Outbound

What does outbound mean?

Outbound (in German: aktive Kundenansprache) denotes sales and marketing measures in which a company approaches potential customers on its own initiative, without their having made contact beforehand. Usual routes are telephone, letter, email, messages in professional networks and targeted approaches at events. The first approach without prior contact is colloquially called cold outreach (Kaltakquise). The counterpart is inbound: prospects get in touch because they have come across the offering through content, search, advertising or recommendations.

Outbound is a sub-area of lead generation and is used above all in business with companies, when the target segment is clearly delineated and the contract value supports several conversations. In financing rounds it is often at the centre of the use of funds, because it can be scaled up predictably with additional staff. In Germany, however, it is subject to narrower legal limits than in many other markets.

Organisation and process

The basis is a target list of companies that match the ideal customer profile, that is, the description of the customer companies that fit best economically. Added to this are the roles from the buyer personas, the profiles of the people on the customer side who are involved in the purchase.

In growing sales organisations, the work is usually divided. Staff in sales development (sales development representatives) research target companies, take over the first approach and arrange appointments. Sales staff with responsibility for closing (account executives) lead from the qualified conversation through to signature. The division increases the number of conversations per account executive but creates a handover point that needs clear criteria.

An approach usually consists of a sequence of several contact attempts across different permissible routes. Per person and month, the decision-makers approached, the rate of conversations achieved, the qualified sales opportunities resulting from them and the closed deals are measured. These figures are recorded in the CRM, the system for customer and sales data (customer relationship management); they are the basis of any planning.

Legal framework in Germany

The limits of active approaches result above all from Section 7 of the German Act against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb, UWG), which prohibits unreasonable nuisance through advertising, and from the General Data Protection Regulation (GDPR; in German: DSGVO). The concept of advertising is broad: even an appointment request or the offer of an introductory conversation is advertising if it is intended to promote sales of the company's own offering.

Telephone

Advertising calls to consumers are permissible only with their prior express consent, which the advertiser must document under Section 7a UWG. Towards companies and other recipients who are not consumers (in the statute: other market participants), Section 7(2) UWG requires at least presumed consent. This exists only if specific circumstances lead one to expect an objective interest of the person called precisely in an approach by telephone, for example an existing business relationship to which the offer fits. That a product could be generally useful for the business is not sufficient according to the case law.

Email and direct messages

Advertising emails require under Section 7(2) UWG the recipient's prior express consent, with no distinction between consumers and companies. Presumed consent is not sufficient for emails. An unsolicited advertising email to a contact person who has not consented is therefore impermissible even in business with companies, even if it is sent once only and is individually worded.

The only statutory exception concerns existing customers under Section 7(3) UWG. It applies only if all four conditions are met together:

• The company received the address from the customer in connection with the sale of a product or service.
• It advertises only its own similar products or services.
• The customer has not objected to the use.
• The customer is clearly informed, when the address is collected and with every use, that he or she can object at any time without incurring costs other than the usual transmission costs.

For winning new customers, the exception does not help.

Whether advertising direct messages in professional networks are to be treated like emails has not been conclusively settled. Because they show essential features of electronic mail, the same standard is often applied in practice.

Letter

Addressed advertising letters to companies are in principle permissible as long as the recipient has not recognisably objected. The letter is therefore a widespread route for the first approach in German outbound, often combined with a request for a reply as the basis for any further contact.

Data protection

The processing of contact data for direct approaches is usually based on legitimate interests under Article 6(1)(f) GDPR. According to Recital 47 of the GDPR, direct marketing can be such an interest, provided that the balancing against the interests of the person approached comes out in the company's favour. If the approach is impermissible under the UWG, the balancing, on a widespread view, generally does not hold either.

If the data do not come from the data subject but, for example, from databases or websites, Article 14 GDPR applies. The person must then be informed of the origin, the purpose and his or her rights, at the latest at the first contact and within one month at the longest. The right to object to direct marketing under Article 21 GDPR must be pointed out expressly and separately from other information. An objection must be observed permanently, for example through a block list in the CRM.

Competitors and associations can issue warning letters (Abmahnung) against impermissible approaches and demand that they cease. Companies that are approached also have a claim of their own to cessation under general civil law. For advertising calls to consumers without consent, the UWG additionally provides for fines, as does the GDPR for data protection breaches. Because permissibility depends on channel, data source and content, the approach is checked legally before an outbound team is built on it.

Worked example

A provider of software for the finance departments of medium-sized companies builds up an outbound unit. One employee in sales development approaches 300 decision-makers from the target list each month. She writes mainly letters with a request for a reply and calls only where there is at least presumed consent. The monthly costs are EUR 13,000: EUR 6,500 for the position including ancillary costs, EUR 5,500 pro rata for the account executive and EUR 1,000 for data and software. The annual contract value is EUR 18,000, and the gross margin, that is, the share of revenue remaining after the direct costs of the service, is 80%.

