Is Cold-Calling Really Dead?
How do successful companies generate sales leads? How important is branding when it comes to getting new business? Is cold-calling really dead? Mike Schultz, principal of the Wellesley Hills Group in Framingham, Mass., posed these questions and more to readers of his marketing and sales Web site, blog, and newsletter.
The responses he received from more than 700 professional-service leaders compose a new report, What's Working in Lead Generation (a free summary is available at his Web site, www.raintoday.com). Smart Answers columnist Karen E. Klein spoke to Schultz recently about what he discovered through the survey. Edited excerpts of their conversation follow.
Your survey summation concludes that company branding is a big part of generating new business. Why?
Well, we asked these CEOs and VPs of marketing and sales whether their firm was "very well known" to their target audience, or "not very well known." The majority—70%—said they weren't very well known, while only 30% said they were very well known. We equate that kind of widespread reputation with being well branded in the marketplace.
And what's interesting is that there was a strong correlation between being well branded and reporting that your company is "good" or "excellent" at generating new leads. In fact, 66% of companies that said they're well known in their marketplace also say they're good or excellent at lead-generation, but only 44% of companies that aren't very well known checked off good or excellent when it comes to getting new sales leads.
Why do you think that is?
Well, the bigger and better your reputation in your industry, the better your lead-generation efforts will work. And this held true, in the survey results, no matter the size of the company. This was equally true for large and for small firms. If you're a player in your industry—writing, speaking at conferences, networking—you're going to be setting trends, you're going to be well respected, and your marketing efforts will be well received.
You saw something of a similar correlation between businesses that were positive about generating new leads and those that were very familiar with their target markets, right?
Yes. Most service firms aren't selling to 7.5 million boys between the ages of 17 and 27. They're selling in a much more narrowly defined, manageable, business-to-business market. So they may have identified 400 companies who would be potential buyers, and 77% could identify a general profile of those companies.
But when they were asked about getting more specific with their target markets, only 58% could give the titles of the decision-makers they needed to reach, 55% knew the names of the specific organizations they wanted to target, and only 30% knew the names of specific decision-makers they would target in generating new leads.
And again, there were strong correlations. Firms that rated themselves good or excellent at lead-generation scored much higher than average in knowing their target audience. More than half, 51%, of those firms knew the actual names of decision-makers at their target. But that figure dropped to 13% for companies that rated themselves poorly when it comes to generating sales leads.
What does that tell you?
Companies spend a lot of time trying to avoid cleaning up their databases, but if you have done this research and you have the information and it's clean and updated, it opens up a whole world of people you can target with your sales and marketing messages. That's eye-opening, or it should be, for CEOs who are arguing with their marketing staffs about where their priorities should be. Should you focus on whether your new brochures are teal or purple? Or should you be cleaning up your sales database and going after new business?
Speaking about getting new business, we've heard a lot of experts recently declare that the practice of cold-calling is dead. Your survey seems to contradict that.
That's right, because cold-calling works, if it's done right. The survey results showed that the top three ways companies generated quality new leads over the past two years were referrals from clients or partners (22%), general referrals (16%), and cold-calling or telephone prospecting (13%).
That means that, after referrals, doing direct marketing over the phone is the second-best method for generating new business. This wasn't a multiple-choice question, by the way, so we didn't list various methods of lead-generation, we just left the question open-ended and asked people to fill in the blanks.
What CEOs find is that referrals are all-important. But referrals are simply not sufficient these days to grow your business. If you sit around waiting for your telephone to ring with new business inquiries, your company is going to tread water and eventually shrink. You have to actively go out and recruit new business if you want to succeed.
Why do you think cold-calling has been negated as a sales strategy in recent years?
Because nobody wants to be a cheesy sales person. People who have call reluctance can make up reasons why it doesn't work. Similarly, I could say that peas and Brussels sprouts aren't healthful because I don't like them, but that doesn't make it true. Everyone wants clients to call them, not the other way around. But there's definitely still a place for direct marketing, with mailers, telephone contacts, or e-mail. And there's a way to do it that isn't cheesy, doesn't rely on a long, boring script, and doesn't demand money up front.
For instance, you call a prospect and invite her to a small gathering of local CEOs interested in talking about new operations strategies. Or you send out a mailer letting your targets know that you will be speaking at an upcoming event about a topic that would benefit their firm's bottom line. Your sales staff calls up local decision-makers to share the results of a new white paper you're releasing that will be of interest to them. People take you up on value-based offers that make your firm and its value very apparent to them.
Another bit of advice you gleaned from the survey respondents is to nurture the leads you generate. What does that mean?
Well, you've done your branding, you've done your research and identified specific individuals that you want to target, you've called to ask what they're looking for or to invite them to a value-added event, but you still can't expect to go straight from telephone call or direct-mail piece to new business. Those things can get people to agree to meet you or download your white paper, but it's too big a leap of faith to expect them to buy from you right away. Instead of making a leap of faith, you want them to take your hand and make a series of small steps.
If your sales staff concentrates all its efforts on "sales-ready" leads, and drops the other leads it has generated, it will lose up to two-thirds of its potential new clients. Our survey results showed that of all the new leads companies generated, only about 25% were sales-ready, while 50% needed further nurturing, and the final 25% were disqualified.
Some business owners think they can drop a marketing campaign in the mail and get flooded with new business. They're terribly disappointed and discouraged when that doesn't happen. What they don't understand is that buyers are spending millions of dollars on their own schedules, and until your service becomes important for them, you're not going to twist their arms into buying it.
Also, there's not much you can do to speed up their buying cycle, but if you have an ongoing lead-nurturing program that involves staying in touch with them over six months or a year, they will remember you at that elusive "time of need" when they clear their whiteboards and pick their next company goal (see BusinessWeek.com, Winter, 2007, "Staying On Top of Your Game").