The dollars and sense of inbound vs. outbound marketing.

The economic downturn over the past few years has driven many talented yet unemployed people to start their own businesses. These folks take their years of experience and offer it to other businesses through their own specialty consulting or service firm — a firm that they must then market.

Just such an individual contacted me last week. He wanted to generate leads and business via outbound email marketing; however, after learning that he has a few clients, a relatively short buy cycle and a very limited budget, I recommended that he use inbound marketing and supplement it with personal outbound phone calls to his highly targeted B2B market.

OUTBOUND
Email marketing is relatively low cost when a company has built a pipeline of leads and handles its own email distribution via marketing automation. But for outbound marketing (that is going to a targeted B2B list) the costs add up fast.

Quality outbound email marketing lists (those that are made of real subscribers to an online publication and are therefore fully opt-in and have been profiled) cost from $400-$700 per thousand. Most of these top-quality lists require a 5000-name minimum, which raises the list cost to $2000 to $3500. Marketing professionals, including me, recommend testing more than one list at a time. Testing allows marketers to learn which list performs best and gives them the insight to improve the success of each subsequent marketing effort. Testing just two lists brings the cost up to $4000-$7000. If a marketer wants to maximize the success of the program, the message should be written and designed by professionals, which adds to the cost as well.

As a result of these higher upfront costs, many marketers avoid the outbound direct mail channel. Yet it is still one of the most powerful channels for B2B lead generation if done according to best practices. That means that, for lead generation, the mailing quantity must be large enough to deliver a response rate that is statistically valid so the results are repeatable on future mailings. In the B2B world this could be a minimum of 10,000 prospects at a typical cost of $1 each and up. For companies selling high-end enterprise systems, this approach is affordable and productive. But not for small start-ups.

INBOUND
Inbound marketing, on the other hand, is very affordable for the small and start-up business. Good-quality Web site SEO can be obtained for as little as $250 per month. Pay-per-click ads — depending on the market, keywords, etc. — can range from as little as $250 to $1000 per month or more. The same general costs apply to content syndication. Social media costs little in dollars but can cost much in time for a one-person business if done properly. There are many other elements in a comprehensive inbound marketing program, but, for small start-ups, it’s a cost-effective option.

OUTBOUND AGAIN
In addition, however, I recommended that this new business owner not wait exclusively for inbound efforts to make his phone ring. I advised him to identify companies that meet his very targeted profile and pick up the phone and call them or send them individual letters.

As I’ve said many times before, no single marketing approach can stand on its own, B2B marketers. That’s why dollars and sense enter into our marketing decisions.

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2 Comments

  • By Eric Goldman, June 15, 2010 @ 2:47 pm

    An excellent post – thanks for sharing. As someone involved with Inbound Marketing and Marketing Automation, or what I call Inbound Marketing Automation, your suggestion to use both Inbound as the long term strategy and to use Outbound as a way to derive some sales while you wait for the funnel to build, is the only way to go.
    But if I may, I would like to add something to the discussion. Inbound Marketing Automation (IMA) is a process – it is not just a collection of tools and techniques. If you don’t design the right approach (process), you will spend money and not gain your objectives. And it helps to think of this process as consisting of 4 sub-processes. In each one, you focus on a specific activity:
    1) Attract more visitors to your website through Search Engine Optimization, Social Media Marketing, and Pay Per Click advertising.
    2) Engage those visitors’ attention with industry leading content (website copy, white papers, videos, podcasts). Match the content to the prospect’s buying cycle to ensure you can nurture them around the cycle (see below).
    3) Qualify these visitors by grading their profiles and using their digital footprints to rack up a score and hence “know” their quality. And then, nurture them from cold leads to hot prospects with multi-touch drip email campaigns. emails which send just the “right” piece of information to the prospect to help move him or her to the next stage of their buying cycle.
    4) Automatically feed these hot sales ready prospects directly into your CRM and automatically notify the assigned sales rep (based on product or territory or whatever…).

    Our website contains a Resource Library of white papers, tools, videos and an extensive glossary, all covering Inbound Marketing Automation in more detail.

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