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Cold calling is dead – what’s the best way to find clients and grow a business?

I talked to Edward Jones about becoming a financial advisor at one point in my career. We talked about their marketing strategy; it was (and as far as I know still is) based 100% on cold calling.

New advisors would reach out to 25 people every day, five days a week. This outreach would mostly be door-to-door, but phone calls could also work. The strategy, they told me, would lead to a client every month.

Now, assuming that a month has four weeks, this means that I would take to 500 people to get 1 client. That is a 0.2% conversion rate. I pointed out that their conversion rate is meager, and there would be much better ways to do the outreach.

They ended the conversation.

Is cold-calling dead or just stupid?

I don’t know that cold-calling is dead or any worse than it ever was. (I include in cold-calling any cold outreach, knocking on doors, cold-email, randomly talking to people in the street, whatever.) But, from my experience, cold-calling has always been a painfully slow way to grow a business.

That 0.2% conversion rate did not seem odd 15 years ago. There wasn’t a lot of room for it to drop, so it probably isn’t much worse now.

However, I recently had a conversation with an insurance salesman trying to build his business with cold-calling. He told me that he had yet to land a client after a year of constant effort.

So I don’t know, maybe it is dead. Or perhaps it has just become stupid.

Cold-calling wasn’t always stupid

There was a time when cold-calling was the only option to grow a new business.

Communicating with the masses used to be expensive. You used to have to pay millions of dollars for ads or exposure. You couldn’t research people or understand their needs, and there was no way to build a relationship before reaching out to have a conversation.

So two things have changed the impact of cold calling:

  • The means of communication are more open. Anybody can broadcast.
  • Many more people are communicating, so cold calls seem less attractive than they did.

That second point is essential.

Back when the means of communication were expensive, somebody reaching out to you might have seemed interesting; you might have given them more time or listened more.

But now that everybody is communicating, a call from someone out of the blue feels like an annoyance.

Today, you have better options available

In the past, a business that could have avoided cold-calling would have avoided cold-calling.

Granted, some, like Edward Jones, did use it as a strategy, but it was a way to minimize investment. Make the new advisor grind like crazy, take on all the risk, and if they successfully knock on thousands of doors, we can embrace them as one of us. If not, well, we let them go, no skin off our corporate noses.

Or, they would hire cheap labor to do lots of cold calls because it was cheap labor.

But there have always been better ways available to companies with money that are now available to everybody.

But what about, sigh, networking

Let’s take a brief sojourn into the world of networking. Here is how networking works: you go to meetings where you either aggressively seek out business contacts (BNI) or pretend that you aren’t actually interested in doing business with people so that you can build deep relationships with others who eventually may decide to hire you (everybody else).

Networking is a fine activity. But it is slow and often painful unless you have a very clear value proposition that everybody instantly understands they can’t live without.

It is also great for those who want more relationships. Business for most people is an extension of their social life and networking fills that need very well.

But it is a long, hard slog if you want to build a business.

How to grow your company without cold-calling (or cold-calling the right way)

Companies have always had techniques to understand their customer and find ways to attract and interact with those customers.

Think of this as a value journey, where your prospect goes from not knowing that you exist to knowing you exist, becoming interested, having a conversation, and then buying your product.

To make this work, you must define who your customer avatar is and whom you are targeting.

Most people want to avoid this work. Many would rather cold call a million people to find 10 customers rather than spend a few days defining a target customer and talking to 20 people to get 10 clients.

It feels easier to talk to anybody who will listen. It isn’t – because no matter how great your product or service is, there will always be more detractors than supporters in the world. So you are always better off talking to those people who want what you offer.

Then define what you want them to buy

The next shortcut that people like to take when starting a business is to adjust their product to the customer’s needs. There is an idea that you identify “their” needs and then tweak what you do to address those needs.

However, if you have defined your avatar (character), you know their needs. You know the language they use, the problems they have, and how to help.

So, define your product and stick to it.

Create the journey

Work backward from the sale:

  • If they are excited enough to buy the product, what made them excited?
  • What is the entry point offer that made them excited?
  • How do you get them interested in the entry point offer?
  • How do you create the awareness to get them to pay attention.

I go through this journey in more detail here. What I want to cover now is the idea of awareness.

Awareness without cold-calling

Cold-calling is a way to generate awareness: they don’t know you, so you reach out, and then they get to know you.

The alternative is to go to your prospect, where they are.

Once you identify your avatar, ask yourself: where do these people congregate? Where can you find a group of your avatar to have a conversation with them?

There are many places people congregate:

  • Market places.
  • Publications.
  • Facebook groups.
  • LinkedIn.
  • Conferences.
  • Networking

If you know where they will be, you can focus your cold efforts on those places. You will find that this focus will shorten the time to a sale while reducing the number of people you have to meet to reach your goals.

People also congregate in Google, Facebook, and social media in general. And, the beautiful thing about these modern gathering places is that you can develop advertisements and outreach that speak directly to your avatar. Of course, you may still only appeal to 0.2% of the population. But the tools available to you today will make targeting that 0.2% easy, or at least a lot easier than calling 500 people for 1 customer.

Use public information to target further

You can get even more specific.

A great strategy is to identify 100 companies, people, prospects you would like to work with. Then:

  • research them.
  • connect on social media.
  • create ultra-targeted outreach.

This is a targeted cold-calling technique that works great. The difference is that you don’t cold-call. Before you have the first conversation, you engage on social media, connect, share information, and generate some awareness.

Then craft an outreach that is more engaging than a typical cold call. Send them a book or a glossy tailored proposal. You might even find a way to solve a problem for them. Whatever you do, it should be more thoughtful than the standard Edward Jones random knock on the door. And since it is more thoughtful, more tailored, and for your avatar, the results will be much better.

Why do so few entrepreneurs move beyond cold calls

Very few entrepreneurs move toward targeted outreach. They perceive it as slow, cumbersome, and expensive.

The reason for that is the work it takes to define the strategy in the first place. It is work. It takes effort. You have to take action before selling, and it can feel like you’re not making progress.

But a bit of forethought and planning will make your marketing outreach many times more effective. Rather than 0.2% close rates, we like to see 30% or higher. And it is always faster.

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