If you’re an active sales executive who is cold calling for new business and not having much success then I’m here to tell you that it’s probably not your fault.

I want to debunk some myths around cold calling, and back it up with researched facts. Most of the success that you’ve heard about cold calling is probably anecdotal at best.

does cold calling work

Cold calling seems to be the strategy that companies always fall back on for business development. Then again, most organizations don’t have a business development strategy in the first place. I would in fact argue that cold calling is a ‘non-strategy’ and rather an activity that is forced on sales executives when in reality the company is without a well planned sales strategy. Cold calling still somehow seems to be universally accepted as ‘what sales reps do’.

I can hear the nay-Sayers now…claiming to have built their book of business on cold calling alone.

I can hear sales managers lamenting that their sales executives need to step up their cold calling efforts as it’s the fastest way to new business.

I can hear the sabre rattling in large boardrooms where a Sales VP is making his heartfelt speech on the guts it takes to make cold calls and the glory that comes with the ‘kill’ of closing a new sale.

I can hear CEO’s saying ‘If only we had a better sales force. Our guys really don’t know what they’re doing. We need better sales reps or training to get them there”.

In turn I can hear sales training outfits saying ‘This is the training your sales force needs. Your team needs to learn how to make effective cold calls. Your sales department needs to know how to sell strategically. We’ll show you the way’.

Now unless you’re the only game in town with no competition OR you have an account base of 5-10 companies and can spend all your time and focus on them then maybe….maybe cold calling will eventually work for you. These are the only 2 areas where I have personally witnessed a degree of success with cold calling.

If you are not in one of the above 2 areas then I am here to tell you NOT to cold call. The sheer amount of research work going into making your calls (especially if you’re in the corporate level), the amount of screening and avoidance done by your prospects or just bad timing will quickly derail your success and deflate your attitude towards business development faster than milk can turn sour in the Sahara desert.

Cold Calling Studies

This article is also not just drawn up from my own opinion and personal experiences. There’s actually been studies done on cold calling and the dismal results they produced. One of the most well known undertakings was the Kenan-Flagler Business School at the University of North Carolina study which revealed that 80% of executives will positively not take a cold call.

Most notable however is one landmark study performed by the Baylor University’s Keller Center for Research in the Hankamer School of Business. The study completed a test on the effectiveness of cold calling by experienced sales executives for the real estate industry. The exercise yielded just 19 appointments from a total of 6,264 cold calls made. Can you begin to imagine the amount of time spent on doing research alone on prospective businesses and then executing 6,264 calls? How many appointments do you need in your industry to make a single sale? 19 appointments might realistically yield 3 or 4 sales, but it all depends on what is being sold and the value per sale.

If that wasn’t bad enough another survey was done by InsideView which revealed an astounding 90% of executives will not take a cold call or respond to an email blitz message.

There have been plenty of business development seminars for sales leadership where the trainer has asked the audience if they have their sales executives perform cold calling as a primary way to generate new business. About 80% of the hands go up. Then as a follow up question they are asked if they ever accept cold calls themselves -to which about 20% of the hands go up. I rest my case…

So what happened?

Well, for starters it’s not 1985 anymore, and the information age happened since then. Information that is so readily available at the fingertips of anyone who wants to do research. Information that shapes the behaviors and attitudes of buyers as they move their organizations forward in a strangely new competitive landscape.

So let’s go through the 7 reasons why cold calling is largely ineffective today.

1) Call Display Units

The information age has produced many new tools for the executives who salespeople call on.

That first tool started appearing in company offices in the late 1990’s, and that’s the pesky call-display unit! New telephone systems being installed in offices (and homes) came with a screen where decision makers could see who was calling them. If they don’t recognize the phone number calling then they can easily let it go to voice mail. This stuff just didn’t exist before. Why take the risk of a time waster? Worse yet for sales executives is if the buyer recognizes the number on his screen and ignores the call, because they perceive no need for the sales executive’s services. This leaves sales executives to call over and over again hoping to get the buyer ‘while they’re in the office!’

2) Post Recession Efficiency

Decision makers are too busy. Gone are the fat times of the 1980’s where most things turned to gold. The recession of 1991 and beyond was like the hangover from the party of the 1980’s. Companies were forced to hunker down and do more with less. That means achieving more productivity with less budget and less staff. Many companies hunkered down to new levels again after the sudden recession-inducing global financial meltdown of 2008. This took the world by surprise as fortunes dried up overnight. Most business people don’t like that type of risk and many organizations became even more efficient. Once again, they needed to become more productive and achieve more with less again. This is actually a good thing for forward thinking sales departments as their reps are in a position to help their prospects become more productive.

3) Mobility

Gone are the days of busy decision-making executives chained to their desks. They’re out visiting their customers, in meetings at other locations etc. I don’t need to tell you that today’s modern workforce is increasingly mobile, allowing decision makers to be more productive again. They’re not sitting at their desks waiting for a cold calls on their office phone.

4) They Hate Taking Cold Calls As Much As You Hate Making Them

Psychology is also at work here. They don’t want to deal with you because they’re afraid of having their time wasted. They’re afraid of dealing with a slick fork-tongued sales shark. They don’t want to have to say ‘no’. Most likely they’ve also seen Boiler Room and Wolf Of Wall Street. They know the sales scripts, the BS, and they hate the awkwardness of that approach as much as you do.

5) ‘Insider’ Information

They also know their own internal organization situation better than you do. They know the political landscape of their employer. They most likely have been with their company for a significant amount of time where they think they know what they need and what their strengths and weaknesses are. They know what direction the company is headed in.

