The most troubling aspect of the pace at which technology has improved business operations is there are a lot of successful people floating around doing things the way they did in 1994.
The exponential technology boom has dramatically changed the way we buy… but for the most part people are still trying to sell the same way they did in the movieBoiler Room
And, that kind of makes sense. Much in the same way it would make sense to hire a star player from the 1990’s to coach your team today. Their experience is invaluable and they’re a proven winner.
However, there is a prevalence within most sales structures (across all industries that I’ve seen) of managers and executives that made their careers smiling and dialing. It would make perfect sense for them to share their experience with their employees, in the hope that they could someday be as successful.
Cold Calling is Antiquated
Even though I don’t recommend using cold calling for any part of your sales structure, I believe if you’re going to do something that you should do it right. Here’s the process that would make the most sense to me if you must continue to use old sales tactics:
- Use a Script – that way it’s easier for your sales rep to zone out
- Follow Up Fax – I like to call this the “Antiquated Medium Double Down”
- Set the Right Mood – Play Boyz II Men/90’s music on the sales floor
Ideally you should have this process documented on an old WordPerfect printout that’s been photo-copied so many times some of the text is no longer legible and haphazardly handed out to your sales team on their first day.
Make sure to make a lot of copies, because if you’re requiring your reps to cold call you’re going to see high turnover (one way to mitigate turnover in cold-calling environments is to only hire nihilists).
Cold Call Close Rates Are Abysmal
Close rates vary by industry, and the quality of your list, but chances are it’s going to be in the 1% range (maybe a higher number will turn into leads, but eventually you’ll see about a 1% success rate).
To put that closing ratio in perspective, Shaq is 50 times more likely to make a free throw than your sales rep is to make a sale on their next attempt. Most people hire sales reps that want to succeed. Getting “wins” is important to everyone.
In his well thought out book, The Paradox of Choice
, Barry Schwartz highlights a critical component of human nature: we feel losses twice as much as we do gains. Meaning, if I gave you a dollar, you’d experience about enough joy to counteract the pain of losing fifty cents.
When you “throw a phonebook” at your salespeople you are making them lose 99 times out of 100. To offset that pain, they’d need nearly 200 wins (again, if you’re hiring nihilists, this is a non-issue).
Cold Calling is Not Free Marketing
Beyond the mental fatigue and eventual burnout your sales rep will experience in their cold calling, there is a hidden cost that for whatever reason is overlooked.
I’ve heard of call requirements ranging anywhere from 30 to 100 outbound calls per day. A rep making $50k annually will cost you roughly $2-$6 per outbound call and between $200-$600 per closed lead. Play with the math however you want, cold calling is really expensive.
For most companies, there is a hybrid model of cold calling and inbound leads, so the high cost of outbound sales are diluted by the much higher return of inbound sales. In essence, it’s easy to ignore the high costs of outbound calls, because inbound leads (organic leads, SEO, referrals, repeat business, etc.) continue to grow across all industries.
Would You Buy From a Cold Caller?
Think of the last few B2B purchases you made. How many were the result of someone cold calling you? My guess is zero. You probably asked someone with experience in that area, researched online, or sourced from an existing vendor.
Cold calling sales reps are annoying. A big part of the reason there is a 99% failure rate is people don’t even listen to cold callers… you’re really just waiting for an opportunity to politely end the call.
If you believe for some reason your sales reps are special, and your cold calls are effective, you’re either naive or delusional.
Why Do Businesses Continue To Cold Call?
It would be overly simplistic to say sales executives are lazy and lack creativity (but it is fun to say). For most executives that have been around an industry for a couple decades or more, they’ve probably seen results from cold calls.
If sales numbers are lower than expected, it makes sense to them to target an industry or database and work the list. We tend to stick with what we know, and if members of your sales executive management team has 20+ years of sales experience, they know how to cold call.
Lies, Damned Lies, & Statistics
Lastly, I’m sure many of you have seen the numbers in the photo above. Some of you have probably even brought them up in sales meetings to push your team to continue to call and call… and then call again.
80% of sales are made on the fifth to twelfth contact
The trouble with that statistic is: it’s not true.
And the official looking group that put it out, doesn’t seem to exist. Happy dialing.