Music Men: Is the inbound marketing movement a con job?

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Today, we have a guest post from one of my favorites – Dan McDade. He is an all-timer, literally. I am lucky to get his contribution. Enjoy this post, it’s great plus who else can make a Music Man reference?

Here is Dan’s contribution, enjoy:

Robert Meredith Willson was an American composer, songwriter, conductor and playwright, best known for writing the book, music and lyrics for the hit Broadway musical The Music Man.

Inbound marketing, demand generation, outbound marketing

I love “The Music Man.”  This verse, from “76 Trombones,” is one of my favorites:

There were copper bottom tympani in horse platoons,
thundering, thundering, all along the way.
Double bell euphoniums and big bassoons,
each bassoon having his big fat say.

Beautiful words, but if you remember, the music man was a con artist.  He was good at creating a vision, selling a bunch of musical instruments and uniforms and then disappearing before the scam was uncovered.  All until Marian the librarian stole his heart… but that is another story.

I feel that the music men and women in our world today get attention because they are like bassoons “having his/her big fat say.” Who can argue with statements such as “70% of the buying process is complete before sales needs to get involved” or “inbound marketing is king and traditional marketing is dead”? – especially because most companies have done a consistently lousy job of measuring results and could not tell you whether or not a marketing or sales campaign worked if they had to.

An example of this is so-called inbound marketing.  Pundits (loudly) promise higher lead rates, higher close rates and above average deal size – all from media where you cannot control targeting and depend on un-validated scoring algorithms to determine whether or not a lead goes to sales.  In the impressive 2013 State of Inbound Marketing, HubSpot reports that “the lack of reliable metrics for reporting ROI is a major challenge for marketers” (speaking about inbound marketing).  I put it a different way: “inbound marketing allows companies to send more, unqualified leads to sales faster than ever before.”

Here are some statistics you might find interesting:

Inbound vs. Outbound Results (2010 – 2013 based on approximately 60,000 dispositions per year)

2010

2011

2012

2013 (YTD)

Overall Qualified Rate

26.5

26.9

28.5

28.6

Inbound

27.7

25.2

25.4

29.7

Outbound

25.7

27.3

28.9

28.4

Overall Lead Rate

6.3

4.3

4.8

5.9

Inbound

8.4

4.2

4.9

6.3

Outbound

5.0

4.4

4.8

5.8

 

As you can see, with the exception of the 2010 lead results the differences between inbound and outbound qualification and lead rates are not even statistically significant.  Why then spend money to drive inbound leads when inexpensive (comparatively), targeted suspects are readily available – and you can target your market much more effectively.

One of our clients is one of the largest software companies in the world.  Their marketing department loves inbound leads.  They produced approximately 6,000 from one source in 2013 at a cost of $23.15 per lead.  Unfortunately, the actual lead rate on that list was just 1.28% (against an average across all clients that year of 4.9%).  The cost per qualified lead in that case was $2,662.24 vs. $1,357.25 for proactive outbound leads.  In fact, EVERY OTHER SOURCE of inbound leads produced higher costs leads than proactive outbound efforts.  But, guess what?  Marketing gets paid on the number of leads generated so the decision was made to stop prequalifying those so-called leads and send them directly to sales.  Oy vey!  I know for a fact that none of them are followed up because I know the VP who owns that sales group.

I am not anti-inbound, just pro-sanity.  If you want to drive better results, you better balance your investments and calculate the actual cost per qualified lead, not just the cost per raw lead.

Otherwise, you are getting scammed by the music men and women in your industry.
Please join or share our Virtual Sales Summit: Quota Busting Strategies from the World’s Best Sales Leaders on October 2nd.  RSVP NOW.

About Dan McDade

Dan McDade is President and CEO of PointClear, LLC, a prospect development firm that helps B2B companies drive revenue by nurturing leads, engaging contacts and developing prospects until they’re ready to purchase. The Sales Lead Management Association named Dan one of the 50 most influential people in sales lead management for the last four consecutive years. Dan’s first book, The Truth About Leads, is a practical, easy-to-read book that helps B2B companies focus their lead-generation efforts, align their sales and marketing organizations and drive revenue. Read Dan’s blog: ViewPoint l The Truth About Lead Generation. Contact Dan by email: dan.mcdade@pointclear.com

Craig Rosenberg is the Funnelholic and a co-founder of Topo. He loves sales, marketing, and things that drive revenue. Follow him on Google+ or Twitter

  • Dan McDade

    Ummm…, Mike, Mike, Mike… and here we are loyal, very positive Hubspot clients… why do you say: Mike Volpe ‏@mvolpe
    17h
    @funnelholic ugh. Surprised you think one poorly executed campaign refutes thousands of success stories. 🙁
    I would hardly call over 200,000 dispositions over 3.5 years a “poorly executed campaign”. Hey Mike, we are actually on your side. We just don’t go all in for inbound. We go all in for ALLBOUND. Thanks for your comment.

