Why Cold Calling Is the Bottom of the Barrel

TrashInsideView nailed it by titling its Sales Intelligence blog “Why Cold Calling is the Bottom of the Barrel”. Finally, a Sales 2.0 company states that cold calls are dead.Yet, many sales people continue to cold call. My definition of a cold call: You call a person who does not know you and is not expecting your call.  (For more on why a real introduction—a referral—makes all the difference, read: “How to Bypass the Gatekeeper”.

If you have just a name in hand (and not a referral), your call is cold. The cold calling conversion rate is less than 10 percent, and you are in the “dialing for dollars” league (read, “wasting time”. And who has time to waste?).

Why Waste Your Time Cold Calling?

Referral selling works. Really.

Compare cold calling to referral sales. When you receive a referral introduction:

  • You are pre-sold
  • Your sales process shortens
  • You ace-out the competition
  • You convert sales prospects to clients more than 50 percent of the time

No other lead-generation or business-development process comes close to these results. Referral selling works.

However, sales success is a strategic process. You must actively use all of the tools at your disposal. Use Social Media and Sales 2.0 tools to find out who people are, who they know, and how you’re connected. Then pick up the phone, talk to your Referral Source, ask for the referral introduction, get the meeting at the level that counts, and boost your close rate to more than 50 percent.

Key Points from InsideView

Regardless of your level within a sales group, cold calling is a cloud hovering over your head. If you’re the VP of Sales, you receive these (cold) calls several times a week. If you are the Account Manager then you have a set number of calls to make or a list of companies you should be “hunting.” In either of these scenarios, the call is never appreciated. Getting interrupted or interrupting someone else is always the result. The science (if you call it that) is if you make 100 calls a certain percentage will become opportunities. Are companies still playing this game?

Outbound calling to a person that has never heard of you or your product is just about as likely to buy your widget, as they are the Brooklyn Bridge. You have to build trust.

Current Customers Are Key

Getting business from current customers is usually the easiest since they already use your product.

Unless you have done a poor job with the account or have not been able to keep up with their needs, you are generally in a good place with them. Current customers are a great place for referrals and can and should be leveraged to bring in new business.  This is why companies spend so much time making sure they have great reviews and working with customers to write these reviews. (For more on how your well-tended customers are a part of your referral-sales team, read: “Your #1 Untapped Referral”)

Why Are You Still Cold Calling?

These numbers don’t lie: 90 percent of consumers trust peers based on a Nielsen poll, and less than 10 percent trust an unknown source. Cold calling is perceived a lot like phone spam. If customers want information they will search you out or at least leave digital breadcrumbs of questions or conversations that you can find and then engage. … Selling is based on trust and you can spend the time (a lot of it) building it with people that have never heard from you or you can move further up to leads and prospects that you have some trust with.

This is why sales people have been hearing so much about the value in nurturing campaigns and social media marketing, but little of it seems to apply to anything a sales person can influence. This is why Sales 2.0 is growing in popularity, sales people can have more relevant intelligence on prospects and become great resources to their customers by using social media and sales leaders see this as a priority.

Some of the best businesses in the world were built from cold calling and that was because they found a way to exploit a technology (phones) using a team of people to saturate a market of people that loved to talk to other people. That hasn’t changed a whole lot in the past few years other than the fact that the phone is no longer the best technology to use because decision makers have less time. Sales 2.0 savvy teams will be the next wave of revenue generators for companies, starting in the technology space and moving like a wave through different industries. Social selling will hit resistance and may not apply at all to some companies (I can’t imagine which ones but I’m sure they exist). Read the full InsideView blog post here.

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15 Responses to Why Cold Calling Is the Bottom of the Barrel

  1. John Muldoon says:

    This is great, Joanne! It’s no coincidence that a Sales Intelligence blog would be on board with what you’ve been saying for years.

    Keep the great content coming!

  2. Jonathan says:

    How can u actually get referrals of value other than from people who have used your product. How much value is there in a referral give because of incentive without using your service or product.

  3. Marge Bieler says:

    Joann, I agree with you; yet, what’s sad is many companies do not allow their field and inside sales teams to take the necessary time to build “trusted or golden” relationships, which are needed to establish referrals. Companies whom have high sale’s rep churn, will make it difficult for new reps to approach their personal referral network until they’ve established for themselves that asking their past referral based peers will not burn them down the road. Companies who have low turnover with high sales rep retention rates, have a much success of establishing a referral built business pipeline.

    Trust is built overtime through active dialogue. Individuals who understand the value of client relationships with other “peers” are the individuals who know how to use these relationships to get in the door.

    RareAgent’s 1st rule of thumb is to ask to use our client’s peer/referral network to help get their foot in the door. We want that peer/referral (friend, client, partner, etc.) to do all the talking/selling for our client. Second approach is using internet research to find “golden” nuggets of information that we can reference to bring relevance into conversations. We want our clients and our teams-for-hire to come across as being “interested” not “interesting” and show we’ve taken the time to show them we are interested in them.

    Sincerely,
    Marge Bieler
    CEO
    RareAgent

    • Joanne Black says:

      Hi Marge:

      You raise interesting points.

      Companies that understand the power of referrals adopt a disciplined, measurable referral strategy. They understand that everyone in the organization is part of the sales team. Everyone knows someone. So, it doesn’t matter whether a sales person is new to the organization or has been there a long time. Who do they know? Who do others in the company know? How about their colleagues and peers?

      The key point is that we must earn the right to ask–which means we have developed a trusted relationship. In many cases, that takes time. However, in many instances, especially when we’ve been referred, the trust and rapport are almost instant. Certain people connect at once and are immediately exploring how they can help each other. We all know when that happens, and it’s magic!

  4. JF says:

    As mentioned previously, “You must actively use all of the tools at your disposal” and for many “Cold Calling” is such a tool. The question is not whether cold calling works or not but instead is cold calling the best choice given the situation.

    • Cold calling is never the best choice. If your back is against the wall and you have nothing else working for you, learn to use social media to uncover and develop leads. Technology & social media really leave no excuse for someone to make cold calls nowadays.

  5. Have any of you ever run a business which isn’t orientated around handing out advice?

    I REALLY don’t mean to cause offence, but to proclaim cold-calling as dead is more than a bit ridiculous. I own a Digital Agency and I use cold calling as one facet of my marketing strategy – I use SEO, I attend networking events, I get a LOT of referral business. That’s great, but cold calling is too, it works.

    It’s all very well saying something is “dead”, but the reality of the situation for us is that it works – we sell training courses using qualified, professional telesales people and they do a great job. In terms of time ratios, we could spend an entire year building up visibility around a new target search term, or we could hit the phones and sell now.

    Both strategies work, one gives immediate return, the other is a slow burner. We use both and any and all other marketing/advertising strategies at our disposal and within our budget.

  6. Joanne Black says:

    Hi Gareth:

    I’m so glad you wrote to share your point of view. It is important to acknowledge that there are many different ways to sell. I tell people that if what you are doing is working, keep doing it.

    I choose not to cold call. The statistics are dismal. When referrals are adopted as a disciplined prospecting strategy and salespeople receive an introduction to their buyers, they actually shorten their sales cycle and close business more than 50% of the time. The results are immediate, and a trusted relationships is built. Nothing beats a referral introduction from a trusted source.

  7. Pingback: 15 Posts on Why Cold Calling Is On Its Way Out the Door | #b2bsales

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