From The Wolf of Wall Street to The Pursuit of Happyness, cold calling has long been seen as a staple of the financial industry. We’re all too familiar with the images of rows upon rows of sweaty brokers, furiously dialing away, hitting obstacle after obstacle--only to suddenly, and improbably, hit gold when they close a client.
But for all its positive portrayals, cold calling is an inefficient practice that offers minute returns for hours upon hours of effort. In one experiment conducted by Baylor University’s Keller Research Center, 50 agents conducted 6,264 cold calls. Of those calls, only 28 percent (1,774) were answered. More importantly, of the answered calls, only 19 appointments were made (a rate of .3 percent).
Cold calling yielded a success rate of less than 1 percent. If you had employees who closed at that rate, suffice to say that they would no longer be with your organization.
But that’s not all. According to a 2013 report from Ad Age, the ROI on cold calling is about 8.21 percent for these third-party lists, and the cost per lead is about $190.12. Either way, it appears telemarketers are barely breaking even.
Here’s the thing: experienced salespeople know that good deals are not closed from cold prospects, but from warm ones. People hate being interrupted with cold sales calls so much that nearly 200 million people -- or the vast majority of the country -- are on the National Do Not Call Registry. Clearly, cold calling can be painful for both sides.
While cold calling appears to be dying a merciful death, note that its idiot cousin, robo-calling, is thriving. Nearly half of mobile calls were expected to be of that nature by the end of 2019, up from 3.7 percent in 2017. “Hatred of them,” comedian John Oliver said on his television show, Last Week Tonight, “might be the only thing everyone in America agrees on now.”
Incidentally, cold calling in Oliver’s native England, while not illegal, is heavily regulated, and can result in stiff fines to companies engaging in this practice. While no such restrictions exist in the U.S., that miniscule conversion rate for cold calling -- .3 percent -- obviously gives salespeople pause. If you’re fresh out of prospects and leads, isn’t that better than nothing?
Statistically, perhaps, but there are far better ways to engage prospects, far better ways to maximize your return. Consider, for starters, email. While it might seem stodgy and outdated, it is the primary mode of lead generation for 89 percent of marketers. And get this -- for every dollar spent on this tactic, a whopping $44 is made.
PayPal’s email marketing campaign is particularly highly regarded. The company’s approach -- “Good food. Good friends. Good way to split the bill.” -- taps into a common problem faced by groups out at dinner: Just how do you go about divvying things up? People tend to only have credit or debit cards, so it can be a hassle. But wait -- here’s PayPal to the rescue! Such things resonate with consumers.
So too does JetBlue’s endearing and irreverent email marketing campaign. Take, for example, this missive sent out by the airline upon its one-year anniversary with a customer:
We’ve been emailing for 365 days now. Huge, right? We’ve made such great memories together -- remember that time you opened our sale email and giggled at our travel puns? Or that time you scored a super low fare to your favorite destination -- all because we lovingly emailed you first? (We won’t talk about that one time you deleted us. We know you didn’t mean it.)
Other old-school methods continue to have legs, even as cold calling twists in the wind. Consider the business conference. While there are those who are skeptical of the worth of such events, our business development team at Saratoga Investment Corp. attends about 100 conferences a year, and the subsequent deal flow makes it worth our while.
One CEO said, in fact, that he expects to see an ROI 10 times that of what is spent to attend one. While conference ROI depends on a number of factors, I would reiterate what that same gentleman said about conferences in general -- that there are steps that must be followed in order to get the most out of them.
It is of the utmost importance, for example, to obtain a list of attendees in the days and weeks beforehand so that you can target those parties with whom you would most like to network. My approach is to feed the information into my CRM to see which groups should be priorities, then coordinate our movements courtesy of scheduling software. (I prefer Calendly.)
Similarly, giving a presentation or appearing on a panel is much different than merely attending a conference. Doing so is a chance to distinguish yourself as a thought leader -- someone worth getting to know a little deeper.
There are also new-school methods, albeit those that build on old-school principles, like the value of publishing online content. That stands to reason, since 77 percent of Americans are online daily, and 26 percent are almost always logged in. Fully 72 percent of marketers believe content enhances engagement, and many favor inbound marketing techniques, as pioneered by Hubspot. A new approach for the digital, globalized age, inbound marketing is uniquely suited to the fragmented, unstable ecosystem that business development specialists find themselves in.
According to Hubspot, 67 percent of companies report that inbound marketing provides the best quality leads for their sales team, while only 16-19 percent of companies report that outbound practices provide the best leads. By combining relevant content with social media, email marketing, and well-designed calls-to-action, companies can position themselves to significantly increase lead (and subsequently deal) flow.
Equally critical to a solid content marketing strategy is search-engine optimization (SEO), as few web visitors -- just five percent, in fact -- ever venture beyond the first page of search results. A high profile is essential. Further, there is a need for a CRM platform to drill down and analyze the incoming traffic and the relationships that are formed.
Because that is the bottom line, after all -- building relationships. According to the Sales Benchmark Index, sellers are 4.2 times more likely to get an appointment if they have a personal connection with the buyer.
Fortunately, there are more means than ever to do that, many of which have proven more effective than a cold call.