
 How cold calling (properly) works better than AdWords - rgraham
http://blog.asmartbear.com/cold-calling.html
======
aresant
"It won’t scale."

That's not true.

If cold-calling doesn't scale it's usually the underlying business that's not
going to scale, not the method of marketing.

Marc Benioff (Salesforce CEO) built his company around "inside sales" which is
essentially cold-calling with a fancy wrapping.

A recipe to scale cold calling for an entrepreneur is:

a) Get very specific about who your customer is, and how you're finding them.
For instance if you're selling small business websites to dentists maybe
that's "go type in "dentists" on Google, and see who's advertising, and then
click through and hit the "contact" button".

b) At scale you can then pay somebody else to do the work for you, large list
brokers like InfoUSA have millions of consumer and business records for you to
reach out to.

c) Get caffeinated, find your courage, and pick up the phone to start placing
phone calls.

d) Based on your interactions build yourself a script (or at very least bullet
points) that gives you an outline of how to contact the customer including FAQ
that you encounter.

e) Build with the end in mind of bringing in your first "inside sales" person.
You want to literally turn over a handbook of how you're working this process.
Throw out a juicy commission on orders, and then rinse and repeat.

This takes work, but it's an extremely efficient way of building your business
particularly for B2B.

~~~
smartbear
Great point, well made.

To counter-point, for _some_ businesses, the cost to acquire a customer even
with the efficiencies you describe is still too much. For example a consumer
product that's $99 per year with 50% gross margin needs acquisition costs
lower than even your plan will provide.

In that case -- which is common in high-tech startups -- cold-calling can
still be an effective way to start, because the learning you get is more
valuable than revenue at the start.

Still, more companies could succeed with your strategy than who are willing to
try, and you're right they're missing out.

------
tptacek
Scripting the cold call and iterating on it like it was a Google Adword ad is
such a simple idea, but it had never occurred to me.

This is a great, great post, one of the more useful things that's hit HN in
the past few months. I don't know what it is about the Smart Bear blog, but
man, it's one of the only things that hits HN regularly that I find myself
sharing with non-HN people.

I would love some more discussion about better cold-call call to actions. I
feel like my particular market, while way better addressed by calls than
Adword ads, already has its hackles raised on the prospect of being linked to
a blog. What else has worked for people?

~~~
rgraham
I've also tried whitepapers or ebooks with limited success. On the phone,
people often assume they are marketing pamphelets and hold no value.

I have had success with inviting people to educational lunches with catchy
titles. Name dropping competitors you are speaking with is something you can
try to pitch attendance. The effectiveness of that varies by market. I think
educational marketing works...you just need to find the right vehicle. I
highly recommend Chet Holmes's 'Ultimate Sales Machine.'

Depending on your price point and geography I think simply setting up a
meeting is a great first step. Most businesses are secretly relationship
businesses. Taking an interest in a set of ideal customers and really building
a relationship pays dividends in my experience.

edit: Thanks for the kind words. I am happy to chat about it. I hope more
people take something away from it. Forgive me for losing focus and not
putting the thank you in the original comment.

------
edash
This passage alone was worth the read:

 _I decided I would offer to write them up on my customer-focused blog in
return for a tour of their facility and a short interview. It gave me blog
content, a personal chance to add customers, and a way to learn a lot about my
prospects. It gave them some traffic, a relevant link, and a blog mention they
could point to for social proof._

He contacted people only after doing research and asked if they wanted to be
featured on his blog. He gave value first and built connections. This isn't a
story about cold calling so much as a story about how relationships, and by
extension business, work.

------
tomkarlo
One of the biggest problems here is that $150 is far too small an amount to
test Adwords for a b2b situation (generally, low conversion / high value per
customer.) If he's figuring on a $50 or so cost of acquisition when optimized,
he's going to need to budget at least $1,000 or more (that's just _20_
conversions) to even start figuring out if Adwords will work for him.

