Compelling Argument Against Cold-Calling

Sales People Don’t Cold Call

By Jeremy Miller

Cold calling is described in heroic terms: beating a path to the prized customer; crossing the many obstacles and walls of protection to find the elusive buyer; wrangling and competing against the many other sales people pursuing the same prize. After breathless battle and hard work the sales person wins his customer. His cold calling has paid off. He is a hero.

Too bad it doesn’t work that way. Cold calling is an act of frivolity. In today’s market, cold calling is the most ineffective lead generation tool out there. Just look at the numbers and it quickly becomes obvious that cold calling is a “get lucky” strategy. It takes 8.4 dials to reach a person, and 2% of all calls results in a meeting. If 30% of these first meetings convert into opportunities and a sales person closes 25% of these opportunities, he will have to make 1,000 calls to get 1 sale. If he is pounding the phones making 50 cold calls per day, he can get 1 winnable sale every 20 days. At this rate he can acquire 12.5 new customers per year. I am sure you can adjust these numbers to fit your business, but no matter which way you slice it the return on effort is terrible!

An average business-to-business sales professional earns $60,000 per year and up. Why would you pay someone that much money to cold call? It makes far more sense to provide the sales reps with “sales ready” leads. By feeding the sales reps you maximize their time, and focus their efforts to where they truly deliver value in selling: building the business case, helping customers evaluate the options, establishing rapport, negotiating terms and closing the deal.

You can look at the numbers and agree that cold calling does not warrant the time and effort it receives, but what else can you do? Cold calling is so ingrained in sales culture, that sales forces come back to it time and time again if marketing does not deliver the leads. Do not fear – there is a better way.

At any given time, only 3% of your market is ready to buy your services, but at this point your prospects are likely already engaged with you or one of your competitors. If a sales person is engaging an opportunity at this late stage the odds are stacked against her. The RFP has been distributed to several competitors, relationships are well entrenched and decisions are being made. Typically the only option to win the deal at this point is price.

The odds of winning a sale increase dramatically if you are able to engage a prospect much sooner in the sales cycle. By positioning the service well before a company is shopping, you gain a deep competitive advantage. Information on the company, the environment and its business challenges can be acquired. Relationships with key decision makers can be solidified. The service offering and value proposition can be established. By getting in early, you will be the first call when the customer is ready to buy.

Demand creation is a distinct function in the sales force. It sits in between marketing and sales. The demand creation team’s goal is to introduce, engage and nurture the prospects until they are ready to evaluate a solution with a sales person. Demand creation is a process oriented function, and requires a great deal of phone work to be constantly engaging companies in your target market. The calls are not designed to sell, but rather to position your services for when the company is ready to buy them.

Sales forces are implementing demand creation functions for several reasons. The first is sales people do not have time to give both the prospecting and selling the time they each deserve. By separating the functions, the dedicated demand creation resources will increase the quantity and quality of activity happening at the top of the sales funnel. The added supply of leads allows sales people to be more effective, and work on solid opportunities with a high probability of closing. Demand creation is a distinct skill, just as selling is. By assigning the right people to each role, the company can improve sales performance, reduce costs and reduce employee turnover. The other primary reason is employee costs.

A key argument against demand creation is lead squandering. Since the sales reps are not generating their own leads, then they will not value the effort, money and time that went into getting them. This is a valid argument, but one that can be effectively managed with training and metrics. The demand creation team and sales reps must work in tandem, and constantly be tracking their activities and successes. By managing the conversion ratios to move a prospect through the sales funnel, management will have the data and intelligence on what is happening with the leads. Metrics are essential to an effective demand creation strategy.

Lead squandering is also unlikely when sales people are able to work on qualified, “sales ready” leads. A sales ready lead is a prospective customer that is fully engaged and ready to enter the sales process. These are the opportunities great sales people love. If that is all they had to work on every day, their job would be amazing. They could establish rapport, demonstrate options, block competitive threats and acquire the customers. They become far more effective sales people.

