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A few blue moons ago, I was hired to run marketing at a startup and I messed up the entire GTM strategy. If you spent even eleven minutes in a startup, you know how expensive of a mistake I had committed.
After several sleepless nights, few questionable coffees, and multiple whiteboard sessions, we were able to get back on track. Since then, I’ve managed to steer startups towards the elusive $1 million ARR twice and build somewhat of a framework for myself when it comes to choosing where to invest your efforts between Inbound vs Outbound.
So whether you’re refreshingly new to the world of marketing, or know enough to just about be dangerous, I hope you will find this useful to decide where to invest in your GTM motion. And if you are a seasoned marketer that knows the tricks to create, delight, and pump your marketing engine at will, I hope this will at least be a refresher.
Ready? Let’s dive in.
A tug of war between Inbound vs Outbound GTM motion
When I think about GTM motions and decide where to invest between Inbound vs Outbound, I look at these components and their relationship with each other:
- Your total addressable market (TAM)
- Product category that you’re playing in
- ACV on deal touchdown
- Demand for your product
Of course, your product matures as you grow, and you learn more about your ICP, sales cycles, your buyers, and your market. That’s why I run this thought exercise for myself every two quarters to judge if we’re still heading in the right direction.
NOTE: Having done this multiple times, which component you decide first often dictates the next few components you zeroe-in on. That’s why, I almost always start with the TAM, the ACV, followed by the category you play in, and finally assessing how much demand there is for your product. With each component I try to figure out, I keep visiting four nuances all of which play an equally important role:
- Who is your buyer?
- How many buyers/decision makers are involved?
- What’s your sales cycle?
- Does your product have virality built into it?
Let’s get into each of them one by one.
Inbound vs Outbound? It all starts with the size of your TAM
If you’re a founder or the first marketing hire, chances are you already know or at least have a decent understanding of which kinds of companies might be a good fit for your product. But if you have early adopters, even a handful, nothing quite like it.
One of my favorite exercises to do is to enrich these companies (if you already have a handful of early adopters) with basic details like industry, employee size, funding raised, and region, and run it through a TAM calculator to see how many such companies even exist.
If your total addressable market is limited, chances are you’ll be focussing on a specific industry or niche. And if you’re looking to hit tens of millions in ARR, you’ll have to have a high ACV (because… you can’t argue with math?). If you’re a company at this stage, an outbound heavy motion paired with evangelical or educational marketing motion with multiple touch points is likely a better strategy to get your foot into the door.
On the flip side, if your total addressable market is infinite, you might benefit from building an inbound marketing engine, casting a wider net to capture multiple industries with a focus towards one use case. This typically means, your ACVs are smaller at least at the beginning till you go up market.
How big is your ACV on deal touchdown?
If you’re in SaaS, you probably have this image by Point Nine capital tattooed at the back of your brain by now:
While this is a great starting point to see how your starting ACV impacts how many deals you need to hit the elusive $100M ARR, it also indirectly tells you what a steep path it’ll be if your ACV is lower and has a significant impact on the kind of product you build.
Oftentimes, companies that start with a full blown inbound motion have a low ACV and will need to optimize marketing to drive large volumes.
But why is this such a major consideration? Because with it also comes the need to focus on upselling and cross-selling other products to slowly increase the pace at which you achieve your goal (could be $1M ARR or $100M ARR). As a marketer, this also dictates how you hire your team and where you invest your time and energy. And we haven’t even talked about churn!
Also, a lower ACV indirectly also means you might not be able to afford a full blown outbound motion, especially if you’re hiring your sales team from markets where the minimum base salary could be as high as $80k + OTE.
If you think about it… A lower ACV indirectly means you’ll need your product to be robust enough so you can find a way to upsell and cross-sell (other products or into other teams within the organization) to gradually increase your ACV. And of course, a team that can help you do all of this and keep churn under control.
