Which is better for lead generation: Digital marketing or outside sales?

In general, digital marketing has a higher potential rate of lead generation than that of an individual outside sales employee, and a lower cost per lead – depending on the type of marketing, and the quality of the sales professional. This preceding answer, however, contains many caveats which we will explore below. This article does not suggest that an outside sales team does not still play an important role, but it will outline the instances in which outside sales is superior to digital marketing, and when it is inferior as a lead generation technique. We will then provide some valuable insights into ways to best utilize your sales team in a complementary way to digital marketing strategies – supercharging your lead generation and sales efforts.

In order to compare outside sales to digital marketing we will use the following metrics:

• Cost per sale
• Rate of lead generation

Since it’s not possible to provide one answer to the question of digital marketing versus outside sales for all business types, we will compare both methods for the following:

• Companies bringing a new product or service to market
• Companies with a mature product or service

When is Outside Sales Better than Digital Marketing?

Rulmeca Motorized Pulley Food Conveyor – https://rulmecacorp.com/gallery/#food-processing

Located in cozy rural Wilmington, North Carolina sits a small manufacturing facility that’s making big moves in the conveyor space. The President of Rulmeca Corporation recently sat down with me on the “Manufacturing Insiders Podcast” to talk about what’s working for his company on topics ranging from HR to sales and marketing. Rulmeca manufactures an innovative motorized pulley system for industrial conveyors. These motorized pulleys have a distinct advantage over the drive systems of traditional conveyors, but there are a few problems. First, these motorized pulleys cost more than the traditional systems, and in many cases, Rulmeca is convincing industrial, mining, and food manufacturing companies to switch over, even when their existing systems are working. Second, many of their target customers are not fully aware of the advantages of motorized pulleys, and those customers don’t default to looking for an innovative replacement for their existing systems.

For Companies Bringing a New & Innovative Product to Market, Education is KEY

Rulmeca needs their outside sales team to educate buyers on the features and benefits of their system before they will ever be able to convince them to spend more upfront money on it. We would define Rulmeca’s marketing strategy as “Top of Funnel” – meaning their buyers are typically not out looking for a supplier, instead, they will need to be nurtured down the funnel before they can enter the sales pipeline.

This infographic demonstrates the difference between “top of the funnel” and “bottom of the funnel”.

Key Point: If your company sells a “mature” product or service, outside sales is not as vital as if you sell a product in the introduction or growth phases, because in the later phases of the product cycle – after education has taken hold – consumers are searching directly for the product or service which is when you benefit most from digital marketing.

This infographic demonstrates a maturity model for products where introduction and growth phases correlate with “top of the funnel” marketing strategies. Essentially, if you are bringing a new product to market (introduction phase), you need to address the “unawareness” (top of the funnel) of your market.

The Benefits of Bottom of the Funnel Marketing

Two points could be argued against the above point regarding outside sales as a better method for non-mature products. The answers to each objection demonstrate the benefit of bottom of the funnel marketing, and compare the utility of digital marketing versus sales for bottom of the funnel activities:

1. Outside sales functions as both a top of the funnel and bottom of the funnel strategy.
2. Bottom of the funnel marketing is limiting in that there only exists a small portion of your potential customers in the “now” or bottom of the funnel buying phase.

Let’s address both of these very true statements that appear to contradict the key point:

Outside sales works as both a top and bottom of the funnel strategy

The above statement is true. As a top of the funnel example, an outside sales rep may step into a previously unaware customer’s facility and make them aware of the features and benefits of their product or service, which could replace or enhance their current option. This customer needs to work this into their annual budget and tell the salesperson it’s going to take at least until next quarter before they can look at the offering.

For a bottom of the funnel example, the sales rep steps into a facility and the prospect says, “I’ve been looking for a new option, and I’m so glad you stopped in! Where do I sign?”

For those of you with experience in sales, you’ve certainly encountered both cases occasionally, but only one of the scenarios frequently.

Key Point: The conclusion here is that outside sales is a better top of the funnel technique than a bottom of the funnel technique, simply because it gathers a much higher percentage of its contacts at the top.

Objection #2: Bottom of the funnel – or going after only prospects who are ready to buy is limiting

This statement is also true. According to the commonly used “buyer’s pyramid” in sales (which is sort of an inverted sales funnel).

Buyer’s pyramid infographic demonstrating the opportunity lost if the marketer focuses only on those currently ready to buy.

We are missing a minimum of 6% of our potential customers by focusing on only the top 3%, and probably a lot more! You can think of this top 3% in the pyramid as the individuals at the bottom of your sales funnel.

Here are two questions to consider:

1. Are you getting in front of 100% of the 3% that are ready to buy now?
2. Is it better to make contact with a prospect that’s ready to buy now, or one that may buy later?

If you are getting in front of 100% of the bottom of the funnel (top of the pyramid) prospects or even close to that, then you are certainly missing significant opportunities by ignoring the “open to it” category (reference the pyramid diagram). If you are nowhere close to getting in front of the 3%, then it makes the most sense to pursue them first, since cashflow – not a contact list – is what makes a business tick.