Cold calling makes sense, but he's comparing apples to oranges in saying he
didn't get sales via adwords but he's getting leads via calling. He's spending
an order of magnitude more at any reasonable conversion of time to money, and
he doesn't know yet if these cold calls are going to convert, either. It's
just that it's "cheaper" to do because he's not paying himself to do it,
whereas AdWords is cash out of pocket (a valid issue but not one he's making.)

If he tested Adwords and found a formula that worked to create conversions,
he'd have a scalable solution. Even if he gets great at cold-calling, it's
unlikely he'll have a scalable solution unless he intends to hire a raft of
salespeople (who will probably not be as good as he is as selling the product,
and who have to be paid.)

It's entirely possible this is simply not a product that will do well on SEM,
because people aren't actually out there searching for it, while potential
leads are relatively easy to obtain and call. That's true of a lot of
middleware products. But it might also just mean you haven't figured out what
your target users are out there searching for (i.e. maybe not "Deer Management
Software", but instead things like "Hunting Rifles.")

~~~
rgraham
These are all good, valid points.

For my specific situation spending $1000 to get 20 conversions didn't make
mathematical sense.

I spent several hours cold calling to get my first 10-15 conversions and if I
paid myself for that activity it would certainly be far from 'free', but you
are missing the main point of the calls. Personal attention creates
relationships. These people talk to each other. Relationships matter to them.
Those calls paid dividends beyond individual conversion.

Besides that, there isn't a way to create an AdWords formula for every product
X and market Y.

~~~
tomkarlo
That's true, but it's not mutually exclusive. Lots of businesses use Adwords
to generate leads that are then pursued using phone sales, and it also means
you're no longer making "cold calls", because you're calling in response to a
request. Adwords doesn't always have to funnel directly into a checkout.

I'm also not sure how you're defining "conversions." Do you mean people being
willing to meet with you, or are you saying you had 10-15 sales from the cold
calling (cash in bank account.)?

~~~
rgraham
I agree with your first point. I left it out in implicit agreement.

In the article I am talking about meetings...essentially just warm lead
generation. I called it conversion because that was the goal I was attempting
to convert them to.

I don't think cold calling can be as effective for instant sales as AdWords
because with AdWords you are targeting people searching for a solution to a
problem (you already know this). I still don't have a system that can tie
networking efforts to later sales (cash in bank), but maybe someday I'll
pursue it.

~~~
tomkarlo
Having done a /lot/ of cold calling in the past (sometimes up to 200 in a
day), I'd warn that you can't tell how effective any system is until you
actually have people breaking open their wallet or writing a check. Folks will
take a meeting just to be polite.

There's a saying in cold calling: you haven't really started selling until
they say "no". Everything up to that is small talk.

------
chops
I have to express similar experiences with the blog post.

While I have Adwords experience for 5 years now (with my MMO guild hosting
system), with my newest offering (Plug: Sports League Management -
<http://www.bracketpal.com>), I knew that I'd be facing a much more
established market with higher PPC and I'd be up against more established
players with bigger budgets.

So, I faced my fears[1] and began a sample of calling Volleyball leagues in
the Milwaukee Area, expecting rejection after rejection. So far, it's proven
to be well worth it. Not knowing how to structure these kind of things, I
pretty awkwardly and directly opened with something like:

 _Hi, My name is Jesse Gumm, I'm a software developer in the Milwaukee area
and I'm in the process of getting a new product off the ground for running
sports leagues, with a particular emphasis on volleyball leagues. It was used
to run the leagues at Bradford Beach this summer, and I was wondering if you
would be willing to sit down with me for a few minutes to try and see if maybe
this would be a good fit for your company._

That (terrible) pitch landed me around a 60-70% success rate for setting up
meetings, and of those, the majority of them _sound_ like they'll be buying
from me this coming summer, and at the very least, has turned into referrals
for other leagues and other sports (since I'm much more active in the
Milwaukee volleyball scene, it helps getting those referrals for other sports
for which I've very limited information).

