Inbound vs. outbound leads: Which is the best approach?

Key takeaways

• Inbound leads are potential customers who find your business on their own, such as through a search engine or social media
• Outbound lead generation requires you (or your sales team) to initiate contact with potential customers who might have never heard about your business
• Both inbound and outbound leads have their pros and cons and are suitable for different types of businesses and stages of the customer journey

Attracting customers is a key part of growing a small business. And the right marketing strategies for you will depend on what products or services you offer, who your target audience is, and how much your budget allows you to spend on lead generation.

Inbound and outbound marketing can both result in lead generation, but they each have unique pros, cons, and use cases. Learn about the difference between inbound vs. outbound leads and how to determine which lead generation method is right for your business.

What is the difference between inbound vs. outbound leads?

Inbound vs. outbound leads aren’t polar opposites, and your business may benefit from both of these lead generation strategies over time. Still, there are key differences between them that make them suitable for different stages of the customer journey.

In short, inbound leads are potential customers who first initiate contact with you, and outbound leads are prospective customers to whom you reach out first.

Once you’ve established a lead, you can pursue similar strategies to convert a lead into a sale, but inbound leads are usually further along the sales pipeline. That’s because they’ve actively sought out your business rather than being approached out of the blue.

Types of inbound lead generation

Inbound lead generation means the customer contacts you first, but that isn’t where the lead generation process starts. You’ll still need to raise brand awareness to attract new customers and get them familiar with your product or company. Below are three ways of generating leads via inbound marketing.

Search engine optimization

Search engine optimization (SEO) is the practice of designing your website and filling it with pertinent content and keywords to increase the likelihood that search engines will recognize your site as an industry leader and put it in front of users searching for services and products you offer.

For example, if you run a carpet cleaning service, your website could contain pages that mention “stain removal” or “carpet cleaning”—along with the specific city or neighborhood your business operates in. 

When done properly, SEO can help your website show up higher in search results than other websites that offer similar goods or services. Once customers enter your website, you can collect their contact information using lead capture forms, chatbots, and other lead generation tools.

Social media marketing

Social media marketing is another inbound marketing strategy that can help you grow brand awareness and engage new leads on platforms they’re already visiting. By maintaining profiles on popular social media platforms, you can share useful content and invite customers to “follow” your brand for updates.

Unlike outbound marketing tactics that ask customers to make a decision right away, customers can get familiar with your brand over time and make a purchase when the feeling or need arises, like when there’s a sale or you extend special offers that appeal to them.

Content marketing

Content marketing refers to creating informative or educational content that establishes your brand as a leader in your industry or niche. If you’re a plumber, maybe it’s a blog where you share helpful draining tips or a podcast in which you interview other business owners related to your field, like a roofer or landscaper.

Although content marketing can overlap with other inbound marketing strategies, like social media, and can boost your SEO, it’s a broader term that includes everything from blog posts to ebooks, infographics, and webinars. To make the biggest impact, also consider using ebooks and webinars as lead magnets, offering free valuable content in return for a potential lead’s email address or contact info.

Content marketing can also help you increase word-of-mouth marketing and referral traffic, as people tend to naturally share high-quality content with their friends, colleagues, family members, and online communities, such as via Yelp reviews. (Nearly half of consumers trust customer reviews as much as recommendations from those closest to them, so online word-of-mouth can be extremely valuable.) 

Yelp tip: After you’ve claimed your business on Yelp, you’ll be able to receive inbound leads from potential customers using the Request-a-Quote feature. Once they initiate the request, they’re presented with a series of industry-specific questions about the job or service. That request then comes to your Yelp inbox, and you can communicate directly with the customer on Yelp.

Types of outbound lead generation

Outbound lead generation requires you or your sales team to take a more active role in the outreach process. Rather than launching a digital marketing campaign and waiting for new leads to come to you, outbound lead gen requires you to initiate first contact. Let’s look at three outbound lead generation strategies to consider.

Direct mail

Although postal mail volume has been declining for years, direct mail is a great example of outbound marketing. We’ve all received postcards or flyers in the mail letting us know about the new pizza shop or auto repair shop around the corner.

Direct mail can still play a role in the digital age, especially for brick-and-mortar businesses trying to reach customers in a specific geographic area. For SaaS and e-commerce businesses, the digital equivalent of direct mail is cold emailing. 

Unsolicited bulk emails are essentially spam, but some cold emails are legal, as long as your sales reps reach out to leads individually and don’t use automation to send out emails in bulk.

Cold calling

Cold calling is an outbound tactic in which a sales team reaches out to potential leads with a phone call. For example, a B2B company might focus their outbound marketing efforts on cold-calling decision-makers at high-value businesses.

As with cold emails, you’ll want to comply with telemarketing rules to avoid running into legal issues or damaging your brand’s reputation. Consider searching for quality leads on LinkedIn and researching them yourself rather than buying up lists of phone numbers of low-quality leads someone else has collected.

Display advertising

Display advertising includes everything from traditional marketing tactics like billboards to digital ads and pay-per-click (PPC) campaigns. Some types of ads are considered “interruption marketing” because they appear when potential leads are doing other things, such as watching a video or visiting a web page.

Digital ads have the potential to reach a large audience very quickly and can be targeted based on factors like geography and behavior. With some types of digital ads, such as cost-per-click (CPC) campaigns, you can set spending limits so you don’t go over budget. 

For instance, when you invest in Yelp Ads, your business listing shows up in a number of key places on the site and app, including above relevant search results and on your competitors’ pages. Businesses with Yelp Ads earn 2.5x more leads than those without.

Inbound vs. outbound leads compared

Whether or not to focus on inbound vs. outbound leads depends on your business, target audience, and marketing budget. Both types of lead gen have the potential to benefit your business, but they also have their drawbacks. Here’s how inbound vs. outbound leads compare in three different areas.

Speed

The inbound sales process can take longer to show results, as you need to wait for your website to generate traffic or your content marketing campaign to go viral. But when new leads do initiate contact, they’re typically further along in the sales funnel. Inbound leads have had time to get to know your business, read online reviews, and decide whether or not they really need your product or service.

Outbound leads, on the other hand, may initially be skeptical of your business or even annoyed at receiving a cold call or email. It may take longer to make a sale, but with outbound leads, you’re able to control the volume—meaning you can reach out to as many leads as you’d like to try to gain more sales.

Cost

Outbound sales campaigns typically cost more than inbound campaigns. You may need more salespeople to cold call outbound leads than when fielding calls from inbound leads. If you use display ads, you’ll also need to keep track of your ad spend (or use a platform that lets you set a maximum budget).

Inbound campaigns may take longer to show a return on investment, but once you’ve created a high-converting landing page or lead magnet and increased your visibility to your target audience, the effort can pay off for years.

Effort

Lead nurturing takes time and effort no matter how a lead was generated. It can take multiple follow-ups before a lead becomes a paying customer. But identifying quality leads through outbound marketing can require more effort. Your marketing team may need to do more research to identify your target audience or to narrow down a list of qualified leads on LinkedIn.

On the other hand, an inbound lead who signs up for your newsletter or a free trial has already identified themselves as a promising lead.

Which is better: inbound vs. outbound leads?

Inbound lead generation is an effective way to build brand awareness and steadily grow your customer base. But if you want to get the word out about a new product quickly, or if you want to focus your marketing efforts on a specific type of customer, outbound marketing can give you more control over the lead generation process.

As more potential customers roll in, learn five steps for how to manage leads more effectively.