6) The Internet

This one is huge, and the ultimate game-changer for sales executives. Decision-makers can control all their own research on Google, forums and other sources. They just don’t need regular sales reps that much anymore. At least not until the final nitty gritty of more complex and/or expensive solutions.

Think of when you bought a car 25 years ago -if you’ve been around that long. Most people hated dealing with the car dealers’ sales rep. Now that’s a thing of the past. Today you just go online and research the car of your dreams as much as you want. The car dealerships who aren’t posting information online or allowing you to easily communicate with them are left behind.

Now there’s another study done by SiriusDecisions that dares to ‘debunk’ the ‘myth’ that buyers have done 80% of their homework prior to any contact with a sales executive.

The article quotes:

“While the cognitive buying decision process is linear and sequential, we found that how buyers consume content and interact with provider organizations is not linear – in fact, the interaction patterns are much more episodic. What this basically means is that buyers do interact with sales executives during all stages of the buying cycle -including the very beginning.

I’d like however to poke a few holes in this study so bear with me here. The study does not take into account how the buyer came into contact with a sales executive at the beginning of their buying cycle. Somehow I doubt that first contact was achieved through cold calls. This is my constant nagging question: where do sales reps’ customers come from?

Let’s for argument sake assume the initial contact was made through a cold call and that the call sparked a buying cycle. I would still argue that buyers do both their own research (this however has stepped up astronomically in the last 20 years) and they will also listen to new ideas from sales executives. It’s just that much harder today for sales executives to get through to decision-makers by telephone. So as a sales executive you better have some darn compelling content ready to talk about in your calls if you get a decision-maker on the phone or else you’ll get hung up on very quickly.

The Sirius study in my opinion only completely reinforces the following points below. If you’re not working for an organization who has their digital footprint together and also arms their sales reps with high value information to pass onto ideal prospects then you will still fail.

Here’s a little checklist for modern companies to be successful in the new information age:

  • Does the organization make it easy to be found online in their industry and marketplace by prospects searching for solutions?
  • Does the organization provide information online that is easily downloaded or viewed? Is this information what prospects are looking for? Will this information help prospects immediately?
  • Is the organization arming their sales executives with high value, useful and educational documents, PDF’s, white-papers, case studies, videos etc to approach their prospects with? Are these materials thought-provoking enough for sales executives to challenge their prospects into a new way of thinking or considering new ideas they haven’t considered before?

If your above answers are a ‘no’ then these are often the first signs of a troubled sales department. If as a sales executive your employer is only providing you with PDF brochures on your company’s services then you’re in the same boat as 99.9% of other organizations out there. Your prospect will still need to do their own research on your company and most likely see you as a risk to meet with. You do not want to be in that position, especially if you’re in the commodity game.

As an organization or a sales leader you do NOT want your sales executives having to create their own compelling content to snag the attention of prime prospects. I see this happen all the time and It’s not their job. Create it for them or at least have a sales-department brain storming session on what content to create that will provide immediate high value for your ideal customers.

7) ‘Demand Generation’ Marketing

‘Demand Generation’ marketing departments have started popping up everywhere -and many of them are killing it by doing an amazing job. There are companies out there who ‘get it’ and are driven by their sales departments but led by their marketing departments. They don’t unwittingly make their sales executives try to do both. With modern email and web technology many companies started appearing that enabled marketing departments to be far more effective at attracting and helping educate prospects without their sales department even becoming involved until the customer was ready to talk. A few examples are the pioneering Eloqua, Hubspot, Marketo and many other copycats. If you’re a sales executive trying to get new business by picking up the phone and cold calling while your competition is:

  • Placing digital messages online and targeting your ideal prospects.
  • Getting your ideal prospects to ‘opt-in’ to online forms in exchange for their high-value educational materials such as videos, white papers, how-to guides etc
  • Following up with them regularly and strategically with even more additional value-providing educational information.
  • Romancing them along each step of the sales process until they’re ready to speak with a sales executive to take on the next stage of the buying cycle.

 

You get my drift? Organizations who have taken the right approach to demand generation can get a huge leg up on their cold-calling competitors.

8) Social Media Has Matured

Social Media has earned it’s place within modern and effective prospecting strategies. Social media activites when done properly can be extremely effective because when the stories or articles are high value then they have the potential to be shared. High value articles are shared with other people’s social networks far beyond that of just the sales exectives’ network or the company’s network he works for. Social Media can be very tricky but again, some organizations are killing it and leaving their cold-calling competitors in the dust. We are seeing social media services and training companies popping up such as Sales For Life and Hubspot.

What’s a Sales Rep To Do?

One common denominator that remains is the thirst for knowledge as a means to an end. Busy executives running companies or internal departments are always pressured to improve. This pressure ensures that they seek out solutions, it’s just that modern internet technology allows a faster quenching of this thirst for knowledge than ever before.

It seems the most effective thing individual sales executives can do is to assist with that knowledge quest. Perhaps this is why the challenger sales methodology has been so effective with rave reviews. If sales executives can effectively approach their decision making prospects with high value educational items in the form of ‘how-to’ guides, white papers, reports and other value-rich intelligence they will go a lot farther towards establishing not only a first meeting but also a long term relationship.

Everything evolves and nothing lasts forever. They say what comes around goes around and what’s old will become new again. Right now however cold calling seems to be at an all time low for return on investment, while new technology to communicate new ideas is taking centre stage. It’s not only technology that’s shaping buyer’s behaviors, but also other external factors such as our increasingly educated workforce and our attitudes to one another.

 

2 Responses

  1. James Pollard

    This makes a great deal of sense! Cold calling might have been a great way to build a business in the past, but the effectiveness has definitely waned. I’ve seen that in both my own businesses and my clients’ businesses. Great article.

    Reply

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