I'm gearing up for a massive cold-calling spree (just finishing a few critical
features for a few Winter leagues I've got lined up), making an effort to call
every volleyball league within 200 miles to see if they'll set up a personal
meeting, before I start calling to try to sell the (what I think will be much
harder to get) remote-desktop meeting. The article above and (the article
linked in the comments: <http://news.ycombinator.com/item?id=3234286>) looks
to be extremely valuable towards getting a better success rate, and is
consistent with what I've been reading in sales and cold-calling books,
regarding the success rate of setting up a conversation to find out the
prospects pain points before pushing a product in their face.

[1] And fears they are. I have to psyche myself out before every call, despite
the fact that all of my calls have been pleasant, and most of them have
produced meetings. And after the call, while I'm energized to launch my
product and work, I still have to psyche myself out AGAIN for the next call.
It's really a difficult thing for me. I'm definitely not the kind of guy that
approaches someone at a party and strikes up a conversation.

~~~
vidarh
At my first company, I was thrown in the deep end of having to do cold
calling, and it's amazing how simple pitches you can get away with if your
product is actually something people see value in, and you sound genuinely
interested in providing value.

I also think this is severely under-utilized. Especially since you can often
get hold of people on the phone that you'd never get an e-mail reply from, if
you're just friendly but persistent with assistants etc..

I'm in the same situation as you with respect to being an introvert. It was
agonizing work, but it also drove a significant portion of our revenue. An
alternative if you can afford it is to talk to a professional lead generation
company (though be careful that they reflect your brand well - this is one of
those areas where it definitively does _not_ pay to skimp and end up with some
cowboy). The downside of the latter even if you find a good agency is that
nothing beats getting direct feedback on what is right and wrong with your
pitch.

~~~
silverbax88
Got any recommendations for a lead generation company?

~~~
matdwyer
I've worked closely with Dave @ Client Acquisition Partners (
<http://teleleadsonline.com/> ) - I know he's worked with some tech companies,
so it might be worth a shot.

FWIW, they are redesigning their website!

------
startupstella
great article. we ran an experiment over the summer with cold calling as well,
as many people thought it would be a successful sales strategy for us. being
in the payment processing world, we knew business owners were constantly being
cold called and most likely did not want another point of contact. however, we
wanted some data to show people who made that suggestion in the future.

our hypothesis was correct: our conversion rate was nill, even when tinkering
with the sales script. i think the variation is due to the fact that the
target customers in this article were not as heavily cold called as our target
market. so, it made them more open minded. here's a link that shows our data:

[http://feefighters.com/blog/950-and-1500-calls-tales-in-
tele...](http://feefighters.com/blog/950-and-1500-calls-tales-in-
telemarketing/)

~~~
vidarh
Those are absolutely horrible pitches. I'm surprised they didn't bomb worse.

My first job was to cold call on behalf of a charity for the blind, and I've
also done a telesales job for short time, and got training in it.

First thing we learned the first day in both jobs was the way of structure a
call to get interest. There were of course big differences, but a few very
significant common takeaways. Incidentally there's a lot in common with this
and being a good conversationalist or even generating attraction:

* You need to offer value. That means, you never ask to get anything off the bat. On the contrary, you seek to get them to feel that you're going to offer value.

* You set up drama that they want resolved. E.g. you offer insight about some situation that is emotional to the listener. For the charity for the blind, this was of course about creating sympathy. For the telesales, it was about describing some scenario that corresponded to a need the customer felt strongly about, such as spending more time helping their children read (the company sold children's books).

* You get the listener invested and hopefully make them contribute details to the scenario from their own background; e.g. explaining the problems with their business, for example, and starting to look for ways you can help them.

* You make statements that gets implicit buy-in from the listener unless they object. People don't like to object, and if this is done subtly, people will find themselves accepting your statements even when they initially disagreed with them.

* Then you give the customer hope that you can _help them_ make things better. You've established yourself as having high value to _them_.

If you do it right _they will ask you_ what they can do or how they can buy
your product.

The overall structure is to start on a friendly high note, create drama and
tension and bring the emotions down, then resolve the tension and offer up a
solution while bringing the emotions up. Think Hollywood tear-jerker.

