Cold Calling: Pain or Raw Business S&M?

Posted on | November 23, 2009 | 11 Comments

Please Save Me From Cold Calling It is amazing just how many people HATE cold calling. In fact, I find most sales people see cold calling as ‘real bloody torture’, something only for the ‘S&M’ crowd (i.e. SadoMasochists).

For others however, including many of my sales training friends, they absolutely swear by the approach. But why does this topic bring out so much emotion and near-religious furore?

Why Sales People HATE Cold Calling

That, if we look at the anti-CC crowd, is an easy question to answer I believe.

Most people FEAR cold calling!

But before you go getting dismissive, thinking such fear is blind or irrational, consider if you will how sales people often have a legitimate fear of cold calling for real personal reasons and/or for real professional reasons.

The sources for a legitimate personal fear of cold calling can be:

Fear of approaching strangers
Fear of embarrassment
Fear of painful rejection

The sources for a legitimate professional fear of cold calling can be:

Confusion over cold calling’s purpose
Confusion over message
Confusion over objective
Confusion over approach
Confusion over organizational responsibility

Thankfully, each of these types of fear is addressable: by training in the first case; and by better management in the second. But before considering that, or deciding on whether cold calling is right or wrong for your organization, I suggest taking a step back for a moment to considering the bigger business picture involved.

To Cold Call OR Not To Cold Call, That Is The Question

Which [Sales] Approach is Right for You?

Let’s first consider why sales people do or might want to do cold calling. Many would say: it’s to drive sales. And if we look at things simplistically or just focus on the end objective, they are absolutely right. But the real picture is not one dimensional.

No matter if your company is big or small, all companies need buying customers to survive, because a business without revenue cannot continue for long. And the part of the organization that’s responsible for getting customers to buy is typically called Sales & Marketing (the real ‘S&M’ in business). This is the raw end of all business organizations because it is so vital, real and emotional.

And I think it is called Sales AND Marketing for a practical and very good reason.

That is because sales is first, for without achieving a positive sales result which drives revenue, the business will die sooner or later. But turning to the other end of this name equation, tell me: what is the real business purpose for Marketing?

What Business Purpose Sales & Marketing Serves

If we cut through all the mumbo-jumbo involved in managing the 5 P’s of Marketing (namely: product; price; placement; promotion; and people), I suggest that the real business purpose of Marketing is to deliver leads to the company’s sales force for processing.

However, no matter whichever way you look at it, there is always a gray or overlap zone between the Sales and the Marketing functions in any company. And, a vital management question companies need to face when it comes to revenue generation and growth is, where in this zone it is best for any particular organization to draw the line between the two functions?

The Organizational Gray Zone Between Sales and Marketing

To help answer that question, here are some information gathering questions I have developed that can help management teams uncover where and when in their organization Marketing’s responsibility to generate leads should end and the Sales Force’s responsibility to start the ‘sales process’ should begin:

What you are selling?
Who are you selling to?
How complex / involved / vital is the ‘buy’ decision for customers?
How self-motivated are customers to address their need for your offering?
What alternatives do customers have and what is the appeal of each?
How frequently do customers have a need for your offering and how often do they buy?
What range of means do customers employ or avenues do they take to buy your type of offering?
How readily do customers acknowledge or initial action to address their need for your offering?
How important is trust in the customers’ purchase decision (e.g. how do they qualify who can serve their need)?
How important is having ‘other need satisfying alternatives’ for your customers?
How fast or slow does it take customers to transition from being a ‘suspect’ (a sales lead) to a ‘prospect’ (a semi-qualified / interested lead that’s a sales person can begin to process)?
What are the characteristics in terms of volumes, time and cost associated with your company’s total sales funnel?
What is the cost per qualified lead under each of your lead generation alternative methods?

How To Decide On Cold Calling

In my view, cold calling is a Marketing activity and it needs to be seen as such, even if the sales force does it. Also, it is important to see cold calling as but one method companies can use to generate the leads they need to feed their sales process and drive their revenue generation.

And now that you have the information gathered by answering the earlier-asked questions, you can move on to decide if cold calling is right for your company, and who should do it. This you can do by answering these three decision-oriented questions:

What are the most effective methods your company can use to generate live leads (i.e. specifically identified ‘suspects’ that through some form of interaction have been partially qualified as a sales lead)?
How qualified or matured does a lead need to be before the buy-oriented engagement part of the sales process can truly begin? and
Who in the organization should best be responsible for generating what kind of leads based on cost?

For a bottom-line simple way to conceptualize the decision behind doing or not doing cold calling, you might think of asking yourself:

“Should the company be taking
(i) a shotgun or (ii) a rifle approach
to growing the business?”

If you choose shotgun, then classic cold calling is right for you. If not, it’s best you use some other lead generation methodology, one that is better suited to your business and how your customers buy what you have to offer.

