Music Men: Is the inbound marketing movement a con job?

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Today, we have a guest post from one of my favorites – Dan McDade. He is an all-timer, literally. I am lucky to get his contribution. Enjoy this post, it’s great plus who else can make a Music Man reference?

Here is Dan’s contribution, enjoy:

Robert Meredith Willson was an American composer, songwriter, conductor and playwright, best known for writing the book, music and lyrics for the hit Broadway musical The Music Man.

Inbound marketing, demand generation, outbound marketing

I love “The Music Man.”  This verse, from “76 Trombones,” is one of my favorites:

There were copper bottom tympani in horse platoons,
thundering, thundering, all along the way.
Double bell euphoniums and big bassoons,
each bassoon having his big fat say.

Beautiful words, but if you remember, the music man was a con artist.  He was good at creating a vision, selling a bunch of musical instruments and uniforms and then disappearing before the scam was uncovered.  All until Marian the librarian stole his heart… but that is another story.

I feel that the music men and women in our world today get attention because they are like bassoons “having his/her big fat say.” Who can argue with statements such as “70% of the buying process is complete before sales needs to get involved” or “inbound marketing is king and traditional marketing is dead”? – especially because most companies have done a consistently lousy job of measuring results and could not tell you whether or not a marketing or sales campaign worked if they had to.

An example of this is so-called inbound marketing.  Pundits (loudly) promise higher lead rates, higher close rates and above average deal size – all from media where you cannot control targeting and depend on un-validated scoring algorithms to determine whether or not a lead goes to sales.  In the impressive 2013 State of Inbound Marketing, HubSpot reports that “the lack of reliable metrics for reporting ROI is a major challenge for marketers” (speaking about inbound marketing).  I put it a different way: “inbound marketing allows companies to send more, unqualified leads to sales faster than ever before.”

Here are some statistics you might find interesting:

Inbound vs. Outbound Results (2010 – 2013 based on approximately 60,000 dispositions per year)

2010

2011

2012

2013 (YTD)

Overall Qualified Rate

26.5

26.9

28.5

28.6

Inbound

27.7

25.2

25.4

29.7

Outbound

25.7

27.3

28.9

28.4

Overall Lead Rate

6.3

4.3

4.8

5.9

Inbound

8.4

4.2

4.9

6.3

Outbound

5.0

4.4

4.8

5.8

 

As you can see, with the exception of the 2010 lead results the differences between inbound and outbound qualification and lead rates are not even statistically significant.  Why then spend money to drive inbound leads when inexpensive (comparatively), targeted suspects are readily available – and you can target your market much more effectively.

One of our clients is one of the largest software companies in the world.  Their marketing department loves inbound leads.  They produced approximately 6,000 from one source in 2013 at a cost of $23.15 per lead.  Unfortunately, the actual lead rate on that list was just 1.28% (against an average across all clients that year of 4.9%).  The cost per qualified lead in that case was $2,662.24 vs. $1,357.25 for proactive outbound leads.  In fact, EVERY OTHER SOURCE of inbound leads produced higher costs leads than proactive outbound efforts.  But, guess what?  Marketing gets paid on the number of leads generated so the decision was made to stop prequalifying those so-called leads and send them directly to sales.  Oy vey!  I know for a fact that none of them are followed up because I know the VP who owns that sales group.

I am not anti-inbound, just pro-sanity.  If you want to drive better results, you better balance your investments and calculate the actual cost per qualified lead, not just the cost per raw lead.

Otherwise, you are getting scammed by the music men and women in your industry.
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About Dan McDade

Dan McDade is President and CEO of PointClear, LLC, a prospect development firm that helps B2B companies drive revenue by nurturing leads, engaging contacts and developing prospects until they’re ready to purchase. The Sales Lead Management Association named Dan one of the 50 most influential people in sales lead management for the last four consecutive years. Dan’s first book, The Truth About Leads, is a practical, easy-to-read book that helps B2B companies focus their lead-generation efforts, align their sales and marketing organizations and drive revenue. Read Dan’s blog: ViewPoint l The Truth About Lead Generation. Contact Dan by email: dan.mcdade@pointclear.com

Craig Rosenberg is the Funnelholic and a co-founder of Topo. He loves sales, marketing, and things that drive revenue. Follow him on Google+ or Twitter