The Abusive Math of Cold Calling
If you are emotionally attached to cold calling, you might want to stop reading this post now.
At a recent conference I heard Mahan Khalsa, co-author of Let’s Get Real of Let’s Not Play share the following statistics. (I don’t have the source of the data, but my experience tells me it’s pretty accurate.)
Cold calling results in about a 1-3% success rate for getting an initial appointment and it’s generally abusive to both parties. When that same call is made with a referral, the rate jumps up to 40% and even much higher when that referral comes from within the company.
The conclusion anyone should make from the gap in these two points is that you should never leave the office or get on the phone to call on a prospect without some form of a referral. In fact, if you’ve got a hot prospect, you should probably wait to find someone who can refer you or you might just waste any chance of getting in the door.
So, let’s do some simple math – if you have a list of 1000 names to cold call, you’re looking at getting 30 appointments as doing quite well (who knows if they are the right 30, but we can use this for conversation sake.) Now, let’s say you drill down and do enough research to find 250 prospects on that list that are very well suited to your business. Then you do further research using social media to locate information and contacts that would allow you to get referral introductions and recommendations to most on that pared down list. Experience tells me this approach is likely to turn up 75-100, well qualified prospects willing to discuss your ideas further.
Make fewer calls, get better results – that’s marketing math you can live with.
A referral into a prospect can come from one of three places, your current customers, your network, or a strategic partner. It’s important to mine all three of these groups as you build your prospect list.
A key aspect of this concept, of course, is that you are constantly developing a hot prospect list. In other words, a list of customers you would like to do business with. When you have this as your starting point you can target your referral sources for specific requests. When you go to a customer or strategic partner and ask if they know anyone on your list, it’s much easier for them to help.
Now, here’s where social technology can really be your friend. Once you have a prospect list, connect with them in social networks like LinkedIn, Facebook and Twitter. When you do this, not only will they tell you a lot about what’s important to them and what their challenges and opportunities are, they’ll probably show you who their peers, friends and network members are. They may actually identify for you the best way to get to referred into them.
Do this with your existing customers as well because it will make it easier to identify the ones that are influencers, who participates at a high level in social media, and who might be great candidate to refer you to your hot prospect list.
The last piece of this tactic is that you also have a plan to educate your referral sources. If you find that you are just one LinkedIn connection away from a hot prospect and you would like someone in your network to make an introduction, make sure that you take the time to teach them how and why to introduce you. This assures you don’t waste anyone’s time and your referral source including that of your referral source.
This approach obviously takes more time and planning. You must develop a prospect list, research using social media, and plan for referred introductions. The end result, however, is a success rate that any sales and marketing person would be envious of.
Image credit: stuartpilbrow