Companies who combine lead generation and selling to the sales people are doing themselves a disservice. When sales people are required to cold call to achieve quota, the company faces two distinct issues: a higher cost of sale and higher turnover of sales people. Yet when a company takes a keen interest in feeding its sales people, the opposite happens: increased revenues, improved sales force productivity, and an improved working environment. When sales people are enabled to sell more, it is a great environment to work in – everyone wins.

Jeremy Miller is a Partner with LEAPJob, a sales and marketing recruiting firm in Toronto, Canada. You can reach Jeremy at 905.281.3090, Ext. 22. For more information on LEAPJob please visit http://www.LEAPJob.com.

Digital Signage 2009: The Good, The Bad and The Ugly

December 30, 2009 - San Francisco Bay Area
John E. Lilly | ARROWSIGN .NET

As the 00's draw to a close, I'm finding the Twitterverse inundated with chatter on "digital signage." Often shortened to "DS" or "DOOH" for the awkward catchall "Digital Out-Of-Home" signage, this social media activity stirred the investigator in me.

First off, I'm a hobby futurist/tech geek  and designer. So, the idea of "digital signage" has myriad connotations to me. But, who was in charge of this new vernacular? Who decided that, by virtue of it conveying information, it must include the term "signage." I was getting the vibe that the term was being hijacked. But, by whom?

Imagine if the business card printers wanted to, now, be called "Pocket Signage" manufacturers? Imagine if the tattoo artists' thought there was more profit in marketing themselves as "Epidermal Signage?" Now, imagine if software and hardware manufacturers decided they wanted to bundle their products and services as "Digital Signage."

That's what is happening. Digital is trying to be "signage." Signage isn't trying to be digital.

If the timely value of a digital sign's impact isn't leveraged immediately into a call to action at the Point-Of-Purchase, its value diminishes until its nothing more than clutter near your cash register. If you're just going for clutter, you don't have to go digital.

That's not to say that digital signage doesn't have an important role to play in future society. Quite the opposite, in fact. In a broad sense, signage that utilizes advanced digital technology will be the primary growth area of the traditional sign industry, both in production processes and installed hardware. But, perhaps, not in the way you've been led to believe.

Here are the repelling forces, and attracting powers, for the "Digital Signage" industry moving into 2010... (reverse order - so I can end on a high note).

#3 The Ugly:

You have seem them. The ugly, black-plastic boxes mounted randomly along a hallway, or protruding from a pipe in the ceiling. Sometimes, they even sit on the counter, blocking the view of the human retailer on the other side.

In the mad rush to get retailers to sign agreements and test their networked advertising model, many DOOH firms are failing to integrate the screens with any degree of elegance or integrity. Without targeted, reactive signage, these ugly boxes are just cluttering up the environment. And, what kind of reactive signage would you incorporate in the toilet room anyway? You can make up your own punchline.

Now, stop. Before you accept my clutter argument, consider that clutter = prosperity in many cultures....

Is that the direction you want to go? If so, could we, perhaps, plan things a little better? Integrate complete ideas from the beginning. Stop sticking plastic ad-boxes in the environment without considering the primary purpose of that space.

Integration requires planning. Planning requires vision. I'm not convinced many in the DOOH industry have vision, when it comes to integrating their screens into the existing spaces. What some firms are doing is equivalent to local rock bands putting fliers on windshields and bumper stickers on utility poles.

The New Rules for DS 2010: Digital Signage should be:

1. Adaptive - Dynamically adapts to meet the needs of the environment and the people (directional signs, emergency signs).
2. Reactive - Recognizes people through customer engagement devices (cards, tags) and targets ads specifically to individuals, by name.
3. Distractive - Targets captive, mass populations (waiting areas, public transportation) with traditional network-based advertising.

Its time for architectural and electric sign companies to engage the "signage" newbies in the art of implementation. Otherwise, our digital brethren will soil the good name of signmakers everywhere. Hah. Wait. What do you mean "Signmakers don't have a very good name?" I digress.

Electric sign companies are especially skilled at building structures designed to house electrical components (like screens), in all types of environments -indoor and out.

With the convergence of huge LED electronic message centers (EMCs) into the interactive "digital" space, electric sign companies, again, have the skills and resources to implement screens in a much more intuitive and effective manner. Part of that includes working with designers, engineers and architects in the first stages of project development.