Clearly, the decision about whether your organization should or should not do cold calling is an involved, strategic decision – one that deserves careful, considered thought. In my opinion, it is best that organizations first resolve the question of whether or not cold calling is right for them and who should do it. Once that has been put to bed, then is the time to start considering how training to help your sales staff with any personal cold calling concerns or fears they may have.

How A Sales Process Audit Can Answer Your S&M Questions

If your company would like help answering the ‘cold call’ or ’sales training’ question, or developing answers to the questions asked above, one way I can suggest is by having a Sales Process Audit done. This is a quick and easy do, and it will give your organization a documented, unbiased picture of what the sales & marketing people in your company are ACTUALLY DOING right now to generate sales. Having it will help you settle vital revenue and growth related issues. For more information about the Renbor / Compass North Sales Process Audit, visit the following webpage:

Sales Process Audit (‘SPA’) – Is this what your organization needs?

>> SPA Service Providers:

- Renbor Sales Solutions Inc. – www.SellBetter.ca

- Compass North Inc. – www.CompassNorthInc.com

© Blog.TonyJohnston.biz & Compass North Inc. 2009

Article by –

Tony Johnston, CMC, CGA, MBA, BA (Econ)
President
Compass North Inc.
18 Balding Court
Toronto ON
M2P 1Y7
Office: 416-342-5652
Mobile: 416-346-4140
www.CompassNorthInc.com
www.CNiRapidResearch.com

Tony Johnston is a top level executive & management advisor who is a business results specialist with success in 4 turnarounds and many significant other operations, deal making and finance oriented accomplishments to his credit. He helps companies drive:

› top line growth (revenue)
› bottom line improvement (profits)
› cashflow management (credit line control)
› growth strategy (more / new)
› financing & stakeholder relationship management (debt / equity)
› enterprise value maximization (mkt price)
› acquisition planning & execution (find / close)
› divestiture preparation & execution (prep / negotiate)
› information gathering (competitive intel / market research)
› crisis control (turnarounds & wind-downs)
› enterprise leadership (CEO / CRO / CFO)

Compass North Inc. is a management & advisory services firm that helps companies achieve important, challenging operational, financial and transaction oriented goals. Examples of what we do include helping companies and their owners:

– make better decisions by providing customized competitive intelligence,
– grow by crafting strategic plans and implement them,
– get turned around by dealing with their debt or other business problems,
– borrow more money and/or raise more equity, and
– plan, prepare, negotiate and close acquisitions, divestitures and ownership
transitions.

Bottom-line: The benefit that Tony and Compass North Inc. deliver is helping company owners maximize both what they earn while they own their business and what they bank when they sell.

> Follow me on Twitter @CompassNorthInc

Comments

11 Responses to “Cold Calling: Pain or Raw Business S&M?”

bizsugar.com
November 23rd, 2009 @ 2:27 pm

Cold Calling: Pain or Raw Business S&M? | Biz Money Matters |…

Love it or hate it, cold calling is here to stay. But is it right for your company and should your sales staff be the ones ‘dialing for dollars’? Read how to figure out what will work best in your situation….
Doug Davidoff
November 23rd, 2009 @ 5:33 pm

Some great points here and I certainly agree that whether you like cold calling or not it is here to stay. As a side note, one of the reasons that salespeople hate (fear) making cold calls is that most cold calling efforts are quite boring – and most successful salespeople hate anything that even approaches boring.

The point of my comment (and a post I made about a similar subject) is that analyzing whether the cold call is an effective tactic and should remain, can only be done effectively if it is compared to other alternatives.

While cold calling certainly yields faster results than other tactics it does so at a significant cost as well. When other forms of outreach are considered, such as social media and pull-based content approaches, cold calling loses a lot of advantage. These other approaches, while taking longer to equal the impact of cold calling – also last significantly longer. Cold calling has no leverage as it only works when you are working it.

My recommendation has always been cold calling can be necessary at times, but the aim of any organization that wants to sustain growth in the future should be to build marketing assets that make cold calling unnecessary.
Dennis Lynn
November 23rd, 2009 @ 11:24 pm

You have to have an arsenal to succeed in sales. Part of that arsenal must be picking up the phone, asking for someone you don’t know, talking to that person you don’t know, scheduling an appointment with that person you don’t know, meeting with that person you don’t know, and selling them a product or service while at the same time selling them YOU.

The people who don’t do this on a regular basis – or theorize about why they don’t need to do this – are typically scared to death. I know…I know…there are exceptions (rare) but for the most part you sales people out there know I’m right.

Pick up the phone and reach out to someone you don’t know…you can build a successful business with that alone. Throw in some social media, maybe a search marketing campaign or two – mix in some networking functions…

You get the picture.
Tony Johnston
November 24th, 2009 @ 11:10 pm

Doug,

Thanks for your posted comment and suggested readings:

Is It Time to Kill The Cold Call?

and

Cold-Calling Beats Aggressively Waiting by the Phone…. EVERY TIME!

I enjoyed both articles and I join you in recommending them as sales related reading to others.

