Doyle Slayton | May 31, 2009
If you missed the last post, Compelling Argument Against Cold Calling, it is piece you have to read several times to take it all in. I think there are two key issues. The first is cold calling and the second is lead generation.
I’ll set the record straight. If you are in sales, cold calling isn’t optional. It is a must. If you don’t want to cold call, get out of front line sales. Go into marketing and help develop some lead generation strategies to help your sales teammates. Another option is to go into account management and focus on building loyal customers that will speak highly of your company and refer new leads that turn into new business. That’s not meant as a jab or a brutal attack on those that don’t want to cold call. It’s an honest request to team up with someone who understands the battle… who knows about the scraping and clawing that goes into hunting for new business.
Most organizations are not being strategic enough about their cold calling approach and many are not focused at all on lead generation tactics. Jeremy states that cold calling as a “lead generation tool” is ineffective. There is no doubt, it can be time consuming and difficult to fight through, but we can’t paint everyone with the same brush. Generally speaking, cold calling as a lead generation tool works quite well with non-complex accounts where the sales cycle is short. On the other hand, a complex sale with a longer the sales cycle makes it more difficult to cold call your way to qualified leads.
Believe it or not, Jeremy’s breakdown…
“It takes 8.4 dials to reach a person, and 2% of all calls results in a meeting. If 30% of these first meetings convert into opportunities and a sales person closes 25% of these opportunities, he will have to make 1,000 calls to get 1 sale. If he is pounding the phones making 50 cold calls per day, he can get 1 winnable sale every 20 days. At this rate he can acquire 12.5 new customers per year. I am sure you can adjust these numbers to fit your business, but no matter which way you slice it the return on effort is terrible!”
…is very real for many sales people out there. That’s why they quit cold calling, miss their quotas, and eventually start looking for another job. Let’s be realistic. I don’t care how tough you are, the ratios above won’t take long to break a person’s spirit. That’s why the best sales managers who face this challenge find ways to put their people in a position to gain little victories along the way.
Jeremy shares that “when sales people are required to cold call to achieve quota, companies face two distinct issues: a higher cost of sale and higher turnover of sales people.”
Going into the financial breakdown is too complicated, so I won’t comment on the cost of the sale, but I can tell you that turnover rates are high because most people are not mentally tough enough to battle through the challenges of cold calling to generate their own leads month after month.
Cold calling on unqualified leads is like trying to chop down a Redwood with a dull ax. If you’re tough enough, you’ll eventually get through it, but it’s going to take some time. Once you knock it down, you’ll have plenty of fire wood. Sadly, most people don’t have the energy to get there.
The good news is there is a light at the end of the tunnel. Remember the 2 Simple Goals for Cold Calling Success. The best way to get away from cold calling is to stay put and work hard to build your pipeline. You can move out of the cold calling business and into the follow-up business by sticking with your present sales job, improving your skill-set, and building a strong, very large list of warm follow-up prospects.
So, this is where we come together again as a cold calling army of sales professionals to share best practices. The real solution is to call… call… call… and build a pipeline with the most reachable, most qualified, most interested prospects.
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