Best Practices: Cold Calling
Best Practices for Cold Calling
by Larry Dillon
Cold calling is a valuable sales strategy that nonetheless stirs up a lot of controversy. Business leaders may wonder whether cold calling is a worthwhile means of generating leads and closing sales.
What’s the potential gain?
Cold calling is more of an art than a science, and there’s always room for improvement. You can always get more out of the leads you purchase. I’m always surprised that some of my clients can turn what looks to be an unqualified opportunity into an appointment. Those are the folks who are looking at cold calling more as an art than a science.
Once, Wendover did a couple of surveys where we asked a software company to give us 300 dead leads from their “dead leads dumpster.” This organization is a very successful software company based out of California, and we told them “Listen, we’re doing some research. We’ll give you the results; just let us have a couple hundred dead leads.” They assured us that we wouldn’t find much or anything in their “Global 50” (the top 50 financial institutions in the country). They had 5 full time sales reps focusing on those 50 accounts.
In less than two weeks, we had identified over 2 million dollars in their pipelines, even though not one of their top 50 or top 10 prospects had popped up as a qualified lead.
Overall, we found that 75% of disqualified leads were erroneously rejected. So what’s to gain? The sky is the limit, once companies begin to work leads they may have previously given up on.
How much business is in your dead lead dumpster?
We asked the people who responded to our survey, “How much could you increase top-line revenue with better business development practices? (most of it focused around cold calling)?” The average response from companies both large and small (from everywhere including Ireland, Scotland, US, Canada, UK) was 26%. This means that for a company with $100 million in sales, the CEO is saying, “I know I’m losing 26 million in possible revenue, and I don’t know what to do about it.”
I think the number is closer to 35% based on research over the years. My consultant David Perry, based in England, got a consulting gig with a company with revenue worth about 10 million pounds, which is around 16 million dollars. In 12 months, he took them from $16 to $28 million without acquiring new leads, implementing new marketing practicing, or hiring additional sales people. He just worked on better business development practices by focusing on cold calling and sales processes. There is a lot of opportunity to gain by learning how to improve and perfect your craft.
Cold calling is one of the most powerful forms of B2B marketing, so powerful that the US government sometimes has to regulate it. Why? First off, cold calling is proactive. Being proactive is more important today than ever. In fact, research shows that in 73% of cases, the first person to contact the buyer is going to be the person who gets the deal. You can either be proactive and go after business, or you can wait for business to come to you through your website or other channels: a much less effective practice.
Two-way conversations are the best way to create demand. After all, people like personalities. My dad used to say that you’re going to hit it off immediately with 10% of people you meet, and 10% are immediately going to dislike you. When I’ve done consulting with an inside sales team, you can actually see and hear when two people are connecting over the phone.
The bad news about cold calling is that it’s complicated, but that’s also the good news. If it’s difficult for you, it’s difficult for your competition as well.
In cold calling, there are 5 key sins that companies make when it comes to hiring and finding an inside sales team.
1) Lack of knowledge
2) Underpaying inside sales team
3) Not hiring at a high intelligence level.
4) Management doesn’t respect the position
5) Hiring reps with only average skills
We often have to find 30 candidates and narrow them down to 10 or fewer people who are ultimately hired. It’s hard to find someone who will do the job well.
What makes cold calling so complicated?
Everyone is different. The problem is that we don’t know the personality of the person on the other end of the phone. If we take a singular approach towards cold calling, chances are that we’ll fail. You may just turn them off by the way you approach them, and this may lead to a false negative (saying they’re not interested, even if they’re in the market for your product or service.)
Timing is also tough. There’s a high probability that you’re calling your prospect at the wrong time. They may not be ready to buy in the next 3-9 months. They may be in the preliminary stages of making a decision, or they may not even have decided that they need your product or service. In addition, personal issues, stress, or other reasons could lead to the prospect giving you a false negative. They could be in a bad mood or too busy to talk to you. You may call one day and receive a negative response, but two weeks later, that same prospect may be receptive to your call. That’s why it’s important to reevaluate “dead” sales leads, pass them around among different salespeople, and be persistent about following up until you’re sure the lead is actually “dead.”
Cold Calling Strategies
One size doesn’t fit all in your approach to cold calling. A good strategy is to look at cold calling as a multi-step process that can be tailored according to your prospect. Let’s talk about the buyer. We asked one thousand business owners, sales managers, presidents, and CEOs what they felt was most important to the buyer.
4) Identifying solution to problem
It’s not really surprising that Trust was #1. But what’s the probability of being able to develop trust in a 15-second cold call? It’s impossible.
How is trust developed? One way is by being viewed as an expert by the third party. Showing that you have knowledge in whatever they are inquiring about makes you a reputable source in their eyes, and that’s what you want. You can prove that you’re an expert by providing valuable information, getting published, and having a strong internet presence.