The scripts you quote on that page fails in that they don't set up a conflict
or any tension that you can resolve for them. Just some bland statements about
"cutting the nonsense".

I'd have done something more along the lines of "I'm sure that like lots of
other [small,big, type-of business] businesses (implicit buy-in to your
statement, putting them in a group they identify with), you've been hit with
chargeback fees that were totally bogus [addressing a conflict] and have had
to fight with your processor to recover funds and (more similar stuff)... (ask
how it's impacted their business, and show them you sympathize). What do you
think you can do about it? (listen to their feedback). Well, we have a report
that helps you solve some of these problems. (wait for them to ask what it
costs) We'll e-mail it you for free."

On top of this, voice, intonation and the level of excitement you manage to
project makes a massive difference - the biggest problem in the training at
both jobs was to go from sounding like you read from a script (because you
did) to projecting well enough that you came across as believable. In my own
experience, this latter is so much easier when you call yourself, rather than
outsource it.

(EDIT: fixed formatting)

~~~
localtalent
I'm in a similar situation - comfortable with the product, uncomfortable
selling. These tips were excellent, do you have further information or some
more examples?

~~~
vidarh
I didn't do this very long, so I got the basic crash course. It did make an
amazing difference, but there's a lot more to learn. Generally, though, if
you're selling a product you believe in, you're halfway there - for these
telesales companies so much of the training is down to getting their staff to
project enthusiasm for products they have no connection to.

Largely it's down to doing the same things that make you a good communicator
in general. A couple of very simple examples:

Sit upright when you call and _smile_. You want to be relaxed but alert
(sitting upright) so you breath calmly and have plenty of energy behind your
voice. And smiling when talking changes the entire character of your voice.
Make an exaggerated smile - in general people come across as smiling less than
they think they do, and this is even more the case over the phone. It really
does come across as much friendlier and relaxed. Try it and record your voice
with and without a smile.

And listen to any cue you get about their business and parrot it back to them
either as statements or questions. "So you feel your payment provider don't
understand your side of the story?". The more they talk, the more likely they
are to talk themselves into buying your product, because the more people get
to talk about themselves with only small interjections that shows you've
listened to what they say, the more they feel you understand them.

If they start talking a lot, you often only need to very subtly tie that to
your own experience (creating shared experiences creates a connection) related
to providing your product or services. E.g. "I feel the same way - when I
started building X, it was because I'd done Y in a previous job and I kept
running into the same problems; once we ...; I think we have a good solution,
but how are you solving that for your business?"

Generally, I'd say a foundation to get comfortable with this for someone who
is uncomfortable selling, is not a sales book or course, but a conversational
skills book. Look up Leil Lowndes - she has a lot of easily digested
conversational skills books and most of the skills are directly transferable
to making your more comfortable with sales. And especially if you're selling
your own product that you can muster excitement about, coming across as
confident and a good conversationalist brings you 90% of the way there. Get
that in place and you can top it up with some general sales skills later.

------
js2
A successful entrepreneur I know impressed upon me once the importance of just
picking up the damn phone. He wrote about it here:

[http://www.mcstartup.com/blog/2008/2/23/ive-got-an-idea-
shou...](http://www.mcstartup.com/blog/2008/2/23/ive-got-an-idea-should-i-use-
an-invention-submission-service.html)

and here:

[http://www.mcstartup.com/blog/2011/8/13/where-do-i-
start.htm...](http://www.mcstartup.com/blog/2011/8/13/where-do-i-start.html)

You get the idea...

------
Timothee
I'm planning on going "out of the building" very soon and go talk to some
potential users, so the part about refining the opening phrase is very useful.

It won't be cold-calling but going to talk to people on the street so I'll be
interrupting them somehow, so I'll have to pay attention to what works and
what doesn't…

On the "this does not scale" part, this is a recurring theme: Alexis Ohanian
commented with multiple accounts at the beginning of reddit, IIRC Facebook was
getting the class schedules more or less manually, Airbnb's CEO slept at many
people's homes to understand their needs, I believe the guys at Quora were
answering questions themselves, etc. This doesn't scale but it gets things
moving and you learn what really works.

