Table of Contents
Key Takeaways:
- Your Go To Market (GTM) Strategy must match your business model
- Most SaaS businesses start with outbound and are in denial that this is a scalable long-term strategy for their business
- At least 50% of marketing efforts should be inbound once you have your first referenceable customers and have found product market fit
- Transitioning to inbound later on doesn’t always happen, and it can delay potential results and momentum
- Start inbound early, prioritizing bottom-of-the-funnel content that will continually support both inbound and outbound efforts
When choosing between inbound and outbound campaigns to solidify your SaaS marketing strategy, the goal is to balance fast-acting campaigns with long-term and sustainable growth potential.
The ratio between inbound and outbound will be different for each business. However, while working with over 50 successfully scaled SaaS businesses in the last five years, we’ve seen firsthand that at least 50% of your SaaS marketing strategy should be focused on inbound campaigns.
While each channel has its merits, the first decision you must make as a SaaS business leader is how much effort you must put into inbound vs. outbound sales and marketing campaigns.
Knowing what to invest in upfront can help you make smarter choices with your marketing budget and efforts.
Let’s discuss why.
The Pros & Cons of Inbound vs. Outbound Marketing
When choosing your overall SaaS marketing strategy, it’s helpful to understand the differences between inbound and outbound marketing and the pros and cons of each.
Inbound Marketing
Inbound marketing is any marketing campaign designed to draw customers in, attracting customers to your business and website. It almost always centers around creating value through content and resources. Examples include search engine optimization (SEO), pay-per-click ads (PPC), content marketing, and social media marketing.
The pros of inbound marketing are:
- In the long term, costs can be much lower, especially once the engine starts producing
- Content provides evergreen resources with long-term results; once you’ve created and published a blog post, it can continue to live on your site for new customers to find, even for years to come
- Inbound leads tend to close much faster because they were actively looking for a solution when they became your lead
- It can increase brand awareness, affinity, and customer trust, which is invaluable for SaaS businesses facing a hyper-competitive market and long buying cycles
- Customer reception is stronger; they sought out the information you’re providing, and you’re offering value upfront
- Leads who have made it through an entire content funnel are likely more familiar with your product and brand, increasing their odds of converting
- Results grow and compound over; it’s a little like an investment account, so the best thing you can do is start ASAP
The disadvantages can include:
- It requires some momentum; SEO and content efforts aren’t going to work overnight, so ongoing work and investment are needed to see significant results. The ramp up period can range anywhere from three to twelve months
- SEO (Organic) traffic can be considered free, but it takes significant effort to get it. It’s often most effective when working with experts like SEO agencies, content marketers, and social media marketers; this requires a financial investment
- You may have to sort through more inquiries that aren’t in your target market because your visitors aren’t pre-qualified. However, even after discounting unqualified leads, the cost per qualified lead is still typically much lower than outbound
- While inbound pay-per-click (PPC) campaigns can be fast and effective, like outbound, the results dry up as soon as you stop paying
Outbound Marketing
Outbound marketing is any type of marketing campaign where you initiate contact proactively with potential leads. Examples include cold outreach, tradeshows, conferences, and outbound sales calls.
The pros of outbound marketing:
- The results can be nearly immediate if your campaigns are successful
- You can connect with leads who might not have discovered you otherwise
- If your research is good, almost all of your leads will be in your ideal customer profile (ICP), because you would have pre-vetted the list
- You can personalize campaigns using targeting or personalization features combined with audience research to create relevant messaging that can increase conversion rates
The downsides of outbound marketing:
- Campaign results stop the second you stop putting effort and money into them, so there’s no long-lasting evergreen impact
- Outbound campaigns are not always enthusiastically received by potential leads
- Just because a lead or account is in your target market, doesn’t mean they are
ready to buy now. In fact, only 10-15% of potential customers are in their buying cycle at any given time - Reaching new leads can require a great deal of trial and effort with different platforms
- Personalized outreach requires extensive research for individual leads
Most SaaS Companies Start with Outbound
Many SaaS businesses start their go to market strategy focusing on outbound marketing campaigns, and it’s easy to understand why.
It’s easier to sell to your network
Founder-led companies often get their first sales from existing relationships in the founder’s network. Outside of that, initial outreach is important to gaining traction for many startups.
It’s faster, at least at first
Outbound is ultimately low-yield but faster, which is critical at the beginning when you’re starting at nothing. With strong campaigns, you can take a relatively small budget and acquire leads and customers quickly.
That said, hiring the first salespeople for a company is often a challenge. Few people can sell as well as the founder, often despite a lack of sales expertise, so initial outbound marketing campaigns often stall once additional salespeople are involved and first learning the ropes.
As startups begin relying on outbound marketing campaigns, they run into a common problem. They realize that all the results they’re getting stop the second they press pause on those outbound campaigns.
Match Your GTM to Your Business Model
The bottom line is, your go-to-market (GTM) strategy must be supported by your business model.
Typically, this means the GTM strategy, or balance between inbound and outbound, is based entirely on your annual contract value (ACV) or product price point.
