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New Study: Cold Calling 280% More Effective Than Inbound Marketing

Posted by Pete Caputa on Wed, Aug 20, 2008 @ 04:44 PM
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I hope you laughed when you read the title of this post. I laughed when I wrote it. However, I'm also sad that so many people actually operate their business as if this post's title was true.

I had a conversation with Paul Chaney the other day. He's the Internet Marketing Director at Bizzuka, a web content management system.

He said to me, "My job is to generate quality sales leads via the web so our sales team has to do less cold calling. I've had to do cold calling in my career and I wouldn't wish that on anyone."

I agreed with him. That's a great way to describe the job. When I started my first business (an online event registration service), we basically got some brochures made and I started walking down Main Street in Worcester, MA. I walked into Davis Advertising in Worcester and got a meeting with Andy Davis. We discussed events and how he promoted them and I pitched him my vision. At the end of the meeting, I asked him what the likelihood of him hiring (or referring) my Company was? And he said, "Call me when you grow up."

I was in my mid twenties, but he just meant that my firm was too inexperienced and that he wouldn't trust me to interact with his clients. He meant, I was green.

I continued cold calling for a long time and continued struggling to get the Company off of the ground. About a year into it, we got a bunch of good breaks, learned how to network and get referrals, planned and promoted a bunch of our own events so we had some successes under our belts and later learned how to sell a lot more effectively, cold calling or not. (I'm still learning and more of my story is in the about Peter Caputa section of this website.)

Looking back, though, I was, as Andy basically said, "very green" in business. I was very naive.

I thought it was about my idea. Our idea was great. It still is. There's a handful of companies around the country that watched what we were doing, as I blogged about it, and took our "lessons learned" into account when designing their business.

However, ideas don't generate revenue. Solving problems does. People buy because they have a need, they have the budget, they're convinced your solution will help them solve their problems and the timing is right for them to take advantage of what you're offering. They buy for a compelling reason which most likely helps them avoid some recurring pain. Not because you have a smart idea or great product that YOU think will help solve their problem.

The trick is that most engineers and entrepreneurs (I'm both unfortunately) are very poor at asking questions and discovering problems. Most entrepreneurs skip to the presentation, like I did when talking to Andy a few years ago. Most are way too eager to present their product or solution. Most entrepreneurs don't listen, don't ask questions and don't lead their prospects into coming to the conclusion that "this product will help me solve my problem". They don't understand the unique challenges of each prospect. (Yes, they are unique, atleast to the prospect.) They don't frame the solution using the words the prospect used to describe the problem. They don't help their prospects buy. They pitch and hope the pitch resonates with their prospect.

In short, most entrepreneurs suck at sales.

I'm a firm believer that every salesperson must always be a student of sales. They must always be learning and improving their craft. The senior and top performing sales person at HubSpot, Heidi Carslon, said to me the other day, "A savvy sales person is going to be constantly evaluating and evolving their strategy." Agreed. I believe that any salesperson who hasn't directly sold a Million dollars worth of business in their sales career to atleast a few hundred different customers, needs to get their sales skills assessed and their sales weaknesses fixed. Any entrepreneur without this experience should be doing this yesterday. I wish I knew that the option was available to me in my first year of my business, instead of my third.

Despite typical entrepreneurial sales weaknesses, some get by and are still wildly successful. But, that's usually only because they are awesome at marketing and have a perfectly timed awesome product. (You're probably not lucky enough to be one of them: Google, Youtube, Microsoft, Starbucks, Dell, etc).

The problem with most startups is that most entrepreneurs stink at marketing too.

Most successful entrepreneurs understand that they need to constantly be improving their marketing processes too.

I would never suggest that marketing can fix sales issues OR that good marketing will ever replace the need for strong salespeople, especially in a complex B2B sale. But, based on my experience on the other side now, where I have more leads than I can handle at HubSpot, I know that I don't have to be as good... I don't have to work as hard to generate opportunities; I don't have to cold call; I don't have to travel to see people; I don't have to write custom proposals; I don't have to spend money on brochures; I sometimes don't even have to present my product... in order to make lots of sales.

