The ROI of Cold-Calling
In How to Make a Living in the Web Industry, I outlined a simple plan for generating enough revenue to make a living and a profit.
For round figure’s sake, I said if you needed to earn $50,000 a year and your average project is $2,000, you must land 25 projects, or roughly two jobs a month.
To land those two jobs a month, I said you must do four things consistently:
- Generate conversations with enough people in your target client base
- Separate the prospects from the suspects
- Set appointments and make sales presentations
- Close sales
One way to “generate conversations” is to cold-call. If you talk to enough people, eventually you’ll set some appointments, meet with prospects and make sales presentations. Do that enough times and eventually you’ll close a sale.
Unlike networking, which takes time, cold-calling gives you the ability to get new clients immediately. You can literally call on Monday, meet with a client on Thursday, and close the deal the week after.
But how much time and effort is involved? I don’t know about you, but I always want to compare the effort required to the likelihood of success. If I have to cold-call ten hours a day for three weeks straight, just to land a single client, I might want to rethink my strategy.
Like any marketing activity, cold-calling done wrong can produce poor results and wind up being a colossal waste of time. There’s more to it than just dialing the phone. So before you jump in, I suggest you invest in some quality training.
But assuming you can achieve at least average results, here’s a breakdown of what you might expect.
From my experience managing a telemarketing team, I know that, on average, my two best appointment setters make one sale for every 250 dials. So, using the scenario above, you must make at least 500 calls each month to land two sales.
But even the best sales people only close one in five appointments, so make sure your funnel is full by setting at least six to seven appointments—even if it means making more than 500 calls to do so.
Here’s where most cold-calling neophytes fail. As soon as they set an appointment, they get a rush of excitement and begin imagining how that appointment will turn into a sale. They might even go online, find their soon-to-be client’s website, and start preparing for the meeting.
All that’s well and good, but here’s the problem: you stopped making calls. If that one appointment doesn’t turn into a sale, and you have nothing else in the works, you’re back to square one.
Besides having a well-filled funnel, your chances of success will improve when you block off a dedicated time period to do nothing but call. You can easily make 50 calls in four hours without even trying. (That’s less than 13 an hour.) Get on a roll, and you can practically double that.
Repetition is another key component. Those new to cold-calling are afraid of “bothering” people, so they call each business just one time. But the marketing “Rule of Seven” says that a prospect needs to see or hear your message at least seven times before they’ll take action. While that’s not an absolute number, the point is that when cold-calling, it will take multiple attempts to reach a decision-maker. You’re better off calling 100 businesses five times throughout the month than calling 500 businesses one time each. The likelihood of reaching a decision-maker increases the more you call.
Cold-calling doesn’t have to be an arduous task. By breaking it into four-hour blocks, you can spread those 500 calls over 10 non-consecutive days … without even breaking a sweat.