On the flip side, if you have a higher ACV, you might be able to afford an outbound motion and maybe even layer in an inbound motion on top depending on other factors like the category, how commoditized your market is, and if your potential buyers are searching for solutions to the problem your product solves for.
How commoditized is your category?
It’s easy to think the more commoditized the category, the higher the demand is likely to be. So we’ll need to prioritize inbound over outbound.
However, it’s more nuanced than that. While it might be true in most cases, the chances of you capturing that demand doesn’t just depend on which category you plant yourself into but also how unique your product is compared to the others in the category.
Over the course of the years, I've realised that if your prospects aren't converting into pipeline you probably need to revisit this component and nail your product marketing before your invest any further into either inbound or outbound efforts.
If you're playing in a category that doesn't exist and your product is extremely unique, chances are you're going to have a hard time getting people to pay attention to you and buy your product. On the flip side, if you're playing in a highly commoditized category, but you haven't articulated how you're unique and better, your prospects will likely prefer the category leader over you, no matter how much you invest in either inbound or outbound strategies.
But are people looking for a solution to a problem that your product solves?
If you know people are already looking for a solution that your product solves, then all your efforts should be focussed towards letting them know you exist.
Of course, the easiest way to know if people are looking for a product like yours is to look for search volumes for your product category, your competitors (yes, you have a competitor. Even Sam Altman has more than a handful these days), and look at review sites like G2 and Capterra to see how many players exist in the same category as yours.
One of the mistakes I made early on was to jump headfirst into inbound activities once I saw a bunch of keywords with significant search volume. Especially in the times that we didn’t have our sales funnel quite figured out, I’d focus a majority of my thoughts and efforts - perhaps as much as 90% on the obvious things like SEO and PPC. And it made sense. After all, activities like SEO and PPC that play a significant role in the inbound motion are driven primarily by these search volumes.
I learned the hard way that this needn’t be the case. Seeing high search volumes and crowded G2 grids help in targeting and indicate your persona might be looking for solutions on traditional inbound channels. But deciding between inbound vs outbound also depends on who your ICP is, how commoditized your market is, and the kind of ACV you’re going after.
One of the questions I like to ask myself repeatedly is do our buyers even search for these keywords and phrases. For example, when I was marketing a developer product we saw a significant search volume for Git related keywords. But since our target persona was an engineering manager and CTOs of early stage startups, going after Git related keywords didn’t make much sense early on as we realized someone searching for these keywords are likely early in their careers. In retrospect, it sounds obvious but it's critical to go back and map your keywords to not just intent, but also to your ICP.
Similarly, If you're playing in a category that doesn't have a lot of obvious keywords to go after, it pays to understand deeper about your buyer's motivations, their jobs to be done, use cases they're looking to solve, and what triggered them to seek for a solution like yours. Understanding all of these are great ways to associate yourself to situations that your prospects might find themselves in and look for answers.
But of course, if you're unable to connect the dots from these situations and jobs to be done to your product's core value proposition, that's the first thing you'd need to solve for before you double down on any of your GTM motion.
Some nuances to consider when evaluating Inbound vs Outbound
Of course, some combinations of TAM, ACV, Category, and the amount of demand will lead you to pick inbound vs outbound easily. However, there are some nuances that you might want to consider.
- How long is the deal cycle?
If you know the industry you’re targeting often has long deal cycles because the procurement process is often slow and long, consider re-evaluating your ACV especially if you're on the lower end of the spectrum. A low ACV with long sales cycles is a risky equation for your SaaS business. - Who is your buyer persona and what influences their decisions?
If you are selling to a CFO, chances are they’re spending more time at forums and events, and they are often influenced by what their peers say. This means, you might have to invest in a high-touch outbound motion where you invest heavily on events and partnerships.
On the other hand, a marketing or a support persona is more likely to search for a solution to their problems. Keeping in mind other components such as the category you play in and the ACV you go after, an inbound motion is likely to work in your favor. - How many buyers are involved in the purchasing decision?
