Whats the best way to achieve this look? Adding a picture into lettering?

What is "best way"?

First you would need to convert the text to path (Ctrl+Shift+C),
ungroup characters (Ctrl+Shift+G), and combine them together (Ctrl+K).

Then, the easiest way would be to use that path as a clipping mask, however on your example image it is different.

To reproduce the white outlined red part, you would need to inset a duplicant of that path with the exact width of the later to be added white outline,
and edit it manually with the node editor tool until it looks as it is.
The most accurate way would be to do that is to duplicate the original path, add an outline of the same width as the future white outline,
convert the stroke to path (Ctrl+Alt+C), break apart it (Ctrl+Shift+K), delete unnecessary paths and combine back together the rest...

After that would come the inner shading, wich could be done by using filters.
Preferably you would need to have the white outlines on top with no fill,
the red path below with no outlines (and filters added).

Fast and dirty:



Like Lazur notes, the fills are more complicated and a shadow is added in the OP.