Inside-Out Strategy VS. Outside-In Strategy: Which Marketing Approach Is Best?

You know you need to bring value to your customers by giving them the latest and greatest. At the same time, you strive to keep things running efficiently internally while leveraging your strengths.

The truth is, your company probably falls somewhere between the following 2 marketing approaches: inside-out strategy and outside-in strategy.

So which approach is best, and is it okay to function somewhere in the middle? Let’s get you those answers…

Inside-Out Strategy vs. Outside-In Strategy

The premise of the inside-out strategy is that by building up a company’s strengths and abilities, it will be able to sustain itself by making smart choices. It leverages its internal competencies, such as a talented team, long-term customer relationships, and efficient systems and processes.

On the other hand, the premise of the outside-in strategy is that providing customer value is the only way to success. This approach involves starting with an external market orientation and scrupulously studying customer insights before creating marketing strategies.

The outside-in strategy starts at the end and works backward by looking at what the customer wants and coming up with solutions from that viewpoint. Alternatively, the inside-out strategy develops a product or service and then looks to find ways to create a desire for it.

What We Like About the Inside-Out Strategy

If done right, there are advantages to using an inside-out marketing approach. Let’s look at some of them…

It Creates Short-Term Gains

The inside-out strategy can lead to short-term gains since it helps companies increase back-end efficiency and cut costs. It does this by focusing more on the internal workings of a company and looking at existing resources and how it can streamline internal operations to reduce spending.

It Leverages Strengths

An inside-out strategy focuses on what the company is good at and/or what they love to do, what they stand for, and why they even exist. It’s about eliminating weaknesses and leveraging strengths, and it requires steadiness and stick-to-it-ness.

If a company is able to identify these things clearly, it can be successful using the inside-out strategy, and Apple is a prime example.

Apple has so clearly defined who they are and what they are good at that they can get mobs of people to camp out in line waiting for the latest iPhone time and time again.

What We Don’t Like About the Inside-Out Strategy

There are also some pretty important disadvantages to look at when it comes to the inside-out strategy…

It’s Antiquated

Inside-out marketing is what we know. It’s traditional. It’s how we’ve been taught to plan and strategize in business, but it’s now considered to be the “old way.” As technology has evolved, so has marketing. Customer expectations are much higher now; they expect to be wowed and dazzled with high-tech solutions, which can be difficult to deliver from an inside-out perspective.

It Distracts Companies from What Is Really Important

There are 2 things that are essential for a business to succeed:

1. The ability to adapt to changes in the marketplace
2. The commitment to providing customer value

Advocates of the outside-in strategy such as Rob Tarkoff agree that an inside-out strategy almost always distracts the company from both of those things.

Sure, an inside-out strategy streamlines processes and gets things working internally like a well-oiled machine, but at what cost? While companies are busy getting everything on the back end right, it can be easy to lose sight of what’s really important—providing customers with the value that will keep them coming back.

It Only Provides Short-Term Advantages

In most cases, an inside-out approach only offers short-term fixes for a company, but if continued, it can be detrimental.

For example, when Toyota shifted their focus away from the outside-in strategy of giving customers what they wanted to the inside-out strategy of trying to maximize growth and beat GM, their quality went down, and they lost sight of what kept their customers buying.

What We Love About the Outside-In Strategy

Most companies nowadays are having more success with the outside-in strategy as compared to the inside-out strategy, for several reasons…

It’s Innovative

Move over, inside-out strategy, your way is antiquated and ineffective in today’s marketing landscape. An outside-in strategy is unique because it uses customer trends to guide what products and services are offered.

Outside-in companies are always trying to determine how they can expand the demand of their products or services by tuning into their customers’ needs and behaviors. Their thinking is often either ahead of or right in line with their customers. Therefore, they always provide high value.

Companies who use this strategy look at how a company can solve today’s trends in a new way, what opportunities are presenting themselves, and what needs aren’t being met in the market.

It’s Gotten Easier with Today’s Opportunities

Thankfully, we are living in a time when outside-in marketing couldn’t be easier. Why? Because of all the data we now have at our fingertips.

New types of marketing have opened up as a result, allowing us to get more in touch with our customers so we can provide more value. For example, we have omnichannel marketing, personalization, and social CRMs, to name a few.

You can’t just survey your customers and expect to get all the answers. As Henry Ford said, “If I had asked my customers what they wanted, they would have said a faster horse.” People don’t always know what they want, so check your insights and data.

It Looks at Marketing from the Viewpoint of the Customer

From an outside-in strategy, our customers are at the center and we work to integrate as much as we can and give them the best customer experience possible. This way of thinking is what customers of today have come to expect.

If you don’t understand who your customers are—not just that but what they do in their spare time, how much money they make, what issues they have, where they shop, what devices they use, and which way they like to hang their toilet paper roll (okay, maybe not that, but you get our point)—then it’s almost impossible to succeed.

What We Don’t Like About the Outside-In Strategy

Even with all of those advantages, the outside-in marketing approach does still have a downside…

It Can Be Difficult to Think This Way

The fact of the matter is the majority of the people in the world just don’t think the way you need to think to create a successful outside-in strategy. Even experts who consult their clients on outside-in strategy, such as Chris Lema, fall into inside-out ways of thinking.

It Can Be Difficult to Sustain

Companies that use the outside-in strategy tend to be unaware of their limitations. Since they don’t have as strong of an understanding of what their strengths and weaknesses are, they can end up blindsided by this issue.

Many companies, for example, succeed initially by starting out with an outside-in approach, but then they aren’t able to maintain it moving forward.

For example, Dell used an outside-in strategy to earn higher profit margins from its larger customers, even though it usually works the other way around. But it didn’t adapt well with changing technologies and customer behavior, so it wasn’t able to sustain its success.

Our Conclusion: Which Approach Is Better?

We agree with Elena Ozeritskaya that the best strategy is probably a blend of both approaches, and most companies fall somewhere in between the 2 strategies anyway.

You need to know where your strengths and weaknesses lie while also having a strong pulse on trends that could create opportunities or threats.

Having said that, if you aren’t providing value, you aren’t of much use to your customers. And today, that value really needs to be unique. It takes innovative thinking and an insight that can look at the current market trends and foresee where it is going. Staying inside your own internal box is not the formula for success. It’s the difference between thriving and struggling to survive.