  • Inbound marketing is great, and it works, but inbound along can’t be counted on to consistently drive the revenue & sales growth you need. By definition, inbound usually means lower-quality leads in the mix. If you can get enough high-quality inbound leads to adequately fill your pipeline, great. But most companies need to augment inbound with other channels to consistently and confidently fill their pipeline with in-profile, qualified, ready-to-buy prospects.

  • Dan, this is the conversation that many in Inbound marketing do not want to talk about, but is critical to have. The fact that outbound prospecting STILL offers clear, successful results is contrary to many who claim inbound is all one needs. Our preference is a combination of outbound, inbound and referral selling. Love the “allbound” term. Keep the conversation going! In the end, all of our companies want net-new business. Perhaps we can work together toward that end result.

  • Interesting article, Dan. I agree that chucking your entire outbound strategy isn’t the way to go. I see inbound marketing as building a foundation of trust, so that when prospects are contacted by your sales team, they’re more likely to know you by reputation. And that, of course, makes them more likely to seriously consider your pitch.

  • Ugh, hate the this versus that argument. Inbound marketing can be an enormous benefit (and should be) to your outbound strategies. Capturing information to prequalify prospects, providing value through content, helping sway the decision-making cycle, nurturing prospects that aren’t ready to engage… all of these strategies make it easier for your outbound strategy to succeed.

    The other element that you’re missing is the ‘softening’ of a prospect through inbound marketing. Having an identifiable brand that is discussed in professional circles adds authority and trust to the engagement.

    In short, businesses (and consumers) don’t sit around waiting for an outbound strategy to find them and begin calling on them. They go scour the search engines, they ask questions in social networks, they read websites and download content for additional information. If your company isn’t there when that happens, you’re in trouble.

  • Chris Beall

    In our shop, inbounds are an OK lead source, but we get the best bang for the buck by having our reps each have 80 – 100 conversations per week with contextual leads we source for them. Some are inbound, many are outbound, and most turn into unscheduled follow ups and referrals (prospects are busy and move around a lot). Instead of waiting around for the perfect moment, our reps load a list NOW, click a button NOW and talk to someone NOW. Allbound is great, but the main thing is to be having real sales conversations NOW rather than waiting for perfection to walk in the door.

  • Dan McDade

    Great comments, ALL! We just heard from a client yesterday that in the past two years our proactive, outbound leads have generated $30,000,000 in closed deals (contact me if you want some more details). Waiting for the market to come to you (except maybe low-end commodity solutions) ignores the value of qualified companies with latent pain just waiting to be sold. Lori Richardson’s comment about balance was echoed by many and is, I believe, the key to success. Thanks to everyone who commented.

  • Lisa Fugere

    fantastic article. thank you for sharing. we sell to orgs that still employ thousands of cold callers to qualify leads. Maybe it’s outdated, but it’s the reality of their business. I’d wager that even the companies that promote inbound the most still buy lead lists and database subscriptions to fuel their outbound sales reps.

  • 360Improv

    Superb article Dan (I follow your youtube channel – terrific interviews, thanks for that!) – serious food for thought:

    my 2c: In my experience the pragmatic way to apply Content is use it for Outbound first – then based on what’s working there spend more time pushing out for Inbound: develop thought leadership / insightful / helpful, varied, and (though on-going testing) increasingly relevant content to fuel email marketing campaigns (a debate about whether to use existing opted lists and/or purchased emails from the likes of Netprospex, maybe out of scope here) – and also the Content would be available for sales to selectively draw upon to provide one to one delivery during the sales cycle / account management.

  • Space Gorilla

    I tend to not like buzzwords like ‘inbound marketing’, or outbound for that matter. It’s all just storytelling and conversation. Your business has a story to tell, value to provide. Find the places where your story can intersect with your customers and give people information that is meaningful and valuable. Tell your story. Talk to your customers. Does it matter whether it is ‘inbound’ or ‘outbound’?