Is digital marketing top of the funnel or bottom of the funnel?

Three years ago, on a hot August day, I received a call from Jonathan, a young guy (as CEOs go), who had recently left a great engineering job with General Electric and made what he called “not the smartest decision I’ve ever made”, which was purchasing a rubber manufacturing company – an industry that he didn’t know too much about. After the acquisition, Jon spent the first few months at Lake Erie Rubber learning as much as he could about management and rubber molding, and finally with a little expertise under his belt, he encountered his next challenge: Where would new business come from?

He had received a call from his website developers saying that his website was outdated and he was going to have to find a new solution, so he went to Google and found weCreate – a digital marketing company that specializes in manufacturing. He thought that potential customers were looking online, but he was about to get a very tangible lesson that proved it. weCreate built an “emergency” website, using a low-cost template for speed reasons (this is in contrast to a custom-designed website, which topic is out of the scope of this article), and wanted to give him a small boost in visibility during the process so we put some budget and effort into content writing. The goal of this was to ensure that we had pages dedicated to each service he offered: Injection molding, compression molding, and transfer molding. As a digital marketing agency, we knew that this was a “bare minimum” requirement as far as marketing goes, but the goal was to just get him a website – and fast. A few weeks after the website was launched, Jon received an inquiry from an out of state company.

The person Jon spoke to told him these words: “I’m so glad I found you! We’ve been searching online for a company with your exact skill sets and location over the past year and have talked to everyone who showed up on Google. We haven’t found the right partner, so we decided to do one last ditch effort search, and you showed up where you never did before!”

This conversation led to an additional $500,000/year in revenue for Jon’s newly acquired company.

Over the next few years, Jon invested more in a technique called SEO or “Search Engine Optimization” which is a process that helps a website show up higher in Google and other search engines for keywords like (in this particular example) “Rubber Injection Molding in PA”. He doesn’t have an outside sales team, and he receives new leads nearly every day.

The lead Jon received shortly after his new website launched is a perfect example of a “bottom of the funnel” opportunity. This person was desperate and ready to make a deal. Here are two questions to consider:

• If someone googles a term like “Custom rubber molding manufacturer in Pa” what is the likelihood they need to find a rubber molding manufacturer to work with?

You’re correct, the answer is: Very likely! In the SEO world, we refer to this term as a “transactional query”. Now contrast this against a query like “How does rubber molding work?” This person is looking for information about the process. The individual searching a term like “Custom rubber molding manufacturer” is not only quite obviously interested in finding a manufacturer, but even better, they are likely a decision maker in the selection process.

• Would Jon rather speak to the person who just googled “custom rubber molding manufacturer in PA” or with a secretary in the lobby of the 5th facility he visited for the day?

You’re correct again! Jon would rather spend his time speaking to individuals who just “Googled” a transactional keyword, and who are also decision makers, than spending countless hours hoping to stumble across the unicorn company that allows him past the gatekeeper.

Digital Marketing as a Top of the Funnel (low interest phase) Technique

Further on in my conversation with Brian V. at Rulmeca, I asked him about digital marketing, wondering if it wasn’t a big focus because of their unique product that many potential customers weren’t aware of. He surprised me by saying that they were heavily invested in YouTube marketing. Essentially they were creating educational videos about their product, and how to deal with common conveyor issues. These videos were viewed by facility managers who were troubleshooting the issues, and that gave Rulmeca their “in”. They would then drive the traffic to the Rulmeca website from YouTube, which Brian said was “thousands of visitors per month”.

This true story gives us another key point to discuss.

Key Point: Digital marketing can serve both top of the funnel and bottom of the funnel efforts, but it is one of the best ways to engage individuals who are already searching, and ready to buy.

Comparing Cost & Lead Generation Capacity of Outside Sales Vs. Digital Marketing

To make a substantive comparison between digital and sales, we need to compare apples to apples in terms of cost. Certainly, a team of 100 sales staff can outperform all but the best and highest budget marketing campaigns but how does 1 sales professional compare to 1 digital marketing campaign?

Cost of a Sales Professional:

According to Zippia. The average annual salary of a manufacturing sales rep will be between $42k and $97k. If your reps are paid through mostly commission, then the salary could see tremendous fluctuation depending on that employee’s closing rate. Let’s pick the median salary of around $70k which sounds about right. The actual cost to the company for this salary is likely going to lean closer to $100k after benefits and bonuses, and perhaps much higher if you calculate hotel, stipends, rentals, and other travel costs, but we’ll be cautious and stick with $70k.

Productivity of a Sales Professional

An aggressive contact target for an outside sales rep would be about 50-60 calls per day if by phone, and much less if they are doing cold site visits.

According to some research, about 1% of these calls will result in interest or a meeting.

From speaking to manufacturers I’ve found that an average target of closed deals from quotes given is a little less than 10%.

