Before dedicating your promotional budget to a specific sales channel, shouldn’t you test which one has the highest return for your business?
I’ve tried it all, and it was expensive
As a B2B business owner practically addicted to testing, I’ve tried pretty much everything. The good news is that you only need 1 sales channel that works. The bad news is that you don’t know which one, and there are 10+ alternatives.
You’ll be surprised how off your gut feeling can be on this one… By sharing my experiences, I hope to show you the path to find the right channel for you, without going through the expensive mistakes in-between.
I will also be imparting some of the wisdom from the team that runs Traction Testing, which is effectively the business version of what I’m doing with this series of articles. It’s a startup that helps companies scientifically test each channel and assess the customer acquisition costs (“CAC”) of each.
What works isn’t constant
A major curveball in finding your channel is: what works probably won’t work a few months later. I built one of my businesses using YouTube video ads, which was great for the better part of a year, until very suddenly we went from 30 leads to 2 (with the same budget). That can be devastating when you’re investing behind growing your business, staff, etc.
Another example: it used to be that you just buy an ad, send prospects to your sales page, and you close. This was the golden age of A/B testing. It’s still a great idea to A/B test, but much harder to find something that works and that’s why many business owners (especially B2B) swear off PPC (“pay per click”, think Google Adwords).
Now, it seems to be the age of content marketing: you need to add value and nurture your prospects through content marketing, in order to build authority and TRUST before they even consider buying from you.
Sales approaches and funnels are changing at an accelerating pace, so it pays to monitor your results closely and always keep testing. Because if something works, your competitors WILL find out, and sooner or later your CAC will skyrocket. Channel complacency can seriously drive you out of business!
Let’s start with sales channel #1… COLD CALLING.
Yes, it DOES work but it’s very expensive because of the resources required and the low win-rate. So you either need a product that converts really well, or – more likely – a high-margin service (in dollar terms, not percentages).
A few years ago, I hired a salesperson and a seasoned sales coach (20+ years experience, built 4-5 large sales teams in the past, advising large sales organizations, and recommended by a close friend).
Mistake #1: I hired an inexperienced salesperson, who hadn’t sold services or in a B2B environment before. He came highly recommended and I tend to place more weight on referrals than experience. In theory this could work and I know many small business owners that make the same mistake. I’ve done it 4-5 times now already, and it’s never ended up well.
Mistake #2: The sales coach had been a coach for far too long (in my opinion). As a result, he could work as a great motivator for large sales organizations, but wasn’t on top of the minutiae… the details that I didn’t know and needed serious help with. Ideally, you want someone in the trenches.
There are sales coaches who currently work within sales organizations as senior salespeople or sales managers. You can probably use an expert platform like Clarity, where you can call up an expert and talk to them for half an hour for $50-100. It will be money well spent before engaging with someone. It’s best to discuss with a few and find the right fit for you.
How did it go?
Within a few months, it was obvious that cold calling wasn’t going to work for us. Initially, I sat in on calls with my sales person just so I have a first-hand knowledge of what’s going on. I won’t forget our first cold-call: the poor guy was at his mother’s funeral! The second call wasn’t much better: the business just filed for bankruptcy the week before.
The cost? A solid salesperson can cost you $7-10K/month, and a sales coach can add $3-5K/month on top of that. There’s an interesting service at Predictable University, where they train junior sales people and place them as interns with your company at a reduced rate for 3 months so you get to ‘try before you buy’.
First, hire the right sales coach. Look for someone with real and recent sales experience. And ask them for sample scripts and tips on cold calling – they should have loads if they know what they’re doing.
Hiring the sales coach first is important because they can help you recruit the right sales person AND save you money by finding a diamond in the rough instead of you having to pay up for experience.
Mistake #3: I did the hiring in the reverse order (salesperson first, then sales coach) and it back-fired because the two couldn’t work well together.
Do you need a script?
YES, you need a script. Do NOT try to ‘wing it’. Cold calling is science. You’re interrupting someone from their very busy schedule. And you know how much they hate it.
The first thing to understand is that a cold call is NOT a sales call. Don’t even try to close a sale. Your objective is to transition from interruption to scheduled interaction – a demo or an appointment – where your prospect will be much more open to spend some time with you since you’ve both agreed to a meeting. In contrast, during an interruption, you’ll be walking on egg shells because the slightest thing can go wrong and result in a dialtone.
What does a good script look like?
Start with something like this… “Hi, this is KP with Board Studios. Is this a good time?” This question starts the conversation going, and you want to keep asking and going back and forth. Because a conversation feels much less like a sales call than a monologue.
I think this is a good way to start because if they reply “Yes” you’ve got permission to engage, and if it’s a “No” you can ask to get on their calendar at a better time and then you’ve achieved your objective. But many sales experts will advise you against using yes/no questions where they can shut you down. Maybe you can A/B test your script both ways.
