Is Cold-Calling Really Dead?

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Speaking about getting new business, we've heard a lot of experts recently declare that the practice of cold-calling is dead. Your survey seems to contradict that.

That's right, because cold-calling works, if it's done right. The survey results showed that the top three ways companies generated quality new leads over the past two years were referrals from clients or partners (22%), general referrals (16%), and cold-calling or telephone prospecting (13%).

That means that, after referrals, doing direct marketing over the phone is the second-best method for generating new business. This wasn't a multiple-choice question, by the way, so we didn't list various methods of lead-generation, we just left the question open-ended and asked people to fill in the blanks.

What CEOs find is that referrals are all-important. But referrals are simply not sufficient these days to grow your business. If you sit around waiting for your telephone to ring with new business inquiries, your company is going to tread water and eventually shrink. You have to actively go out and recruit new business if you want to succeed.

Why do you think cold-calling has been negated as a sales strategy in recent years?

Because nobody wants to be a cheesy sales person. People who have call reluctance can make up reasons why it doesn't work. Similarly, I could say that peas and Brussels sprouts aren't healthful because I don't like them, but that doesn't make it true. Everyone wants clients to call them, not the other way around. But there's definitely still a place for direct marketing, with mailers, telephone contacts, or e-mail. And there's a way to do it that isn't cheesy, doesn't rely on a long, boring script, and doesn't demand money up front.

For instance, you call a prospect and invite her to a small gathering of local CEOs interested in talking about new operations strategies. Or you send out a mailer letting your targets know that you will be speaking at an upcoming event about a topic that would benefit their firm's bottom line. Your sales staff calls up local decision-makers to share the results of a new white paper you're releasing that will be of interest to them. People take you up on value-based offers that make your firm and its value very apparent to them.

Another bit of advice you gleaned from the survey respondents is to nurture the leads you generate. What does that mean?

Well, you've done your branding, you've done your research and identified specific individuals that you want to target, you've called to ask what they're looking for or to invite them to a value-added event, but you still can't expect to go straight from telephone call or direct-mail piece to new business. Those things can get people to agree to meet you or download your white paper, but it's too big a leap of faith to expect them to buy from you right away. Instead of making a leap of faith, you want them to take your hand and make a series of small steps.

If your sales staff concentrates all its efforts on "sales-ready" leads, and drops the other leads it has generated, it will lose up to two-thirds of its potential new clients. Our survey results showed that of all the new leads companies generated, only about 25% were sales-ready, while 50% needed further nurturing, and the final 25% were disqualified.

Some business owners think they can drop a marketing campaign in the mail and get flooded with new business. They're terribly disappointed and discouraged when that doesn't happen. What they don't understand is that buyers are spending millions of dollars on their own schedules, and until your service becomes important for them, you're not going to twist their arms into buying it.

Also, there's not much you can do to speed up their buying cycle, but if you have an ongoing lead-nurturing program that involves staying in touch with them over six months or a year, they will remember you at that elusive "time of need" when they clear their whiteboards and pick their next company goal (see BusinessWeek.com, Winter, 2007, "Staying On Top of Your Game").

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.