Sometimes, the environment is the signage. More and more often, the environment is digital. We can't stop convergence, but we can make it more integrated with just a little forethought. Don't accept ugly.

#2 The Bad

Like any fast-growing industry, digital signage has a problem with standards. Not only are there input issues with regards to media formatting, there are output problems as well. The industry still lacks a create-once, publish-everywhere graphic standard. Likewise, there are a lot of companies trying to make the "best" standard and monopolize the industry.

Meanwhile, we get progressively cheaper flat-screens cluttering open space with messages like this ...

These messages are the hardest ones to get rid of. Why? Because they are cause by human error.

The people who design software for novices would do well to recall Douglas Adams' quote: “A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.”

How many times have you seen an error message like this on a microwave or an alarm clock? How about on traditional architectural signage, or even on massive EMCs? It just doesn't happen. Its unacceptable.

And, since "digital signage" companies are putting these screens into the hands of amateurs, it begs to reason that those same firms are responsible for training the end user and, moreover, preventing the embarrassing photos like the one above... I found easily on Flickr! At least we can see who didn't train their customer. The logo is right on the screen. It may as well say "Hey, look at us! Our products don't work!!" Security and hacking aside, there is a public liability to what is being shown on your screens. This is just bad. Here's an idea: If the software experiences problems, have the screen shut itself off and disappear.

#1 The Good

As much as I like to research the pros and cons of different topics, I wouldn't waste the time writing about something if the positives didn't ultimately outweigh the negatives. And, to be honest, the things I've mentioned are just growing pains of a remarkable new field of advertising that deserves a better name... than "digital signage." Just sayin'...

For those who haven't looked at recent digital signage screens, even something as simple as nice resolution, synchronized screens and thoughtful creative makes for quite the mesmerizing display, as you can see here.

But, so what? We've had TVs in the retail space for years. We've had VCRs and DVDs looping customized content in the retail space for years. SOoooo... the hardware isn't revolutionary. Neither is customized video advertising. So, what is the attraction? Why the hype?

In a single word: "Potential."

As the hardware and software companies get their collective acts together, traditional advertising agencies will also converge into the digital signage space. When that happens, and when meaningful, objective advertising metrics are established we will finally be able to quantify the expense of Digital Signage.

Quantifying the expense of deploying targeted, dynamic advertising will knock many current players out of the game. Why? Because they won't be able to rationalize their own existence in the work-flow.

However, fewer companies trying to hijack existing open-standards is a good thing. More companies adopting and improving common software standards will allow the industry to focus on progress in the areas mentioned above... technologically-advanced signs that adapt, react or distract.

Despite the issues with software compatibility many DS companies have made great strides in providing high-quality digital graphics on commercially-durable screens. While the measurement technique is different, many screens are capable of producing text and graphics with the same visual clarity as printed vinyl.

Some of the best examples of effective digital signage can be found at your local movie theater. From the satellite-controlled electronic message centers displaying show times, to the the animated menus at the concession stand and even the on-screen messaging inside the screening room movie - theaters are starting to get the picture ... (pun somewhat intended).

There was a time not long ago when theaters would show static ads from local small businesses on the screen before the movie started. Apparently someone finally realized "Wait a second... if the moviegoer actually patronizes one of the restaurants or theme parks advertising on our screens, they will have less money to come back to the theater!"

Now, in the smarter theaters, they only advertise things that can be bought there - at the point-of-purchase. Good thinking.

Is 2010 going to be the year in which my TV remote can detect my thumbprint and eliminate feminine hygiene commercials from my daily viewing? Sadly, no.

Is it going to be the year the menu board at the movie theater concession stand recognizes me by the RFID strip on my customer loyalty card and offers me special prices on future movies I might like, and upgraded popcorn/soda combos? Maybe.

So, while we are a couple years away from "Minority Report" style signage, there are many encouraging signs that digital signage will live up to some of the hype once we kick the 00's to the curb. For 2010, let's work harder to eliminate the ugly and the bad while we wait for the good to catch up.  ~JL