Introduction to Cold Calling 2.0
There are three problems with expecting your field or telesales salespeople to do all
of their own lead generation in addition to closing:
1. They don’t like to do it
2. They usually aren’t effective at it
3. It’s a poor use of company resources
If you want to take an important step towards turning your sales organization into a
sales machine, start by letting your sales people focus on what they do best: work
active sales cycles and close. Implement a Sales Development function to prospect
for new clients to ensure a predictable, sustainable supply of qualified leads for the
field and/or Telesales, and a Market Response function, to qualify the leads that
come into your website, through the telephone or other “inbound” channels:
1. Sales Development prospects into cold or inactive companies who aren’t
engaging with you already, to source new, incremental sales opportunities and pass
them to quota-carrying salespeople. In the past this team would have been making
cold calls, though today there are much more effective means to prospect.
Organize Sales Development Reps by territories that match the field and telesales,
because it’s vital for them to build relationships with their sales teammates. One
Sales Development Rep typically supports 3-5 quota-carrying reps.
By the way, while adding a dedicated Sales Development function can vastly
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5. improve your outbound prospecting results, we’re not saying your quota-carrying
salespeople should not do any new business generation – far from it! However,
they shouldn’t spend their time making cold calls. They should to higher-potential
sources of business: a small list of targeted accounts at which they can build
relationships, current clients, or their own past dead opportunities.
2. Market Response qualifies incoming leads that reach the company through the
website or phone (usually driven either by internet search, word-of-mouth or
marketing programs), and route qualified opportunities to the appropriate quota-
carrying salesperson. A rule of thumb is that for every 400 leads per month that
require human attention, a company needs one Market Response Representative.
By removing unqualified opportunities out of the pipeline early in the sales cycle,
Market Response determines which accounts will be followed up by the sales force
and thereby paves the way for increased close rates by the field and Telesales, who
spend their time only on pre-qualified opportunities.
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6. Why Sales Development and Market Response should be separated
In companies where incoming lead volume justifies having a dedicated market
response function, separate the Market Response from Sales Development to make
both teams more focused and productive. The roles are very different (inbound reps
receive leads to work to qualify, while outbound reps initiate calls and emails) and
it’s very challenging for a rep switch between the two mindsets throughout the day.
The market response become experts at efficiently qualifying inbound and
marketing-generated leads, and the Sales Development team only prospects for
incremental business at accounts that need to be pursued, where there is no active
or pre-existing interest.
Aaron Ross, founding Director of Salesforce.com’s outbound prospecting team tells
us, “Salesforce.com learned this the hard way in 2004, when we changed from
having separate Sales Development teams doing inbound and outbound roles, to
having the same team handle both inbound and outbound responsibilities. Within a
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7. week, productivity had dropped by 30%. Within three weeks, it was clear that the
productivity drop was caused by the mixing of the responsibilities and was not
going to improve with time. Salesforce.com quickly changed the structure back to
separate teams doing Sales Development and Market Response functions, and
productivity rose back to prior levels.”
Aaron Ross calls the kind of prospecting efforts he initiated at salesforce.com “Cold
Calling 2.0”. He says, “Through 2008, the Cold Calling 2.0 team there will have
sourced about $100,000,000 in recurring annual revenue for salesforce.com. Year
after year, return on investment on each person in the role was about 3000%.”
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8. Cold Calling 2.0
Why aren’t the old techniques effective anymore?
Although once in awhile a cold call or classic new business letter might work, it’s
becoming more rare. There are three dynamics in the market that have changed
the nature of prospecting and what works:
1. Buyers are sick of being sold to, and become more resistant every year to
classic sales & marketing methods, such as pushy cold calls or generic marketing
2. Sales 2.0 technologies, both of CRM systems and Sales 2.0 applications, make
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9. it easier than ever to take the guesswork out of implementing, executing and
auditing the ROI of a prospecting methodology.
3. More accountability in marketing spend. There is ever-increasing pressure
for lead generation and marketing budgets to show documented proof of revenue
results. Every project is scrutinized - “what’s the ROI? How do you know?”
Executives want proof of revenue generated.
What is Cold Calling 2.0, and why is it different?
A cold call is “calling someone who doesn’t know you and who isn’t expecting your
Cold Calling 2.0 means prospecting into cold accounts without ever making any
cold calls. More importantly though, executed systematically in high-volume, an
inside Sales Development team devoted exclusively to Cold Calling 2.0 can become
the most predictable and sustainable pipeline engine (and thus revenue) for the
company. Three key principles to developing a team successfully include:
1. No cold calling: prospect into cold accounts with new methods, other than
surprising people on the phone or trying to negotiate around gatekeepers. For
example, use simple emails to generate referrals to the right people, or who
then expect (and often welcome) a call.
2. A focus on results, not activities, which means that dials and calls per day
are much less interesting or even important. Rather, track metrics such as
qualification calls per week, qualified opportunities per month, or closed revenue
sourced. Calls per day and dials are usually only tracked during training periods,
for coaching purposes while reps ramp up their pipelines.
3. Everything is systematically process-driven, including management
practices, hiring, training, and, of course, the actual prospecting process. By
emphasizing repeatability and consistency, the pipeline and revenue ramps
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10. generated by a new sales development rep become very predictable, and the
entire team’s results become highly sustainable.