That's because there is demand that has been generated for the product I sell. That's because marketing was built into the business plan from the beginning. The founders were smart enough to develop online lead generation and sales processes as they developed the product. It's also because I have a bunch of successful clients who refer me business. But, mostly it's because marketing is charged with delivering an ROI, as well as tasked with constantly improving that ROI. They do measurable marketing. They do Closed Loop Marketing.

I talked to 3 people today who have a decent sized sales team who spend their entire day cold calling. Yes. Cold Calling. All day. They don't have a marketing team that generates interest or leads. They all get a lot of business through referrals, so their products and services are good. They've just ignored the internet's ability to help them cost effectively deliver warm leads to their sales team.

I can't imagine why anyone would continue operating like this. Can you?

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COMMENTS

Suggestion to improve Cold Calling:
Cold call on "warm" companies.
Companies that have been visiting your website.
You just need to identify the company name of the website visitors (what we provide of course).

posted @ Friday, August 22, 2008 5:57 AM by Engago Team


I understand how that might be more effective than straight cold calling assuming you can find the right person. I think it might be a little creepy, though, unless someone has completed a form on your website and expressed some interest.

posted @ Wednesday, August 27, 2008 8:23 AM by peter caputa


Have your ever heard of the term "sophomoric?"
Please don't think I'm saying this just to be argumentative, but hopefully in a few years you will look back and see just how much growing up you still need to do.

posted @ Tuesday, September 02, 2008 12:40 AM by Greenville Computer Support


I know what sophomoric means. It's a good word to describe people who don't have anything constructive to say, who instead rely on insults to demonstrate their lack of maturity.
I'm glad I struck a cord with you, Mr. Greenville Computer Support. Feel free to elaborate. Would love to hear why you think I'm immature.

posted @ Tuesday, September 02, 2008 8:11 AM by


I would have to disagree with what you are saying since not all companies are as basic. As a Business Development professional I would have to say incoming lead and referrals are a bonus. To make any company profitable, either an entrepreneur, medium sized even large company they must look to other sources (i.e. cold calling) to generate leads to keep referrals on going since referral and personal relationship networks only go so far. Of course this is industry dependant.

posted @ Monday, September 08, 2008 2:54 PM by Samantha Paulson


As I said in my original post, I was not trying to be argumentative, and even though I didn't say it I was not trying to be insulting either. 
 
 
 
This was the first and only post of yours that I have ever read, so I don't know if you're fundamentally a nice guy or a jerk. Judging by your reaction to my post, right now my assesment is 70% nice guy and 30% jerk, but I'm willing to change that one way or the other. 
 
 
 
If you are in sales or marketing it is essential that you understand the nuance of language, and you probably think that you do, but consider the word sophomoric: 
 
 
 
Dictionary.com uses the following definition: 
 
suggestive of or resembling the traditional sophomore; intellectually pretentious, overconfident, conceited, etc., but immature: 
 
 
 
Notice that in that definition, the immature part is just one element, the real core of the definition is the "intellectually pretentious, overconfident, conceited" part. 
 
 
 
Consider the typical college sophomore (I'm going to invoke a little poetic license here). What's one of their favorite sports? Making fun of freshmen and the freshman-like mistakes that they make. Mistakes which the sophomore made just the year before and so they are fresh in his mind, but now he thinks he is "so much more mature" because he doesn't make the "freshman" mistakes. But unbeknowst to him he is still maing lots of mistakes, but they are sophomore mistakes, to which he is blind. At least the freshman knows that he is stumbling around. The sophomore thinks he has the world by the short hairs. 
 
 
 
By the time he gets to be a senior he realizes his sophomoric folly. But seniors don't stand around and make fun of sophomores (unless the senior is a jerk), because by that time they have matured, and hopefully they've learned to find better things to do with their time. And likewise, I wasn't trying to be insulting about you or your post. I simpy tried to call attention to it so that you might have an easier path to get where you're going in life. 
 
 
 
I should be able to stop here and have you see why I called your post sophomoric, but in case you don't yet understand I'll add a little more here. 
 
 
 
Consider your statement "I talked to 3 people today who have a decent sized sales team who spend their entire day cold calling. Yes. Cold Calling. All day." 
 