Regardless of whether they respond with “yes” or “no”, you can come back with “Great, I’m looking to get 10-15 minutes on your calendar.” This sounds a bit too forward and strange… you haven’t even explained why. So your prospect will engage once again “Wait, who are you? What do you do?” This is a great question for you because THEY asked to learn more about you.
“I work with Board Studios, have you heard of us?” Of course not, but you’re making it once again a conversation, and they will ask you again about what you do.
What’s in it for them?
Now you’re primed to answer their key question: “what’s in it for me” – that’s all they care about. Not about how big or successful your company is, not about your product and it’s dozens of features. Give them benefits, and make them real with numbers and client names.
For example, your pitch could be something like this:
“We work with Marketing Managers of companies such as A, B, and C. We recently helped a client get twice as much traffic at their tradeshow, and another increase their RFP win-rate by 30%.”
The goal is to get them genuinely interested, engaged. So THEY are the ones asking you when they can get on your calendar…
Do your homework
During the 1st call, your goal is to join a conversation already happening in their mind. What is your prospect likely to be working on, or worried about?
Study tradeshow agendas and trade magazines that your audience is attending or reading. Pick up a hot pain point and demonstrate how you can solve it, ideally with specific results from case studies.
Set an appointment
By now you should have their attention. “Do you want to put some time on the calendar for next week? I can share some ideas specific for your company and we can explore if we’re a good fit.”
Before you can schedule the follow-up, there are likely to still be some objections: catalogue them and work with your team (and coach, if you get one) to find the best way to address them.
It goes something like this: script -> calls -> refine and repeat.
When you’re done with your script, memorize it, and practice-practice-practice (so it doesn’t sound at all like you’re reading from a script). And remember that it’s a work in progress: A/B test it and refine it based on what works and the feedback you get from prospects.
As soon as you’re all loaded up with your prospect contact information and a great script, it’s common practice to do 1-2 sessions of 20-call bursts daily (we’ve tried a few tools with so-so results but I’m hearing great things about Close.io for helping manage this process). That’s a lot of work but it will help you be very focused and productive. You can spend the rest of your time researching new prospects to keep feeding your pipeline.
Of course, if you’re running a company you may not have the time, so you’ll need to hire a salesperson. And if you have the financial flexibility, you can hire an additional person (called a Sales Development Rep, or SDR) to keep filling the pipeline, feeding prospects with contact info to the salesperson.
The bad news: tough economics
Best-case scenario you’ll have something like 2% of your calls turn into demos (btw, for demos I prefer join.me because it doesn’t require the other side to download anything – what’s your favorite tool?), and then maybe 20-30% of those into clients. If you do 400 calls a month (20 per day x 20 days), you’ll get 8 demos, and 2-3 clients. It’s expensive, because you have to invest in people and won’t get a payback (or really know how well it works) until the end of a sales cycle. And for a while you need to iterate through your script to find what resonates with your audience. You should expect to spend at least 6 months before you start seeing solid results.
At a salesperson comp of say $8K/month including commissions (though it ranges depending on your region and what you’re selling), and assuming you get 2 new clients per month and you have a 20-30% pretax margin (fairly standard for a services business), you need to be looking for clients with a lifetime value (“LTV”) greater than $15,000. Otherwise, you’re effectively splitting your business profits down the line with your sales person.
The good news: cold calling is repeatable!
If you can afford cold-calling, the good news is that it’s a repeatable process. That means that, once you have your numbers down, you know how to grow: get more bodies on the phones! If 1 salesperson completes 400 calls in a month and closes 2 clients, then 2 salespeople will double that volume, etc.
You can get a pick-up on productivity once you have a team of 3-4 sales people and you hire a couple of sales development reps (“SDRs”). The idea is that a salesperson should spend as much time on the phone as possible instead of researching prospects. An SDR can add to the pipeline and feed the salesperson with all the information necessary to reach – and convert – a prospect.
How to test cold calling
The best way to test cold calling is to do it yourself for a couple of weeks:
- Find a tradeshow where your prospects go. Don’t waste time going there because the booths are manned by sales reps with sales quotas to fill so they don’t want to waste their time talking to someone selling to them!
- Send the link of the tradeshow attendees page to a freelancer on Upwork and ask them to get you the email addresses and phone number of the job titles that you need to engage with
- Spend a week doing 20-call bursts daily and see what results you get.
If you don’t have the time or don’t like doing cold calling, you can actually check out a new service I just came across – Upcall – I haven’t tried it but it sounds promising. You write the script, assign the call numbers to their team, and then you can listen to recordings of the calls, adjust your script, and remove people from your calling team.
If you try cold calling or have questions, send me a note with your experience or comment below. I would love to hear your results.