Recently I had a conversation with a fellow marketer who challenged the notion that inbound leads costs less. They pointed to the high cost per lead of some paid search (PPC) campaigns as evidence. I tried to identify the challenges of using paid search as a proof point that pull marketing is not a cheaper, more effective approach.
One of the great benefits of blogging is that it allows me to think a little longer on how best to respond to really important questions like these. So in this post, I will make my best attempt to show that inbound leads do indeed cost less. I will point to some research from Hubspot that quantifies the fact that inbound leads cost significantly less than traditional demand generation. I will also talk about how this is only part of the story because inbound marketing is about understanding the current market landscape. It’s about lining up marketing efforts more closely to the buying process. And it is about earning a prospect’s business vs. buying it.
What is Inbound Marketing?
Inbound marketing also known as “pull marketing” uses content to attract a desired audience. The buyer is in control and decides whether to act on the content or not. It is typically more persistent or “always-on” as the content is placed where buyers tend to go seeking information. Common inbound marketing tactics include both paid and organic content placements on the company’s or other’s website, blogs, click-to-call and click-to-chat, search engine marketing techniques and social sharing. More simply, “pull marketing” uses content on the web, search and social to attract a desired audience and then uses personalization and response management resources to convert that traffic to leads, pipeline and deals.
Market Forces Driving The Need For Change
There are some significant forces at work that are driving many marketers to change the approach they take to marketing from an outbound push to more of an inbound pull approach:
- Buyers are tuning out of traditional push-based messages lowering response rates and increasing marketing costs per lead.
- Buyers are in control of their own buying process. The mobile internet and social web allow them to find the information they need, when they want it.
- Buyers are shifting their time spent on Digital channels. Internet access, mobile browsing and social networking are all conspiring to deliver information, education and entertainment to all of us on demand – where and when we want and need it.
- Content is nearly ubiquitous and the expectation is often that it should be “free.” Content has become shorter, less “serious” and more informal, social and “scan-able” on a mobile device.
- Marketing departments are being asked to deliver higher yields – to be more efficient in delivering higher business results on a relatively flat budget in the face of buyers who are increasingly rejecting marketing messages.
- Marketers are acting as publishers. To respond to this, leading marketers are seeking to deliver information to buyers earlier in the buying process, with more un-gated, social, informal and educational information that is not about their products and services but that meets buyers needs in this fragmented, multi-format, always-on world.
Inbound Marketing Leads Cost Significantly Less
One of the main reasons marketers are shifting their focus and their budgets away from traditional tactics is because of the theory that inbound leads costs less. At the recent SiriusDecisions B2B Marketing Summit, Jay Gaines (@izjay) announced that “inbound leads cost less and convert at significantly higher rates than outbound.” He continued, “and the difference is significant and quantifiable!”
But don’t just take his word for it. Marketing platform provider Hubspot has been delivering research to support this notion for over 3 years. In 2012, their State of Inbound Marketing report declared that inbound leads cost 61% less than traditional outbound. The trend has remained relatively constant, shifting only 1% from 2011’s 62% cheaper:
Which Marketing Tactics Perform The Best?
The report also shows that Blogs, Social Media and Search drive the lowest cost per lead and that paid search (PPC) truly is more expensive than some outbound tactics except trade shows / events:
Cost Per Lead Is Not The Only Reason To Shift to Inbound Marketing
The main reason to shift more marketing resources to inbound marketing tactics is simple: customers!
Inbound marketing seeks to help our buyers in their journey by providing valuable information. Inbound marketing is the marketing of attraction and earns a business the right to gain a customer. The real reason to shift to inbound marketing is that it is simply a more sustainable business model because it lines marketing up to customers. It is the reason I became a marketer. It is the reason marketing exists: to bridge the gap between our buyers and business.