In 2002, saleforce.com had begun building a field sales organization dedicated to
larger companies. To supplement the inbound leads they received (generated
mostly through word-of-mouth), the field sales force was expected to prospect to
bring in their own large deals. However, little was happening in the way of
prospecting. Along the way, salesforce.com realized that in addition to the field
people not making many calls because of their understandable dislike for cold calls
1. The environment had changed, and the Sales 1.0 prospecting techniques of
the 1990’s weren’t working. Not only were cold calls ineffective, but even
targeted marketing programs offering high value items (such as business
books) produced disappointing results.
2. Making the field do cold calls means having your highest-cost (per hour)
sales resource perform the lowest-value (per hour) activity
Through these realizations, salesforce.com decided it needed a new approach to
create its own controllable, predictable source of new pipeline. What better place to
create a new system than in the guts of the world’s leading CRM company?
At salesforce.com, which used its own CRM system to pioneer the company’s Sales
2.0 methodology and best practices, the Cold Calling 2.0 project was begun in 2003
by Sales 2.0 leaders Aaron Ross, Frank Van Veenendaal and Shelly Davenport.
They spent a year testing and perfecting the methodology and system to prove its
ability to add incremental revenue at a high ROI, before heavily investing in
building a team around it. A key advantage they had was the salesforce.com
application itself as a platform on which to build the Cold Calling 2.0 program.
Aaron confirms that “We would never have produced the same level of results
without using salesforce.com software and resources and open mind frames. The
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11. Sales 1.0 CRM systems would have held us back as slow, unintuitive and lacking
the capabilities we needed around things like third-party applications, reporting and
Despite some serious obstacles, which are detailed below, results quickly followed:
Aaron reports “You might assume that the prospecting was easy ‘just because it
was salesforce.com’, now a well known brand, and that companies would take our
calls. Nothing could be further from the truth. Although today salesforce.com is a
globally recognized brand company and the software-as-a-service (SaaS) licensing
model is broadly accepted, back in the early and mid-2000’s:
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12. ! Salesforce.com was unknown and misunderstood in most companies. If
someone had heard of salesforce.com, they typically thought “don’t you
offer outsourced sales teams?”
! Salesforce.com was pioneering the concept of Software-as-a-service,
offering its products online and on-demand; SaaS had not yet become
accepted by mainstream companies.
Furthermore, classic prospecting techniques just didn’t work. Aaron says, “I
decided to throw out all the books and legacy ideas and start from scratch. I also
believe that because I had zero sales experience prior to salesforce.com, I had a
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13. What did salesforce.com do differently?
Here are examples of the different intentions and practices of Cold Calling 1.0
versus Cold Calling 2.0:
Here are some further thoughts on what has changed:
* Develop respected experts: the Sales Development role is often treated within
a sales organization as a low-level job. If you treat it that way, you’ll get low-level
results. It’s a challenging and often thankless role. Treat the team as, and expect
them to be, experts. Don’t skimp on training, equipping or developing them. Set
high expectations of their ongoing skills development.
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14. * Qualify accounts and contacts before calling: Cold Calling 1.0 involves calling
or emailing into unfiltered industry-based lists of targets. Prospecting into accounts
of marginal potential is the most common waste of time by Sales Development
Reps and companies? Spend serious time on identifying and clarifying your Ideal
Customer Profile. Define what companies are the most similar to your top 5-10% of
your customers, defined as the ones likeliest to purchase for the most revenue, and
develop focused target lists based on these tight criteria.
* Research rather than sell: when reps do call into cold accounts, rather than
cold calls make “research calls.” The intention is different – rather than trying to
get the decision maker on the phone, a rep simply learns about the company and
whether there is even a potential fit or not.
* Blackberry-sized emails: Avoid sending long, salesy emails that no one reads.
Send emails that are very short (readable on a blackberry) and to the point. Be
direct – what are you looking for?
* Go beyond basic CRM: Leverage your CRM system and Sales 2.0 applications in
every way possible. Do you use dashboards? What about applications for de-
duplication and data cleansing, contact acquisition, or tools that tell you when
prospects that you are in touch with visit your website? There is a wealth of
options now to enhance every step of your process – in fact, there are so many
options it can be too confusing! Don’t let that stop you from constantly testing new
applications to see what works for your company.
But Would Cold Calling 2.0 Work For My Company?
It can work for any company, as long as the company can sell products worth more
than $10,000. Over time, and as new Sales 2.0 technologies continue to evolve,
this minimum amount will come down.
The success of the Cold Calling 2.0 project was a direct result of a well-planned and
executed Sales 2.0 program, combining strategy, process, people, and technology.
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15. It included intensive training for both outbound Sales Development reps and
managers that enabled:
! Every outbound Sales Development person to produce consistent, verifiable
individual results, and
! Every Sales Development manager to ramp and manage a team of outbound
reps to create consistent, verifiable team results
By following Sales 2.0 practices, other companies have seen similar successes. For
example, in late 2007, at Responsys, Scott Olrich (Chief Marketing Officer) and
Erythean Martin began building a Cold Calling 2.0 program based on the
salesforce.com system. Within four months the team increased the pipeline
generated per sales development person by 300% and had become the top (and
most predictable) source of new pipeline for in the company.
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16. ALSO SEE:
Buy the Sales 2.0 Book on Amazon:
More from Aaron Ross:
“Grow revenue through enjoyment”
“Make money through enjoyment”
“Fresh B2B Marketing Data”
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