Are “inbound” marketing efforts producing more cost effective results?

In a recent article in B2Bonline entitled “Study: ‘Inbound’ marketing rates high in lead-gen results” one would be led to believe that this is the case. 

Cambridge, Mass.—Inbound marketing, including techniques such as blogging, social media, search engine optimization and pay-per-click, which pull relevant prospects toward a business and its products, realize lower costs-per lead than outbound marketing efforts, according to a new report by Internet marketing company HubSpot.

The company’s report, “State of Inbound Marketing,” is based on an online survey performed late last year among 167 executives and business owners, 71% of whom work for b-to-b companies.

The survey found that respondents who spent 50% or more of their lead-generation budget on inbound marketing averaged $84 per lead, while businesses spending half or more of their budgets on such outbound marketing techniques as direct mail, telemarketing and trade shows averaged $220 per lead.

Search leads the pack in lead-generation efficiency. Survey respondents said they devoted an average of 12% of their budgets to search but gained 16% of their leads from their search marketing efforts.

So let’s examine the facts. 

Unfortunately HubSpot appears to have made an unfair  comparison.  The Inbound Leads referred to here are not leads at all.  They are mostly “hand raisers”, that is to say they have merely  inquired and we have no way of knowing how genuine each inquiry is.

This is because the ‘so called’ leads have not been qualified to ascertain quality. Their potential is unknown.

No one has established the value of their potential; their decision making processes; their purchasing timeframe; their budgets.  Etc.

All these aspects and more can only be ascertained by someone who has the experience to engage with the prospect and peel away at the onion in order to establish if the lead is worth the investment of a sales person’s expensive selling time.

Leads without qualification have little value to salespersons whose standard of living depends on the volume of their sales. In many instances the most experienced salespersons will not follow through on unqualified leads because it doesn’t pay them. In that event the total cost of the cheap leads would be wasted.  And your actual cost per qualified lead and sale will skyrocket.

eti statistics show that only a very small percentage of these types of  “low cost” inquiries actually convert to highly qualified leads.  Based on thousands of inquiries of this type – over any number of industries -  we can say with certainly that the range of conversion is between 5% and 15%.  If you take the mean of 10% you can then ascertain that the true cost per lead (based on their $84 average) is $840  - or 10 times what they claim.

That’s substantially higher than the cost of qualified leads from the other media mentioned.�

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