Let’s take a look at the buyer’s process. The first stage is when the prospect hasn’t really decided what they need. This is usually 9-12 months before the purchase. The second stage is when the prospect says, “We’re considering buying,” usually 4-9 months in advance. This stage is also called the “information gathering stage,” in which the buyer is trying to get an idea of what they want to buy. They may have used the internet to do some research. The last stage is the bidding stage, which is typically a month to 4 months before the purchase.
As a company, you have to realize that the people who are easy to get appointments with are not necessarily your best prospects. It’s important to look at cold calling the same way you look at your stock portfolio: diversity matters. The short-term leads may give you an immediate appointment, but medium- and long-term prospects allow you more time to attain the number one buyer value: trust.
Today, up to 50% of buying decisions are made online well before a sales rep is able to get involved. How many prospects have gone online and scoured the internet before talking to a sales person for help? What’s important now is reaching people before they hit the internet. You need to “frame the discussion” by engaging the customer before they become a bidder.
The highest value and margin are those in the long-term lead category, or the 9-12 month range. They’re the most valuable because there’s no competition so early in the game, and you can create demand for your product. Most sales reps ignore this pool of people, but paying attention to long-term leads is the best way to preempt prospects before they go to the internet.
The mid-range category of leads is often still pre-internet and yields an average margin. You have to figure out how to engage these customers and stay with them. By the way, 80% of sales reps will never call these people back, because mid-range prospects are still unsure of what they want and are often unwilling to make a commitment.
Short term leads are the easiest to set up an appointment with, but these opportunities have the most competition. You must be the best to get these.
Another important fact to keep in mind is that 78% of companies have less than 10 employees. Only 1.9% have over 100 employees. If you get a lead that has 50 employees (putting them at the top 5% of your potential leads) that particular prospect deserves 5 times the effort. When you’re looking at it this way, a company with 15 people doesn’t seem so small. It’s huge.
Let’s get back to cold calling basics. First thing is, NEVER ask a yes or no question. There are very few people that can get away with this. Saying things like, “I know you’re moving your office,” or, “I know your lease is expiring” tends to breed suspicion and defensiveness. Instead, build relationships between your two companies to set your phone calls up for success. Some ways to do this include:
Engaging the gate-keepers. These may be receptionists, influencers, assistants to decision makers, etc.
Sending over a white paper. You need to have a white paper that is free, helpful, and informative. The purpose of this paper is not to sell your product, but to educate and even inspire the prospect to revitalize their business development practices.
Invite the prospect to a networking event.
Here’s a sample call:
“Hello, this is Marcy.”
“Hi Marcy, my name is Larry. Listen, my CEO wanted me to invite Bob Jones to a free webinar. I’ve got Bob’s email, is this correct? (Verify email). Does Bob have an assistant that I should forward this to, as well? (Take down assistant’s email). Hey, is Bob available right now for a quick introduction?”
She may say that it’s not the best time, or she could put you through. Either way, she will be honest. If not, simply ask when the best time will be. Every phone call you make is a winner, because you’re inviting the prospect to an event or providing something useful for free.
Here’s another example:
“Hello, this is Marcy.”
“Hi Marcy, I’m Larry from XYZ Co. Listen, I know you’re busy. My CEO Betty Klein would like to invite Bob Jones to an open house and networking event at our office. We’re getting some local businesses like yours. Our CEO would like Bob to join us. I just want to make sure that this is Bob’s email (rattle off email).”
If it goes well, you can go right into an introduction. Once again, Marcy will be honest. She may either say that it isn’t the best time, or she may put you right through to Bob. Either way, a relationship is established. You’ve engaged the customer.
Notice, I’m not trying to sell anything. Every phone call is nice; a free webinar, a free white paper, a free event with clowns and monkeys. Whatever you want.
Now let’s talk about the second call. Let’s say we get through to the receptionist again.
“Hi Marcy, it’s Larry again. We spoke last week. I want to follow up and make sure Bob got the information I sent him. Is he available right now?”
If you can get in some banter or some chatter about the local baseball team or anything you want, that’s optimal. Even in the second phone call, we’re building a rapport. This can be 2 days apart or a week apart.
What do you do when you finally connect with the decision maker?
Here’s an example:
“Hey Bob. First I’ve got to compliment your staff. Marcy has been great. What a positive way to represent your company. This is Larry from XYZ Co. I wanted to make sure that you got the invitation that my CEO had me to send you about our upcoming event.”
If it’s going well, ask some questions about the business and say:
“Listen, I want to send you some information about what we provide to relocating companies.”