Imagine you have a category that you can go after with infinite demand. Your ACV is low. If your buyer is also the decision maker who doesn’t need approvals from other functions, an inbound motion might make sense.
However, if you’re selling a product that needs your buyer to get buy-in from other functions (like marketing buying tools that impact the sales process, so they’ll need buy-in from the sales team), an inbound motion might get you into the door, but you’ll need to quickly introduce an outbound engine that engages with other functions to help speed up sales cycles while keeping in mind if the unit economics of introducing an outbound motion will make sense for your business. - Are there network effects to your product? Does it have an impact on your marketing efforts?
This one is special. Because if your product is able to engineer distribution, it might not drive significant net new ARR by itself, but it can drive awareness for prospects to consider you when they’re in the market looking for a solution. And it’ll also make your outbound efforts a lot more effortless.
Of course, it’s hard to strategically engineer virality into the product. But when thinking about some of the best companies in the world with lower ACV (Notion, Slack, and Intercom), they often have some level of virality engineered into the product that gives them an unfair advantage in the market when it comes to awareness.
Bringing all of this together with an example
Let's look at Linear's GTM motion in the early days, for example.
It’s easy to categorize them as a project management tool or a task management tool. But these categories are so commoditized and crowded that Professor Dumbledor would have had better luck protecting the philosopher’s stone had he hid it in one of those G2 grids.
Luckily, the founders at Linear were smart and played to their strengths. They went after Jira and positioned themselves as a well designed and a fast issue tracking software. This was the need of the hour in the issue tracking software world.
While the issue tracking software was commoditized, it wasn’t nearly as commoditized as the project management space. The market had just enough room to welcome a new player with a better approach to the specific problem for that specific buyer. The TAM was big enough. The ACV they were going after (at least at the start) was considerably small. And since the end user was a developer and buyer was often an engineering manager or a technical co-founder, the GTM motion demanded a bottoms-up approach.
This naturally pushed them towards building a community of raving fans, driving word of mouth, and investing in some traditional PPC campaigns by going after specific keywords like "Jira Alternative".
Food for thought: It’s not always Inbound vs Outbound
It has become difficult for companies to grab prospect’s attention and stay top of mind for most companies. In the past, using paid social was a viable option to give your prospects a surround sound effect of your brand. But with an ever increasing CPC, that isn’t a smart strategy for the long run.
For us at RevenueHero, a large segment of our customers are people who care about providing a good buying experience right from the moment their prospects request a demo, no matter the channel. These are people who care about ensuring leads don’t slip through the cracks while also looking for ways to delight their prospects and customers.
As we work towards making buying simple for B2B companies, what we’ve seen work well for us is a combination of Inbound AND Outbound.
We’ve realized there are certain segments of the market that are more receptive to inbound strategies and convert directly through inbound channels. However, there are others who aren’t and are a bit more skeptical. We also understand that outbound as a channel often has a longer sales cycle.
To combat these:
- We started to invest heavily on our brand efforts. Our realization is, the more people are aware of our brand, the less skeptical they’re likely to be about us when we pop up on their social/search feeds.
- For the segment that’s not converting as well (either on inbound or outbound channels), we try to stay in touch with them and provide value with our outbound efforts.
- We also look at how people behave on our websites before reaching out to them. This is basic sales and marketing alignment, but there are companies that are trying to rebrand this as Inbound-led Outbound or Signal Based Outbound. But the point is, many companies aren’t going to convert the first time they land on your website or landing page. They’ll need more convincing. So as they hear/read more about us on our website, we deanonymize them, and based on how often and which pages they repeatedly visit, our sales team prioritizes them and reaches out to them.
If you take away one thing from this article, I hope it’s that you’ll never really be done with figuring out the balance between inbound vs outbound. As your product evolves, the market changes and your goals get more ambitious, your GTM motion must adapt.
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