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.
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.
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?
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.
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.
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.")
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.
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.)?
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.
There's a saying in cold calling: you haven't really started selling until they say "no". Everything up to that is small talk.
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 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.
 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.
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.
FWIW, they are redesigning their website!
This, a thousand times over, is my biggest obstacle for cold calling. However, like anything, once you get into a good groove, the calls become easier and easier as you get more confidence in your pitch. Definitely something to just keep drilling away and practicing at!
rgraham's phrasing: "each call feels like an approaching disaster" is so spot on. It's terrifying and after it's over and went well (and even if it didn't go well), the feeling afterward is nothing short of exhilaration. However, I suspect after I've done a few hundred the fear and the exhilaration will both tame proportionately.
As for Erlang, all my new projects are written with the Nitrogen Web Framework (http://www.nitrogenproject.com), and will be using bits and pieces of my little blogging engine/CMS, Yabbie, which will soon be an open source and hosted project of mine.
That said, the BracketPal software is not currently planned to be open source, at least not at this time. I do want to find a way to tailor the service to smaller ad-hoc-type leagues (like a group of friends who regularly play volleyball together, do a fantasy league together, or who want to run like a weekly gaming league amongst themselves).
So there's that :)
One thing is for sure, I wouldn't see Adwords working terribly well for this market segment: most of these folks don't really know what exactly they're looking for, and since they just get things done with spreadsheets, they're not looking for (ie, not searching google) for solutions.
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:
Furthermore, I don't think the value proposition of your scripted pitch was significant enough. The OP went out of the way to try to create a valuable win-win scenario without it sounding like a sales pitch. If I were on the receiving end of your script and didn't know of your organization, I'd assume the ebook would be filled a bunch of fluff and a hidden sales pitch for your product. Potential value for information that I couldn't just otherwise find on Google is low.
Also, we know our ebook is a potent conversion tool. I think it stills comes down to the question of industry marketing practices: we've found inbound marketing to be much more effective because of the saturation in cold calling.
Take a look at this book: http://www.amazon.com/gp/product/0470567023/ref=as_li_ss_tl?... -- it's the best book I've ever read on cold calling, and is helping me get over my fears about it (I plan to start a big cold calling push in January.) You'll quickly see the difference between your pitches and the ones outlined in the book.
And I also recommend that you do cold-calling yourself instead of outsourcing it. You'll learn a lot more quickly that way. Once you have an effective script, then you can outsource.
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)
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.
_Your_ ability will show, or won't, in the general knowledge and individual focus of your questions. If you can't ask good questions, you aren't ready, and your product surely isn't either.
You get the idea...
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.
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.)
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.
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.
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?
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.
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.
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?
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.
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.
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.