------
DanBC
I really like two things about this article:

1) His approach would have worked with me.

One job I had, I used to have to filter calls from everyone trying to get
through to my boss. Polite honest quick callers got the chance to mail
details, or let me web-search their company. But the amount of pushy idiots!
Some of them really gave "their" product a bad name. Scare quote around their
because unlike the author in OP these sales people were just low-wage
employees of some big company.

2) Some aspects of the job are easy. (Coding.) Some are going to appear really
hard, but you just have to do them, and learn as you do them. (Selling, to
real humans, face to face or over the phone.)

------
tnicola
Like AdWords, cold calling has its place. I am sure that cold calling about
deer hunting was more effect than Google AdWords, as (forgive the stereotype
here), I am assuming, your audience preferred high touch and is not all that
tech-oriented.

I would like to see the effect of cold calling vs. AdWords when you are
marketing an app for an urbanite and cold calling in a major city, like New
York or Chicago.

Your pitch may be carefully crafted, but between people like myself who'll
hang up before you reach your first breath intake point and Do Not Call Lists
(in Canada), I think that the success of your marketing campaign was a little
circumstantial.

~~~
rgraham
I think the success of (nearly) every marketing campaign is circumstantial,
but your points are valid. Marketing is highly dependent on context.

------
dkokelley
_"At this point in my company it was far more valuable to land a dozen
orders... This part doesn’t need to “scale,” it just [needs] to happen."_

A thousand times this. I think this is the biggest takeaway from the article.
I think as entrepreneurs, we see something both scary and mundane like cold-
calling and think "I don't want to do this. There's no way I'm going to make
$1MM+ calling people from the phone book." I know I suffer from this frame of
mind, and the above quote is a good dose of reality.

------
mattmanser
I was looking around your site trying to find your products:

<http://whitetailcensus.com/>

<http://www.mywhitetailscout.com/>

One of them doesn't even seem to have a stylesheet or a _single_ picture or
video of your product. Sounds a cool product but I have no idea how hard it is
to use. Is it like facial recog software?

The other, the scout product, the 'reasons to buy' are the worst I've _ever_
seen. And I still don't know what you're selling! But it has _rapid record
retrieval_. Wow. Marketing 101 man, that's not a reason to buy, customers
don't care about that.

I didn't want to be negative but on the other hand I honestly think you could
do more harm than good with this article.

Firstly it seems that online selling is not at all your forte. Let me be
frank, you cannot write marketing copy. Worse you've presented yourself
disingenously, as if you had some skill with adwords, _I thought I understood
AdWords pretty well. I even worked on the AdWords API team as an intern at
Google_.

What has working on a technical product at Google got to do with writing
marketing copy? Quite obviously nothing.

Secondly, cold calling can be a _very_ expensive way to acquire customers. And
you've hand waved your way through it. You converted them because you drove
out there and sold.

At $29.95 a _year_ , the price you're listing one of your products, you
_cannot_ buy a list of phone numbers, call the customer and then drive out and
visit them and still make money.

The premise behind the article seems a great way to validate your ideas, but
that's _not_ what adwords is for. Adwords is for selling. And you haven't
mentioned any sales costs associated with the phone process in the article.
The fuel? The time?

Having worked in industries where we did buy leads, the mortgage industry, it
was £75 a number. They weren't even cold and we still had a conversion ratio
of 1 in 10. Could you make money paying £750 per customer? Our product sold
for £2500 so it was worth it.

And say you go b2b instead, companies give away their numbers on websites all
the time. Can you get to the decision maker in a couple of minutes? Or are
there barriers?

Overall I just think this article is badly titled and you shouldn't have
mentioned adwords _at all_. This is a great idea for getting to know your
customers. For selling, I doubt its benefits.

I want others to _think_ , is cold calling really worth spending your time on?
Can you actually afford to?