Given the stats above, we can conclude that the salesperson would provide around 15 new pieces of business in a year if he was making 50 calls per day, 300 days per year. Or just over one successful closed deal per month.

Now let’s take the example of Jon at Lake Erie Rubber. He generates 1-2 viable leads per day via the SEO-focused digital marketing strategy implemented by weCreate. Since the leads have already expressed interest by searching “transactional” key terms, we don’t need to worry about the fact that 1% of cold calls result in interest. We will operate under the same assumption that we did with cold calls though, and that is the assumption that he quotes 100% of interested parties.

If we do the math on 1 lead per day we can conclude that the company doing digital marketing would receive 36 new customers each year: 365 interested parties per year x 10% close rate = 36 new pieces of business, 2.5x higher than the average outside sales rep generates.

What’s the difference in cost between digital marketing and outside sales?

An industry average cost for an SEO campaign ranges between $2,500 – $5,000/month. The annual cost for an outside sales professional versus digital marketing is respectively $70,000 versus $30,000 – $60,000.

Here’s the real kicker!

Let’s say your salesperson left the company. How much would he produce the following year? It’s a ridiculous question! He wouldn’t produce anything the next year because he’s not working there anymore.

Let’s say you quit doing SEO services after you attain the lead generation rate of 1 lead per day. How much would your website produce the year after you quit? That’s right, 1 lead per day. How much would your website produce in the second year after you quit? Yes, 1 lead per day.

Now eventually your returns on the original SEO efforts, without continued optimizations or new content, will diminish, but we’re talking about a 5-10-year decline.

Key Point: Digital marketing – especially SEO has a long-term residual effect on lead generation, even if the service is discontinued, so ROI calculations should take into account the 5-10-year value of one-time SEO efforts.

Notes to add specificity to the above discussion:

1. There are many types of digital marketing, and for the sake of this comparison between outside sales and digital marketing, we chose to use the technique that – in our experience – has the most dependable returns.
2. SEO does not produce immediate results, and it could take a year or more of increasing lead generation to attain 1 lead per day example used above.
3. Manufacturers often continue SEO services because the rate of lead generation and the quality of leads tends to increase over time.
4. With outside sales, you will still have a warm contact list even if the sales activity stops. Some of these individuals will continue to become customers over time if the list is nurtured.

Should I Replace My Outside Sales Team with Digital Marketing?

Absolutely not. Especially if they are doing a good job and attaining somewhere close to the metrics outlined above. I’d have to assume that 15 deals closed in a year would be worth significantly more to you than the 100k that person cost you.

The purpose of this article is to put a spotlight on a key point that many manufacturers forgot or never knew.

Key Point: Digital marketing is an excellent way to supercharge your sales team, and it provides consistency in your lead generation, even if you have a dip in the productivity of your sales team or you lose them.

I’m advocating for training your sales team to be better data-driven deal closers because as your leads increase from the website, you are going to need their technical knowledge and sales skills to close the deals.

Sales teams LOVE effective digital marketing because the people they talk to are already at the bottom of the sales funnel which makes them the fastest deals to close, and gives them the easiest commission checks.

A few awesome resources that can improve any sales professional’s close rate:

1. Stories That Stick by Kendra Hall – this book (or audiobook) will change the way you think about sales and improve the way you share compelling experiences with potential customers. It helps you feed into the emotional triggers that drive buying behavior and makes your pitch memorable.
2. Never Split the Difference by Chris Voss – Written by a former FBI negotiator, this book (or audiobook) does a phenomenal job of demonstrating the role of negotiation in everyday life and sales. He outlines specific words, phrases, and conversation techniques to use with different prospects so that your message resonates with them.

I’ve read both of these books in the past year and I can’t speak highly enough about them. As a person who relies on facts and data, I’ve made the mistake of using data to convince people often, when I needed to tell a story or to better understand their thought process. If you check them out, send me a message through our contact form and let me know what you think about the resources or the article.

More Reasons to Keep Your Sales Team

Beyond closing deals, your sales team is your finger on the pulse of the customer. You should have a procedure for assessing this pulse regularly by giving them standard questions to ask the customer at different phases of your engagement. If your sales team gains knowledge of problems you’re solving for the customer, success stories, and problems you aren’t solving adequately, this information can be used in the way Brian V. is using it: To create themes for top of the funnel digital marketing.

You can use this information to refine your offerings and improve operations as well.

Is Digital Marketing Better for Generating Leads Than Outside Sales?

Remember:

• Consider where in the product lifecycle we exist (early or late stage). If early, then outside sales may be your best bet, but also remember that digital marketing can be used as an important educational resource.
• With the knowledge that when either method is performed correctly, we’ll likely gain more revenue than what we pay, we don’t have to choose between them.
• If you have to make a choice (for example, a small company where the owner is also the salesperson) then digital marketing is likely your best option, especially if your product or service is commonly understood in the marketplace.

If you’d like to have a conversation about how digital marketing can generate growth for your business, or have questions about this article, shoot Nate a message on the contact form below!