Rates from a test lasting several months are applied: 6% of those approached come to a first conversation, half of the first conversations become a qualified sales opportunity, and 20% of these opportunities are won.

• First conversations: 300 × 6% = 18
• Qualified sales opportunities: 18 × 50% = 9
• New customers: 9 × 20% = 1.8 a month, around 22 a year
• Acquisition cost per new customer (customer acquisition cost, CAC): EUR 13,000 divided by 1.8 = around EUR 7,222
• Gross profit per customer and month: EUR 18,000 divided by 12 = EUR 1,500; EUR 1,500 × 80% = EUR 1,200
• Payback (CAC payback period): EUR 7,222 divided by EUR 1,200 = around 6 months
• With the conversation rate halved to 3%: 300 × 3% × 50% × 20% = 0.9 new customers; EUR 13,000 divided by 0.9 = around EUR 14,444; payback around 12 months

In a steady state, the model holds. In the first months, while the new employee is being onboarded and the target list refined, the conversation rate is often lower. Halving the conversation rate doubles the acquisition costs and pushes payback to the limit of twelve months.

Outbound as justification for the capital requirement

If a company justifies its capital requirement with the build-up of an outbound team, investors expect proof on a small scale: rates over several months, achieved by at least one person who is not part of the founding team. If so far only the founders themselves sell, it is open whether the success can be transferred to employed sales staff.

In due diligence, through which investors and buyers examine a company before concluding a contract, activity and result data from the CRM are analysed and reconciled with new deals. The legal review covers which routes were used for approaches, where the contact data come from and how information duties and objections are implemented. If a sales model rests on impermissible advertising emails, it cannot be continued, and the planning based on it must be adjusted.

Distinctions from related terms

• Inbound: prospects get in touch on their own initiative. Inbound is legally simpler but harder to increase at short notice.
• Account-based marketing: the targeted handling of selected target companies, combining direct approaches with advertising and content for precisely those companies.
• Cold outreach (Kaltakquise): the colloquial term for an approach without prior contact. What is legally decisive is not the label but the channel and whether consent exists.

Common mistakes

• Approach taken over from the US market. In the US market, advertising emails are essentially governed by an opt-out model. In Germany, prior consent is the rule, including towards companies.
• Presumed consent understood too broadly. A company's mere membership of the target industry does not create a presumed interest in an advertising call.
• Target list too broad. A short list of suitable companies produces more conversations than a long list with weak profile fit and ties up less staff.
• Multiplied too early. Additional positions pay off only once one person has reached the target rates over several months.
• Service provider without control. If a commissioned service provider breaches the UWG, claims to cease and desist under Section 8(2) UWG are also directed against the commissioning company. If the service provider processes the contact data on the client's instructions, a data processing agreement is also needed.

Frequently asked questions

Are unsolicited advertising emails to companies permissible in Germany?

No, not in principle. Section 7(2) UWG requires the recipient's prior express consent for advertising by email and does not distinguish between consumers and companies. Only existing customers are excepted, under the conditions of Section 7(3) UWG.

When is an advertising call to a company permissible?

If there is at least presumed consent. This requires specific circumstances from which an interest of the person called arises precisely in a call. The assessment depends on the individual case and, for first contacts without any connection, as a rule comes out negative.

From what contract value is outbound worthwhile?

There is no fixed threshold. What matters is whether the acquisition costs for staff, data and software flow back from the customer's gross profit within a reasonable time. With the values from the worked example, the threshold for a payback within twelve months is an annual contract value of around EUR 9,000.

How long does it take for an outbound team to deliver reliable figures?

As a rule several months. Conversation rates show after a few weeks, reliable closing rates only after at least one complete sales cycle. Until then, plan values are assumptions, which should be set cautiously in financial planning.

Should outbound be outsourced to a service provider?

As a rule only once the approach has worked in-house. Without own experience of rates and objections, a service provider's performance cannot be assessed. Legally, the commissioning company remains jointly responsible for compliance with the UWG and the GDPR.

The Roemer Capital view

If a round is justified by the build-up of an outbound team, Roemer Capital works in the financial model with the measured rates per person and with onboarding times. A realistic time to fill open positions is added. In the cautious case, Roemer Capital applies lower conversation rates and shows whether the payback of the acquisition costs then still stays under twelve months.

The legal permissibility of the approach routes is assessed by the company's law firm. Roemer Capital makes sure that this review is completed before the process starts, because investors question any planning that rests on channels whose use in Germany is not secure.