~~~
rgraham
You're right. Something is wrong with the Census site, but there are images on
the tour page. I'll take a look. The Census product uses Mechanical Turk to
recognize deer in trail camera photos and determine herd statistics using
capture-recapture. You upload images and get emailed results. That is it.

I never managed to sell the Scout product online. It is incredibly bad
marketing copy that I modified from some examples I found around the web. Any
sales of that product required calls or in person handling. I did best at a
trade show. There is no online audience I could reach for it. I underpriced
the product and marketed it poorly. I found some success in higher-touch
sales, but you are correct that the price point needs to support that effort
level and you should target your market accordingly. That particular product
also has an entrenched and highly likable competitor.

Phone numbers (business listings) from a service like Hoover's are free at
your public library.

You're also correct that working on a technical product has nothing to do with
writing marketing copy, but I'll bet that not everyone in this audience knows
that. Hopefully my story lent them some perspective.

I'm working on another product at the moment. I wrote the article about my
experience developing those products hoping that people would think about what
might work for them and be open to ideas that aren't commonplace. I'm glad to
have your perspective as it may help everyone consider their options from
every angle.

~~~
mattmanser
Yeah, that's true.

In the end you did totally the right thing, which is go where the customers
were. As you say you couldn't find your audience is online.

And it's good to remind HN that there are other marketing methods they might
not have tried.

I just thought the article wasn't fair on comparing a $150 adwords spend to a
bunch of customer visits, which once you get past being a sole founder will
cost you a lot of real money.

------
username3
Wasn't there another article like this?

~~~
rgraham
Yeah. This builds on <http://bit.ly/oeZDzC>.

------
narag
_software for deer management_

Software for... what? Is this some kind of idiom or is it some kind of wild
animals control? Please, could anybody drop a line of explanation?

~~~
rgraham
Whitetail deer hunting is a 6+ billion dollar industry in the US.

Many ranches sell hunts on enclosed ranches for trophy animals and you pay a
sliding scale of how good a trophy you kill. This is so popular that many
people are getting in the business of breeding deer to sell to other breeders
and those ranchers. There is still a lot more demand than supply.

On top of those segments, there are many hunting clubs and individuals with
land that wish to manage the animals responsibly or in accordance with state
guidelines in exchange for special privileges and tax breaks.

All of these people need record keeping and analytics to measure what they are
doing and report it to their state.

~~~
narag
Thank you, very informative!

------
johnohara
_Hi, I’m Robert ... I am looking for a few people to visit, tour your
facilities, and talk with you about your business. I can then write up the
experience and link you up on the blog._

I'd be inclined to think you were stopping by to case the place which is why
professional networking is so important. Not fool proof, but helpful
nevertheless.

------
EponymousCoward
He addresses scale but only scaling up. What he neglects to realize is that
AdWords et al are elastic, if I want to get 10x impressions over the weekend I
can do that. With cold calling, not so much...

~~~
jacquesm
This is not true in all cases. Adwords has plenty of niches where the number
of clicks per day is very limited, no matter how enticing your ad.

If you already have a good idea of who your customers are the shortest path to
those customers is likely a much more direct one than waiting until they
happen to see your ad and click on it.

------
danielhodgins
Very useful follow up to your previous article on 100% conversion rate cold
calls. Thanks! By the way, how did you hear about your deer management niche?

~~~
rgraham
I grew up in Texas. I've been hunting and fishing since I can remember
anything. When I couldn't walk through the marsh because I was too little for
the sucking mud I'd float on top of a mesh bag filled with plastic duck
decoys.

------
joelrunyon
Couldn't there be a complementary article titled "How Adwords (used properly)
works better than cold calling?

------
quanfucius
Does cold calling produce better conversion rates than emailing? What are
everyone's thoughts on this?

~~~
rgraham
The answer to nearly any marketing question is 'it depends.' My experience in
a couple of markets suggests that it does for me. You will have to test it for
your context.

~~~
HeyLaughingBoy
You also have to consider that emailing to non "opt-in" targets can run afoul
of CAN-SPAM.

