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Can Cold Calling Kill your Company?

Written by: Greg Gaskill

Article Overview: Years of practice have led to everyone having Caller ID and highly effective spam filters; "attraction marketing" is a more viable long-term solution for lead generation.

Can Cold Calling Kill your Company?

What would you call one thousand telemarketers on a sinking ship? A good start! Sure, we borrowed that joke from the hundreds about lawyers but the sentiment still applies. There is no group of sales associates more loathed than telemarketers except maybe used car salesmen. Telemarketing has one of the least effective conversion ratios, it creates ill will from the customer toward the company, and it wastes valuable resources such as time, energy and effort of the sales staff and money for the company.

If cold calling is so bad, why do so many companies still rely on it? The problem lies squarely on the shoulders of management, who refuse to believe business is changing, and with upper level management satisfied with tired old techniques and conversion ratios. Basically, you have a culture of ignorance promoting an outdated business practice based on a memory of success rather than the actual success. It's as if businesses that still employ cold calling like wasting money, and creating a bad name for the company and industry.

In today’s Internet age and with the use of direct response direct mailing there are far simpler ways to generate a customer base and keep in contact with them. Permission based marketing is a concept where the company becomes a valuable resource to the customer by providing information beyond the initial product and service, and create such a remarkable experience that the customer becomes an evangelist spreading the word about the company. This "word of mouth" advertising constitutes attraction marketing and converts at a much higher rate than any other type of advertising. So why wouldn't most business want to switch to attraction marketing?

It's simple. Ignorance. They don't know better, and they don't understand how to make their product remarkable. Quick, name the top three benefits of your product to your customers. Not the features, that's what's important to you, something you put in your advertising. Tell me how those features benefit your customer. If you can save your customer time (which is a cliché, since every "modern convenience" claims to save time) how is that a benefit to your client? A benefit is a specific measured return on an investment in a feature. One of the benefits of attraction marketing is the incredible amount of money it can save a company. Think of it as hunting with a rifle instead of a shotgun. A rifle is precise, a shotgun wide and scattered. Attraction marketing creates a niche, and identifies how your product benefits the niche specifically. No employee time is wasted searching for people who may be interested, but just aren't sure- and that energy can be turned to learning more about the product to be better prepared to solve customer problems.

Many old school managers will take new conversion ratios based on attraction marketing, and attempt to apply them to ineffective cold calling numbers. "If we convert 1 out of 10 on attraction marketing, then we can convert 1000 out of 10,000 using cold calling." Unfortunately it doesn't work like that. The key to attraction marketing is being remarkable, either through product, or superb customer service, or exceeding customer expectation at every service level. Be a company worth talking about, and have a product worth telling a friend about. Cold calling can kill your company. It may generate short term success, but at the sacrifice of a reputation. What people think about your company can help long term success by turning you into a valuable resource, a place where people turn to get the answers they need and their problems solved. The tools available on the Internet make creating and servicing this niche simple and easy.

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Article Tags: business practice, car salesmen, cold calling, conversion ratios, direct mailing, direct response, fareast, ill will, internet age, mso, paper source, permission based marketing, sales staff, sinking ship, style definitions, telemarketers, time energy, times new roman, upper level management, valuable resources



Related Forum Posts
Re: How to develop sales contacts? - Everyone has the right idea here. Depending on your business, there are different techniques that you could use. For consultants and sales heavy businesses, there are three tactics that I have found especially useful in my business: 1. Attend Networking Events 2. Cold Calling 3. Referral Program 4. Affiliate Program (most successful) The affiliate program was successful for me, as I hooked up with a franchise consultant, and he gave multiple unit businesses that needed my credit card processing services. I highly suggest you hook up with a sales partner, and give him a cut of the monthly revenue.
Re: Direct Mail Postcards - Post cards would be really expensive to send from Japan...but one way to advertise that is not expensive from overseas is by Cold Calling using cheap VoIP equipment. I know Japan has a really good internet connection, so as long as you are willing to stay up late, it might be an option. I cold call from Thailand far, far away from any city using a CDMA wireless internet connection and have had pretty good results. I find tho, that cold calling works best for business 2 business (b2b), rather than b2c products. --matt
Re: Cold Calling - As long as people are out of jobs, you'll probably have a lot of people who say they want to work for straight commission, but if they don't get paid fairly quickly, they usually move on. We've run into that and went through about 500 people (whose resumes looked really good) until we found about 3 good resellers. People just don't want to work for anything. Or they do a good job getting the business but don't do the follow up necessary to make the sale......so they move on thinking they need money NOW. Our business requires all cold calling as well. It's really tough for people to perfect that but there are a lot of good books out there. On is Cold Calling Techniques, by Stephan Schiffman
How to valuate a business - Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out: How Northern Crown Capital Valuates a Business 2008 Financial Projections Earnings Before Tax $5,865,000 Tax Rate 42% Taxes $2,463,300 Net Earnings $3,401,700 Amount Seeking to Raise Today $3,500,000 Discounted Value of Future Opportunity, 5 Years Out 2008 P/E Ratio 15 Value of Company in 2008 $51,025,500 Discount Rate Applied 30% Year 2008 $51,025,500 Year 2007 $35,717,850 Year 2006 $25,002,495 Year 2005 $17,501,747 Year 2004 $12,251,223 Value of Company at Investment in 2003 $12,251,223 Less: Investment Amount $3,500,000 Present Value $8,751,223 Discount for Risk & Private Company 40% Less: Discount for Risk & Private Company $3,500,489 Private Company Value $5,250,734 Present Value (What the Owner Keeps) $5,250,734 60.00% Financing (What the Investor Gets) $3,500,000 40.00% Total $8,750,734 100.00% I hope this helps!
Re: Cold Calling - Cold calling is an extremely difficult job to do and unless one learns that being told no by people is not a direct refusal aimed at the cold caller but at whatever is being sold, it can be very soul destroying work to do. One needs to have absolute confidence in themselves and a pretty thick skin. MichelleJ


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