 
 
You seem to think you have it all figured out because you know what works for one little corner of the world. You don't yet understand that there might be a lot of reasons that things are done a certain way. The sales manager at these companies that you mention might be luddite idiots -- or you might be the carpenter who thinks the solution to any problem is a hammer. In any case, you can't deny that there was conceit and arrogance in your statement "...who spend their entire day cold calling. Yes. Cold Calling. All day." 
 
 
 
Clearly every business should have a website, but there are lots of businesses that will not get much if any business from the web. The question is are you able to expand your thinking to be able to see that?

posted @ Friday, September 19, 2008 2:44 AM by Greenville IT support


@Greenville IT Support - Wow. Thanks for the lecture. (Said with conceit and sarcasm.)  
 
I am in sales, but know a thing or 2 about marketing too.  
 
Since November alone, I have spoken to about 1,000 small business owners and marketing professionals. At the most, after understanding who their target market was and how they generate business now, I've found one or two that could not benefit significantly from online marketing, if it would be done right.  
 
It is very rare that I've spoken to anyone who, if they put do what is necessary, can not generate the vast majority of their business through the web after a period of time and intense effort.  
 
You can call it conceit if you'd like. But, I'd just call it facing the facts. The world is changing. You can still certainly sit down and bang the phones and cold call and get lucky once in a while. But, it's a much harder rode to hoe.  
 
So...You might consider that my perceived conceit is your lack of knowledge about internet marketing. From looking at your site, I can understand why you wouldn't know this stuff.  
 
BTW, Do you realize that putting "Greenville IT Support" when you leave a comment does absolutely nothing for your search rankings since the link in my blog comments is "no-followed"? 
 
If I may make a suggestion to you, stick to IT support, leave the personality profiling to the psychiatrists, and either learn internet marketing or stop lecturing about it.  
 
I don't think we will ever really get along, so calling me isn't an option. But, If you'd like to talk to an expert about this stuff, give HubSpot, PR 20/20, or Find and Convert, Garfield Group, Brook Group or Wakefly a call.  
 
@SamanthaPaulson You are right on. Thanks for your respectful comment. In my experience, however, if a company commits to inbound marketing fully, they can develop a very strong high quality lead volume. I would never suggest that personal networks (of founders and salespeople) should be abandoned. They often generate the best referrals. And referrals from existing clients are the best. And Face to face networking with complimentary service providers is a very strong source of leads for some small business owners. However, I can point to examples where blogging and social media marketing can accelerate the referral process significantly when networking online and real world networking are done with the same people.  
 
That said, there are not a lot of companies that have made the full commitment to "using all the web" has to offer. Of course, in this case, they must continue to invest in cold calling and traditional interruption marketing to keep their pipeline full. I suggest they dedicated a fraction of that spend to doing online marketing right w/ no hesitation about blogging, social media, seo and ppc. (Many people think these things won't work for them.) However, if they push their lack of knowledge, experience and their biases aside and find an experienced expert they trust to guide them, they will quickly realize the positive "relative ROI".

posted @ Friday, September 19, 2008 8:46 AM by Pete Caputa


You have wrestled me to the ground with your vast intellect, wit and charm, and argumentative skills.

posted @ Saturday, September 20, 2008 5:53 PM by Greenville IT Support


You just got tired and realized there were better things you could be doing with your time.

posted @ Monday, September 22, 2008 10:42 AM by Pete Caputa


I thought I'd throw my hat in the ring. I think that people *like* cold calling because at the end of the day they can say because I called 7 people today I have 3 new prospects. This is much harder to do (and prove) online. Until people have tools that can directly correlate web activity to prospect to revenue, phone calls are easier to track. 
 
But as a *user* i hate untargeted cold calls, but tracking website visitors and indirectly referring to their interest is acceptable as you build up to inbound techniques.

posted @ Thursday, September 25, 2008 5:20 PM by Jamae


Very good point, Jamae. Extremely valid. Until a business starts doing closed loop marketing, they're not going to be able to make the leap of faith.

posted @ Thursday, September 25, 2008 5:31 PM by Pete Caputa


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