic channels like search, referrals, or word of mouth. You can speed up your results by using marketing partnerships, but it’s a more advanced technique. A big part of inbound lead gen is content creation, which takes a lot of time not only to make but also to distribute and get noticed.
With the competition for attention today, having multiple promotional channels to amplify content is critical, meaning you’ll multiply your management and promotional tasks, too. Overall, it’s a lot of work!
Outbound Speed of Execution
If you wanted to launch an outbound campaign right now – as in, stop reading this, start it, and watch the results come in – you could!
There are few barriers to running outbound lead generation campaigns, and the speed of your lead flow is much faster. If you’re well-versed in email copy, email tools, and building lists, then outbound is an easy way to get more leads in the door today.
Speed of Execution Winner: Outbound
If your primary concern is making something happen right away, outbound is your choice. It’s fast, and there’s a lower cost of failure since you can collect feedback in a matter of days or weeks, not months.
If you’ve looked into inbound marketing or demand generation at all, you’ve confronted buyer personas, demographic targeting, or account-based marketing. All of these concepts can help steer your inbound strategy, but they don’t come with a guarantee.
For instance, even though I talk about sales, I focus the conversation on sales as they pertain to freelancers and consultants. Which is to say, I have a better chance of the right people reading my content, or getting referred to me, but I don’t have total control.
My control over the people I target with inbound lead generation is limited. The places I promote content, how I create and build the content, and my positioning statement all influence the quality and accuracy of my targeting. But ultimately, it’s up to other people to control lead flow, or if I’m a provider that can help them.
Lasers. Powerful, highly-focused, sophisticated lasers.
That’s what you can use to target your outbound campaigns, especially with a tool like LinkedIn Sales Navigator. Do you want to focus on Directors of Marketing at companies with 200-500 employees in the computer software industry, with Marketo installed on their website and at least 100% headcount growth in the last year? No problem! That’s the level of specificity you can target in the earliest days of your outbound campaigns, and that’s just the beginning.
You can also target specific accounts. This level of targeting is often called Account-Based Marketing (ABM) or Account-Based Selling (ABS). So instead of targeting a particular title, you can make a list of your top 50 dream accounts, find 3-5 people at each company or organization, and reach out to them individually to start a conversation.
Targeting Winner: Outbound
Outbound shines in its ability to target specific people and companies. Your inbound program, if done right, will attract the right people, but you don’t have the level of control that outbound offers.
Timing is critical in sales. As in, is now the right time for this person to buy? If you’re selling higher-end services, active buying cycles can sometimes take 6-12 months. The bigger the company you target, the longer the sales cycle is likely to be.
Therefore, the timing of your buyer’s cycle is a consideration when weighing the relative benefits of inbound vs. outbound leads.
The sales cycle of an inbound lead is quite a bit shorter since inbound prospects have typically researched their problems, the solutions and options in the market, and trust you (otherwise you wouldn’t hear from them in the first place). It’s hard to say the exact difference between inbound and outbound leads, but my experience is that my inbound sales cycle is typically 3-5x faster than outbound.
Picture it. It’s the start of your workday. You have your list of things to do. You have your coffee. You open up your inbox to power through it, responding to the emails that have come in. Then you see it. A solicitation.
At no point in your morning routine did you think, ”I hope someone tries to sell me something this morning. That’d make my day!”
That is the first challenge of outbound.
The people you contact are unlikely to be in a buying cycle now, they’re unlikely to know you, they almost certainly don’t trust you, and you have to figure out how to close the gap on each of these points. Whereas inbound does most of this work for you, outbound requires it 1-to-1 with every lead that responds to your campaigns.
Timing Winner: Inbound
Inbound is the clear and unequivocal winner when it comes to timing (from the time a lead comes in to close). The reason is simple: whenever an inbound lead lands in your lap, it’s because they’re thinking about buying right now. And because they thought you, of all people in the world, might be especially suited to help them.
I have a background in copywriting. When it came to putting words on a page that drove action, I spent a lot of time researching the level of awareness a website visitor was likely to have before they viewed the marketing or sales message.
I’m a big fan of Eugene Schwartz’s level of awareness map:
Before selling anything, it’s valuable to know answers to these questions:
Does the person know they have a problem?
Does the person know that solutions to the problem exist?
Does the person know that I can provide a solution?
When it comes to sales, this model is critically important. The less aware a buyer is, the longer the sale. So if you contact someone who doesn’t know they have a problem, you first have to educate them about their problem and all of the pain it causes. With this backdrop, I’ll cover how the likely differences in awareness between inbound vs. outbound leads.
I’ve already detailed the two most likely ways you’ll get an inbound lead: a referral, or someone is exposed to your content and contacts you. In both cases, the person is sure they have a problem. They’re sure there’s a solution. And they’re at least entertaining the idea that you have the solution they need.
In other words, their level awareness is quite high. They wouldn’t be a lead otherwise.
Where is outbound awareness as compared to inbound? Two points to make:
The level of awareness of any given outbound lead is unknown
The likelihood of a high-level awareness is relatively low
The better your targeting, the more likely your outbound leads have some awareness. The consistency will be much less, and on average your outbound leads will be much less aware. For those that aren’t problem aware, you won’t get a response in the first place. For those that are problem aware but not solution aware, you might get a response, but you’ll have to educate your prospect quite a bit.
The difference translates into a longer sales cycle and much more hands-on work throughout the sales process.
Awareness Winner: Inbound
Undoubtedly potential clients coming in through inbound will be much more aware of their problems, the solutions in the marketplace, and that you’re potentially suited to help them. These are all good things.
