Earlier today I had the opportunity to talk with an entrepreneur that has a successful Software-as-a-Service (SaaS) startup. He’s been at it for a few years and the business is growing nicely. Naturally, a question that’s top of mind for him is how to grow even faster. After I mentioned that cold calling works well for us, he started asking a number of questions.
Here’s how I like to think through if cold calling will work for a startup:
- Markets that suffer from a lack of market awareness are ripe for cold calling (e.g. the technology is ready, the ROI proven, but people just don’t know about it yet)
- Products with a high lifetime value, and gross margin, help make cold calling more viable
- Test cold calling on a list of prospects by hiring a college intern for $15/hour and see how many people answer the phone, how many people engage in a conversation, how many people schedule a demo — shoot for at least 50 calls per day
- Ensure that social proof and case studies are readily available to educate the potential prospect
Cold calling one of the most under utilized, but effective, method of B2B sales. Startups would do well to experiment with it and figure out how to make it work in their organization.
What else? What are some other ways to know if cold calling will work for a startup?
8 thoughts on “How Do You Know if Cold Calling Will Work for a Startup”
David, I agree that cold calling is one of the most under utilized methods of B2B sales, and more businesses should be using it. However, i think that at the same time cold calling has become a pain for most SME’s as ther number of calls they receive each day with offers has gone overboard especially for toner cartridges and telecommunication services with most calls originating from overseas callcentres. For that reason many business operators like myself have put in place strict systems to bounce all cold calls. Unless the caller knows who I am and what my specific title and role is s/he does not get through the wall.
In addition to your great advice, to do it right you need to do more work with research and improve your hit rate by developing your own lists with names of key contacts and focus the campaign on providing relevant information to the right people. If you don’t get to the right people most of your calls are going to get bounced.
Hi David, I’m surprised cold calling works for anyone. I know that I personally get very upset when someone calls me out of the blue. But that might just be me. Anyway, still a good read. Thanks!
Cold calling does work especially if the product is new. Many companies are looking for a competitive advantage and will at least listen. Now you aren’t going to make a sale on the first call, but it starts a dialogue and gets your name out there. You eventually run out of friends, family and connections so what other choice is there.
Cold calling should work for any company offering a solution with proven value. In the SaaS world, I’ve found “cold emails” followed by followup calls deliver better results, as more and more people are open to responding to email vs phone.
I don’t agree startups should hire interns to test cold calling. Not only is cold calling a great way to generate sales opportunities, it’s also a great way to refine messaging.
Every way of tention is tention, positive or negative. It’s just one of the fastest and easiest ways to directly mention your product or service by a dozen of people. B2B but also B2C is very effective. I called both ways and both worked fine.
It is easier and less expensive than online marketing (well, that actually depends) or other ways of marketing. TV’s, billboards etcetera. Just like you told in your post. Nice one.
Cold calling is tough, but you get to know what your clients or potential clients problems are and if and how you can solve their problem so its definitely worth it.
I agree with your first 2-points but point 3 is just plain wrong and point 4 needs some more meat on it.
Issue with point 3 – it should be the founders on the phone making those calls. Cold Calling is tough for both the prospect and sales person.
So you’re asking a college kid, who probably isn’t trained nor knows anymore than the talking points you’ve given him. To talk with prospects ,who don’t want to be interrupted in the first place and especially by someone who doesn’t know what they’re talking about.
It might be time consuming for the founder and uncomfortable, but at least if he/she’s doing it they can have deeper conversations about the industry and learn what’s important to their prospect.
A college kid might get a 4% pull through on 50 calls so perhaps 2 leads come from it. A founder or good sales guy could 10% so maybe 5 leads per day.
And with point 4 – you gotta have more tools in the tool chest than a case study and follow up email. Compile a quick ROI calculator in Excel, some useful links on articles relevant to your industry, samples of your product, cheeky voice mail scripts that are give value, etc.
Cold calling is like any other tactic, if you prepare (strong caller, a lot tools, etc) you’ll get a much higher pull through rate which means you’ll more easily get back the money you’re spending on it in the first place.
I’m not sure if this is against policy or anything. But since I think we share a lot of the same thoughts on cold calls for startup sales. I figured it would be worthwhile.