To get more specific: If your ACV is less than $10,000+ it’s almost certain you need to focus on your inbound strategy, as your outbound will be prohibitively expensive.
For a lower ACV product, you need high volumes of leads and self-serve sales to make the business model work in the long run. When you consider the cost of sales staff, it’s often not possible to close enough deals with a low ACV to pay for the cost of the large teams with expansive tech stacks.
You might think that some types of outbound marketing, such as email outreach, are high-volume, but that’s only in the top of the marketing funnel, not in the bottom, where it counts:
Outreach typically doesn’t translate to high-volume results; it’s high-volume activity and impressions to realistically get a low (though hopefully solid) number of people in the door. Once you factor in open rates (5-40%), click-through rates (0.5-2%), form conversion rates (1-4%), it becomes a low volume output.
Many startups are in all stages of denial about this, spending the money and putting faith into the idea that it will pay off, whether they’re paying for pre-built lead lists or shelling out major dollars to SDR agencies. We’ve also found that many believe they’ll make the transition to inbound eventually, not realizing it can be hard to do without the proper groundwork.
As already discussed, Inbound does take some time to ramp up, but the dollars you spend on organic content compound over time.
You must consider your total addressable market, your ACV, your expected sales cycle, and the competition when weighing how to balance the inbound vs. outbound ratio for your GTM strategy.
That said, we do have one strong recommendation.
You Should Have At Least 50% Inbound Marketing
If you neglect inbound marketing upfront, you’ll regret it for plenty of time to come. It might even mean you run out of money and your business fails. Inbound marketing compounds, so the best time to start was last year, but the second best time is now.
Because of this, we recommend that at least 50% of your marketing efforts focus on inbound campaigns. The exception is product-led growth models, in which case you need to rely entirely on inbound campaigns.
When done correctly, your content helps the buyer and offers extensive value upfront. That value isn’t automatic or free during outbound campaigns. It can help you generate trust, answer customer questions, and demonstrate how your product can resolve a customer’s core pain points or problems. If you don’t have the content, you will have to address all of your customer questions and objections one-on-one on sales calls, at considerable cost but not at scale.
As an additional note, if you have 5,000 or fewer potential customers worldwide, you do want to leverage outbound marketing techniques to reach out to each one. Inbound should also just be a strong part of that picture (again— at least 50%).
PRO TIP: We strongly recommend starting with content at the bottom of the funnel, which helps you attract and convert leads most effectively and support later outbound efforts as you expand your marketing campaigns.
According to Dave Shanley, founder of Content Camel, organizations of all sizes often aren't effective closers.
“Spending a lot of money on outbound amplifies this pain. Effective bottom-of-the-funnel inbound content helps late-stage buyers close themselves, and that investment provides residual value. Businesses of all sizes can use improvement here – even if you are 50M or 100M business, there is an inbound opportunity. Do it right, and you address buyers’ pain points and speed up the sales cycle, lifting your bottom line.”
Real-world Examples: Inbound vs. Outbound
Theory is great, but genuine evidence is worth a lot more when making decisions. So, let’s look at some real-world examples that back up our argument that SaaS businesses and startups need at least 50% of their marketing strategy to focus on inbound campaigns.
1. Inbound Only: A sales enablement software startup with low ACV
Content Camel is a sales enablement startup offering content management systems designed to improve access to and collaboration on sales resources for both internal and external use.
Content Camel’s GTM strategy has been purely inbound. Because of the price point of the product, outbound just didn’t make sense. And with inbound marketing alone, we’ve helped them grow site traffic by 300% in the last year.
“With past companies and advising other startups, I’ve seen a lot of cases where GTM strategy didn’t match the business model and organizations really struggle to generate meaningful revenue as a result. Working with PureSEM has been critical to our success in building our strategic inbound pipeline. It’s a partnership we’re excited to expand”,
- Dave Shanley, founder, Content Camel.
2. Inbound/Outbound Mix: Mid-market, high-ACV logistics software company
Another one of our clients has an Annual Contract Value (ACV) of high 5, low 6 figures. That kind of price point can certainly support outbound sales, so that was initially their primary focus.
They hired an outbound SDR agency, built a significant outbound sales team, and invested in all the major tradeshows and conferences. They were putting in the work (and the budget) but weren’t seeing the results they felt they should given their investments.
When we started working with this company, their inbound marketing was practically non-existent. Once a strong inbound marketing system and marketing attribution system were in place, the company found that most of their pipeline and revenue were being generated by inbound at a fraction of the cost of their outbound campaigns.
The result?
The company drastically slashed outbound sales expenses, shifting resources and efforts towards inbound marketing, which is now accounting for up to 70% of the company’s new annual revenue.
Outbound marketing is okay to get started or for quick hits and key customers, but if you’re looking to rely heavily on it for the long term, it really needs to be a high-ticket item with a minimum $25K ACV.
The moral of the story?
Start inbound early, and start with bottom-of-the-funnel content that will continually support both inbound and outbound efforts. It builds the foundation necessary for your marketing campaigns to thrive, and inbound is required for long-term growth and momentum.