With the right targeting, you can increase the likelihood that outbound leads have a higher level of awareness if you’re using buying signals to develop your prospecting lists.
Trust and Credibility
Rather than tackling trust and credibility in inbound vs. outbound individually, it should be clear by now that one builds trust before the lead comes in (inbound), and one requires building trust after generating a lead (outbound).
Above, I talked about the speed of execution. There’s no doubt that outbound wins that category. One thing to consider, though, is that inbound lead generation builds trust and credibility first, often before you interact directly with a prospective client. By definition, someone trusts you, at least somewhat, before contacting you.
On the other hand, it’s you who is initiating contact in an outbound campaign. Your prospect is unlikely to know who you are, the work you’ve done, your client roster…they’re unlikely to know anything about you.
Trust and Credibility Winner: Inbound
Building trust and credibility is required long before you pitch yourself or your services. With inbound lead gen, your prospect trusts you before initiating a conversation. With outbound, you’ll have to invest considerable time educating your prospective client to develop trust and credibility after you’ve made contact.
Investment and Return
Inbound Investment and Return
Whenever I run a sales or marketing experiment, my friends, coaching clients, and just about anyone else I encounter asks: “what’s the ROI of activity X?” To which I respond, “I dunno.”
The truth about ROI is that you don’t know what it is until you try it. I’ve created and launched highly successful campaigns for others that I could never duplicate for myself. The opposite is true, too.
There’s just no way to know. The effectiveness of a given activity is dependent upon the variables: the target client, the offer, the packaging, the timing, and on.
One thing that is for sure, though, is this: when inbound lead gen works, it has staying power. Relationships or content you create today may pay off for the next decade. A single article can bring you dozens, hundreds, or even thousands of leads. A relationship with a critical referral source can double your business. Yes, it takes time and trial and error to achieve this level of success, but it’s possible and within reach.
The ROI of an individual inbound effort is impossible to predict. It’s possible to make an educated guess about the relative impact of one activity or another, but that’s about it. There’s a steep learning curve and high required investment here, but the returns can be massive and ongoing.
Outbound Investment and Return
Since the speed of execution for outbound campaigns is relatively fast (especially with the right tools), the investment isn’t that great. Building a list of qualified outbound client prospects will cost time and money, sure. But you won’t have to spend the 4 hours it took me to write this post you’re reading.
Since it’s unlikely that prospects in your outbound campaign 1) trust you, or 2) are ready to buy now, you’ll have to invest a lot of time staying on top of those prospects. Most outbound prospecting reps use an 8-15 touch model to work their leads. So it’s not a matter of building a list and sending one or two emails to each person; it’s creating a list, then sending 5 emails, a LinkedIn request, a Twitter message, and a LinkedIn. DM. Or more. The time investment to run these campaigns is pretty big once they launch.
With outbound, it’s quite easy to buy time. You can outsource research and prospecting. You can buy complex tools. Heck, you can even purchase lists of companies or prospects.
If you find a particular outbound campaign that works for you, the return can be fast and quite good. As opposed to inbound, though, your outbound campaigns are likely to have less staying power. You may have noticed that you get a higher volume of cold, outbound solicitations, which inevitably erode the effectiveness of your campaigns (or at least email as a channel).
Investment and Return Winner: Tie
I’d pose a question to you here: do you like to create content and high-leverage relationships? Or do you prefer to engage in dozens or even hundreds of sales conversations and opportunities?
One thing to note is that outbound works well for individuals and firms with higher ticket offerings, say $10k or above. If you don’t have a Customer Lifetime Value (CLV) that meets this threshold, outbound is unlikely to work for you.
On the one hand, inbound has a considerable upfront time (and energy) investment. Once your relationships and content are created, you can reuse them, often for years.
Outbound requires ongoing and consistent investment both in the campaigns you create and the backend work that comes with following up with leads.
Overall Quality: Inbound vs. Outbound
There are practically limitless numbers of freelancers and consultants in the marketplace. No matter the service you provide, your potential clients can realistically go elsewhere and have their problem solved. If they do, they won’t get you or your way of doing things, but it stands to reason that there’s someone out there that can help. You’re not the only choice.
And yet, if you receive an inbound lead, you’ve already been chosen. Something about you stood out to your potential client. Even if you’re just one of three possible providers in the consideration set, there’s so much trust already built that they may choose you. They contacted you of their volition, which also means now’s the right time to buy, and they trust you enough to get on the phone.
For these reasons, inbound leads are overall the highest quality leads because they’re coming to you. On average, potential clients coming in through inbound channels are in their buying cycle, trust you, and believe you can successfully do the work for them. Since they sought you out, you also have more leverage with inbound leads. They want you, and it’s up to you to work with them or not. The speed of the sales cycle with inbound leads is typically much faster, too.
When targeted correctly, outbound leads can be high quality and are much faster to develop since you can turn them on or off. Sometimes outbound leads are fantastic; sometimes they’re not. The advantage of outbound leads is that you have total control over who you contact, and therefore can be more assured that they’re a fit for you. However, they may not be ready to buy now. They may have low awareness of their problem or solution, and it’s unlikely that they trust you. A lot of the education that would’ve happened through content or other inbound channels needs to be done in the sales process.
I recommend you look at where you are in your business. It’s good to run both strategies together, knowing that inbound requires a slow build but yields high-quality opportunities. At the same time, do some outbound prospecting and pitching to at least start conversations with potential clients right away. It’s tempting to look at the inbound vs. outbound question as either/or, but I’d challenge you to ask a more nuanced question: what percentage of each will you do?