Resources for your inside sales team
I’m always shocked when people don’t have an elevator pitch. When people say “What do you do?” I could say “Well, we’re the largest relocation lead provider in the US, Canada, England.” Or I could say “We provide the best sales leads.” But what I do say is, “We identify four billion dollars in B2B purchases before the buyer selects a vendor.” It’s compelling, it raises more questions than it answers, and I could tell you story after story about how successful this is. Once, I was literally in an elevator with an important business publisher, and I had 30 seconds to get his attention. He was a very difficult guy to get an interview with. After I gave my brief pitch, he said “I want to meet with you. Call me on Monday.” I wound up getting 600k in free advertising for our business.
The bottom line: your pitch has to be provocative and memorable. If you’re a moving company, your elevator pitch might be something like: “MoveCo helps companies identify and avoid the 7 critical problems that are disastrous during a move.” That’s going to get you some questions like, “What do you mean problems? Give me an example.”
You could also say:
“Hi Bob, this is Larry from CCom. Bob, I was reading your website. I see your business is growing. That’s great! Have you increased your staff? What is the key to your success?”
Whatever the answer to that question, this is the point where you definitely want to ask if they’ll be needing moving services or furniture. So you say: “Bob, let me ask you a question. Are you more likely to buy new furniture in the next 24 months or later than that?”
If you’re doing things right and engaging correctly, they might ask you more about your business. So have a bunch of questions that you’ll ask them about their business.
Or you could say, “I know you don’t have any needs right now, but if there is ever anything, no matter how small, give me a call, and I’ll make sure you get the red carpet service. Here’s my cell number.”
If they say they’re moving but don’t need a quote right now, keep at it. You have to jump into action these days. Do not call the prospect a month or two later. Figure out how to get into the office. One good way is to send them a quote for budgeting :
“Hey listen, I know getting a quote and figuring out the budget for the move is difficult. Let me ask you some questions about this move and send you a quote for budgeting purposes.” I used to close 12 deals a year without ever going to see the customer. Sending out a budget quote kept the competition out and took advantage of the fact that many people procrastinate when it comes to getting bids.
Increase the contacts
These are the prospects who are in the long-term and mid-range categories. Do not call them a month later. You need to get out to that company within a couple of weeks. You can do a fly-by or something else, but the ultimate goal is to do anything to get engaged with the customer.
Do I leave a voicemail? Some people don’t like leaving a voicemail, but it can be productive. The voicemail should be very short, for example: “Hey, it’s Larry from CCom. When you get a moment please give me a call at (phone number).” You don’t have to talk about your company too much; the shorter the better.
Another good idea is to always arm your inside sales team with a list of happy recent customers, organized by zip code. They could say “Hey Larry, I noticed you’re in Haverford. Are you familiar with XYZ Company that just moved in that area? We did a move for them, and they were really happy.”
Selling is dead. It’s all about the buyer. In terms of cold calling, we have to stop selling and start looking at it from the buyers’ prospective. What can you do to help them before you get the appointment? Identify what the buyers’ problems are and what their biggest concern is. This is all basic stuff but I think it’s really important to look at cold-calling from the buyers’ prospective instead of a seller’s prospective.
Be careful, because buyers do not have to tell you the truth. They can say they’re not going to be buying furniture or telecom when, in fact, they are. Always call back, even when you get a negative response.
Here are some common questions related to cold calling:
Do you confirm the appointment on the day of the appointment?
I would recommend that. Sometimes it kills the appointment, but you have to kind of measure whether it’s killing more appointments than it’s keeping. The other thing is that can you find another opportunity nearby. Today with the time constraints that we have, I would always try to find another opportunity nearby.
We tend to confirm the appointment a week before. Confirmations don’t always mean something, though. I’ve had situations where we’ve called a day before and said: “Listen, I’m getting up at 5 in the morning to drive to Washington DC to meet with you. I just want to confirm,” and when our sales rep arrived, he was blown off.
How long do you wait before making the follow-up phone call?
If you’re sending an email, they should have gotten it that day. I would call them the next day. If you’re sending something in the mail, then obviously I would wait until they get the mail piece.
How do I get prospects to respond to my voice mail?
Try leaving a basic voicemail with your name and number only. Remember that if something is not working for you, there might be ways to unlock it. It might be the tone of your voice, the inflection, the cadence. It might be as easy as reversing one or two words. Quite often, it comes down to the individual – that’s where the art comes in. Figure out how to unlock each of the steps so that you’re getting the maximum results.
Does being direct work?
Some people are really good about being direct. If you’re getting lots and lots of appointments, that’s good. I can only speak for Wendover leads. If you’re setting 25% of leads into appointments – which is top tier – I would say that’s working well for you. The problem is that if you are direct, some people won’t like your approach and may give you a false negative response.
Again, it’s an art form, so there is no right or wrong answer. It’s a combination of your personality and your process.