Inbound and Outbound Lead Generation: Head-to-Head Comparison

Before we begin talking about lead generation, you need to know a couple of terms:

1. Inbound lead generation - it focuses on activities that will bring the customer to the business. This mechanism includes content marketing, search engine marketing, and social media marketing.

2. Outbound lead generation - it takes the business to the prospect with the hopes of converting them as a lead.

3. A prospect - a person who fits the Ideal Customer Persona of your target market. He/she is bound to have problems and pain areas that your business is trying to solve.

4. A lead - a prospect who has shown interest in your product or service. They have acknowledged that they are facing the problems and pain areas that you are trying to solve and are on the lookout for a solution.

Understanding inbound lead generation

Inbound approaches lead generation in a strategic way. It follows the funnel wherein the customer’s journey begins with awareness, nudges into interest, then a desire to purchase is formed, which finally culminates with the action of purchase. This is where you can integrate various types of communication tools to ensure the effective delivery of messages to your target audience and to track performance metrics.

Since the inbound generation uses content as a major medium of lead generation, the funnel is also often referred to as the content funnel. A content funnel is again segmented into multiple stages — ToFU (Top of the Funnel), MoFU (Middle of the Funnel), BoFU (Bottom of the Funnel).

At each stage of the funnel, content is prepared and presented in various formats. The purpose of content is to create awareness in the prospect, provoke interest, or educate them to make an informed decision.

It is no surprise that businesses also nudge users into consuming content in copious amounts. The pop-ups that nudge you to download an eBook, or attend a webinar, download a white paper, are all inbound lead generation at work.

When the user initiates an action to consume any of these collaterals, they are greeted with a signup form where their name, email address, or even additional information like phone number, company name, company size, etc., are requested to be submitted.

Some businesses might even go to the extent of fixing an appointment for meeting the prospect who signs up.

Understanding outbound lead generation

Outbound lead generation focuses on activities where the sales reps reach out to customers through cold calling, cold emails, networking, events, etc. It is considered to be the traditional and most popular lead-generation process until digital marketing came into the foray and made inbound lead-gen popular.

In the outbound mechanism, the sales and marketing team tries to engage a large audience of prospects in a conversation that might ultimately result in a lead.

The meetings and conversations happen in person at an event, a conference, or a scheduled meeting. When distance becomes a barrier, this often takes the form of telephonic conversations. These calls are referred to as ‘cold calls’. Alternatively, the marketing and sales team might also resort to direct mailing, networking events, etc., to build a lead pipeline.

The differences between inbound and outbound lead generation

Both mechanisms have their own pros and cons. Also, there are specific scenarios when one mechanism proves to be a better alternative than the other. How and when to leverage inbound and outbound lead generation forms the premise of this blog. To decide which lead generation mechanism to use when it is necessary to understand what sets them apart in the first place.

Here are the major differentiators between inbound and outbound lead generation:

Mode of working

The inbound mechanism is permission-based, implying that the prospects willingly come to the business and sign up for the products or offer their information to be contacted.

Outbound lead generation is interruption-based, implying it reaches prospects that the marketer or sales rep has identified as a worthy target to pursue. The prospect may not be aware of the business and would not have voluntarily provided their information to be contacted. However, consent to be contacted may have been offered earlier to be contacted for sales and marketing purposes.

Channels used

Inbound lead generation uses channels like SEO, content, social media, email marketing, etc. These are channels that enable pull marketing.

Outbound lead generation primarily uses cold calling, purchases email lists, paid display advertising, pay per click, network native advertising and so on.

Costs involved

Unlike any other lead-gen mechanism, in inbound, the cost per lead decreases gradually once the inbound machinery starts working. The costs involved are restricted to creating content, building backlinks, sponsored costs on publications, and so on.

Outbound requires significant investment in the form of purchasing email lists, phone numbers, advertisement slots (online and offline), etc.

Inbound lead generation - Best suitable scenarios

Here are some specific scenarios where inbound lead generation will work the best.

High volumes

When there are too many prospects to chase or satisfy, inbound lead generation works best. It brings the prospect to the offering rather than the other way around. Also, inbound lead generation can be automated with the help of website live chat software, AI chatbots, lead-gen forms, landing pages, and so on. It requires minimal human intervention, making it suitable for high-volume lead generation.

Uniform pricing

Inbound lead generation works best when there is no need to explain pricing to each individual prospect. When the prices are fixed, properly packaged, and well-communicated, it makes it easy for the prospect to make a decision.

Net-savvy user personas

Prospects who primarily take it to the internet to find information are best targeted with inbound lead generation. They know the various platforms, portals, and channels through which information can be sought and a product be found to meet their demands.

Outbound lead generation - Best suitable scenarios

There are scenarios when inbound does not work, and outbound has to flex its old-school arms to win the deal. Here are some of them:

Big budget leads

High-value deals or long lifetime values are best approached through the outbound channel. It creates an environment where the sales team can meet the prospect in person and convince them of the various aspects that make the product an ideal choice. It helps remove any ambiguity that the prospect might be having while considering and comparing the product with other alternatives.

Involvement of multiple stakeholders

Any typical high-value deal or those deals pertaining to the B2B space will involve multiple stakeholders. The stakeholders take the final decision after combined discussions about the ideal pricing plan, the necessary features, customizations, if any required, etc.

Poaching competitor deals

Every marketer and sales rep worth his/her salt, at some point in time, would want to poach a big-ticket deal from their competitor. This is a common practice in every space, more so prevalent in the B2B space. When it comes to winning over the competition, outbound tactics are more effective than inbound lead generation. They help create a personal connection with the prospect that will pave to a successful deal.

Bringing it all together

Every single effort that a marketing and sales team puts in is directed towards bringing in leads. Unfortunately, not all leads convert into deals. There will be some amount of spill, which makes it necessary to generate as many leads as possible. That said, there are two ways leads can be generated. They are inbound and outbound lead generation. It is worth noting that each mechanism has its own way of functioning and as a result, the volume of leads generated will also vary.