Monday, March 19, 2012

What is the Right Mix of Inbound and Outbound Marketing?

Marketing pundits have been debating the merits of inbound vs. outbound marketing for the past few years. Advocates of inbound marketing contend that traditional outbound marketing tactics have become ineffective because of changes in buyer behavior. Some argue that companies should completely abandon outbound marketing and rely exclusively on inbound techniques. More traditional marketers acknowledge that inbound marketing is important, but they contend that most companies still need outbound marketing, and that it can still be effective, if it's done right.

There are persuasive arguments and convincing evidence on both sides of this debate. My focus is B2B marketing, and in my opinion, most B2B companies need both inbound and outbound marketing. The important question is not which type of marketing to use, but rather what mix of inbound and outbound marketing will produce the best results.

Marketing has four major functions in most B2B companies.
  • Customer acquisition
  • Customer retention
  • Expanding customer relationships (cross-selling, etc.)
  • Reactivating relationships with dormant or "lost" customers
The real issue for B2B marketers is how to combine the use of inbound and outbound marketing tactics to achieve the maximum results in all of these functions. The diagram below illustrates the relative importance of inbound and outbound marketing in performing each marketing function. (Note:  In B2B companies with long, complex sales cycles, customer acquisition marketing consists of two distinct components - lead acquisition and lead nurturing. Therefore, the diagram shows five functions rather than four.)

In today's B2B buying environment, the importance of inbound marketing can't be denied. Business buyers (whether prospects or customers) now expect companies to provide valuable information on a consistent basis in a variety of venues, including blogs and other inbound marketing channels. Therefore, inbound marketing is now playing an important role in all marketing functions.

What may raise a few eyebrows is my take on the relative importance of inbound and outbound marketing for lead acquisition. Outbound marketing and sales prospecting have traditionally been the dominant tactics for acquiring new leads in many B2B companies. The landscape, however, has changed. Today's business buyers have easy access to a wealth of information, and they've become convinced they can find whatever information they need, whenever they need it. So, they are far less likely to respond to outbound marketing and sales efforts from companies they don't know. The result is that outbound lead acquisition programs aren't nearly as effective as they once were.

These circumstances are driving a shift to inbound marketing for lead acquisition, and the shift will continue to grow. Research firm SiriusDecisions has said that 80% of new leads will come from inbound marketing by 2015.

The bottom line? Both inbound and outbound marketing are necessary components of an effective B2B marketing effort. Inbound marketing should be the primary tactic used for lead acquisition, if not immediately, then in the very near future. Outbound marketing (primarily in the form of behavior-driven e-mail content offers) should play the leading role in lead nurturing. For customer retention, customer expansion, and customer reactivation, inbound and outbound should be given nearly equal emphasis.

Do you agree? How are you balancing the use of inbound and outbound marketing?

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