As to your comments, I agree with you that cold calling is a valid, useful, proactive approach that everyone should consider using for lead generation. And I agree that in some situations it can work well, while in others, not so well.

Importantly, I agree that companies need to see cold calling as a marketing activity that is but one method of how to generate sales leads. And as such, they should evaluate each alternative on the following four dimensions:

1) time (how long it takes to get to the ultimate result – an new sale);
2) effort (how many people and organizational resources are required to drive the ultimate result);
3) money (how much total investment is required to drive the ultimate result);
and
4) results (how much return is, can, and will be generated by driving the ultimate result).

The only point that I respectfully disagree with you on is that “cold calling certainly yields faster results than other tactics”. To me, that can only be true if (a) cold calling is the fastest and most direct way to get to truly qualified sales leads or (b) your other lead generation techniques are either non-existent or highly unproductive.

To give some dimension to my point here (maybe in a bit over the top way), just think how few sales undertakers would drive if all they did to generate sales leads was cold call phone numbers from the telephone book looking for people in need of funeral services now or within the coming month.

It is because of this last point that I recommended people look to find what is for them the most productive, quickest, and lowest cost means of generating reasonably qualified sales leads that are primed and ready for sales processing. If cold calling comes out as the best alternative for achieving such then great, do it. But if advertising or building a store or focusing on getting referrals would be better, then do that instead.

What do you think of this approach?

Cheers,

Tony Johnston
Tony Johnston
November 24th, 2009 @ 11:26 pm

Dennis,

I appreciate your interest and contribution to this debate on cold calling.

I agree with what I think is your underlying point – that sales people have to do what is right in the situation for the business, not that which would make them personally most or more comfortable.

For me, cold calling is a marketing activity, not a sales activity, no matter if sales staff or other people do it. And as I mentioned in my other comment reply above, I think the question about doing or not cold calling should come down to finding out what are the easiest, most productive and cheapest ways for an organization to get primed and ready leads that can feed their sales process. If cold calling is top of the list or near there, then certainly it has a real and vital role to play. If not, it should not because doing it would be a waste of resources in the particular situation in question.

Tony Johnston
Phuggers are like chuggers and other links | Expert Cold Calling
November 25th, 2009 @ 9:36 am

[...] SalesMarks, meanwhile, tells us that “In writing a cold calling script, there are a few things to remember” and cold calling might be pure S&M. [...]
Brad Gainy
November 28th, 2009 @ 9:31 am

I think people hate cold calling NOT because it doesn’t work BUT because they have a boss who is too cheap and stupid to do the real advertising and marketing work that’s needed to attract the right leads. Sales people are supposed to sell, period. You don’t ask someone in shipping to manufacture the product, you just ask them to ship it. I am in sales; bring me leads and I will sell them.

Brad
The Pipeline » Cold Calling – No Pain – Just Gain!
November 28th, 2009 @ 10:33 am

[...] his post “Cold Calling: Pain or Raw Business S&M?” Tony Johnston states “it is best that organizations first resolve the question of whether or [...]
Tony Johnston
November 28th, 2009 @ 5:02 pm

Brad,

I feel your pain and frustration. When an organization isn’t firing on all cylinders, everyone can sense it, and the lack of traction becomes apparent. If a sales team doesn’t get the support they need, which rightfully management should be organizing, how can they do great work on the job required – driving revenue?

Too often, management just beats the sales force harder when times are tough or results aren’t satisfactory. But really, I believe management needs to make sure it’s part of the house is in order first.

It is too bad when bosses don’t get that, or can’t see the bigger picture, or can’t understand how all companies need to insure their sales and marketing ‘ducks’ are all lined up if meaningful results are to come.

To address such issues, and help companies make sure their sales staff are set up to work their magic in the best and most productive ways possible, is why we, Renbor Sales Solutions and Compass North Inc., put together our Sales Process Audit program. I invite you to check it out. To see how it can both (a) help your organization get great top-line results and (b) document that management has its part of the house is in order, go to:

Sales Process Audit – Is this what your organization needs?

Notwithstanding that, I think each company’s situation is unique. And if they find, or decide, that it is best and right for their sales staff to do cold-calling lead-development work (something I see as principally a marketing activity regardless who does it), then Brad, I think it’s your responsibility to get on board and not resist.

Tony Johnston
Business Development Methods Poll – VOTE TODAY | Biz Money Matters
November 30th, 2009 @ 8:35 pm

[...] Are you wondering what this relates to? It’s about about filling your company’s sales & marketing pipeline and how to figure out what’s the right way to do that. To learn more, I invite you to read my recent article Cold Calling: Pain or Raw Business S&M? [...]
Phuggers are like chuggers and other links - Matthew Kimberley
December 10th, 2009 @ 6:20 am

[...] SalesMarks, meanwhile, tells us that “In writing a cold calling script, there are a few things to remember” and cold calling might be pure S&M. [...]

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