I think the question here is, how alive was cold calling in the first place? Of course before the onset of social media, sophisticated databases and other technological wonders there wasn’t that much choice if you wanted to reach your market. This is true certainly in the world of sophisticated “push” market products and services, that is to say services that customers are not immediately aware that they need. Of course even before the technology revolution you had a certain amount of information, albeit written on a small cardboard card. You knew the following:
- Customers you, or your company had sold to before
- An approximation of the contact, or in some cases, the decision maker
- The age of the product or the service contract
- The type of contract, whether it was a purchase, rental or a lease.
The only other way to gain information about your territory was to call on your customers, ask them questions and make notes in your log. Hey, and if you’re in the area why not call on a few customers who you don’t know about to see what they do!
I can’t say was ever the most effective way of getting business and the 80/20 rule (Pareto principle) certainly applied. 80% of the business would come from 20% of your effort (enquiries and past users), and 20% from 80% of the effort which was cold calling. Daunting percentages, however absolutely necessary, because who wants to finish on 80% of quota?
In short, gaining new business is hard and you need to do it if your company is to grow, because up to 15% of your user base can be lost per year through natural attrition (closures and competitive action and this increases in hard times), therefore you need to add to your user base by more than 15% if you are to grow at all.
The argument always given for the amount of sales effort that is eaten up by cold calling is that the salesperson is on the territory anyway and even with a low return on effort it’s better than nothing. Salespeople are expensive, the transportation and fuel, training, recruitment costs, basic salaries and commission programmes and one of the major costs of any business. The resource should be treated like the family silver polished, used when necessary and brought out for the big occasions.
The sad thing is that many companies utilising technology for the improvement of sales may have a better delivery system, but they don’t give their salespeople much more information than was written on the card. With quality data effectively available and tailored to your market you can use it to increase your sales productivity target your customers better, get fewer refusals and reduce your costs. it pays dividends to invest in good market research, good database knowledge and effective first level contact through telesales. I would love to help you design your strategy, please give me a call!
Cold calling is not quite dead, but it certainly on its last legs.