Want to get better results from your cold calling efforts? Here’s a simple step-by-step guide on how to strategically improve your outbound phone sales approach.
If you are a startup that’s doing cold calling, you're always trying to improve your results.
At least twice a week I'm talking to founders asking me about how to improve their cold calling efforts by describing to me their basic input/output metrics.
They'll say "We're closing an average of 1 out of 100 leads we call. How can we improve this?"
That's an impossible question to answer. You can't just look at input/output and know how to optimize or were the issues are. You need to understand the entire cold calling conversion funnel.
Look at your entire cold calling conversion funnel:
- How many leads do you have?
- How many calls do you make?
- How many decision makers do you actually reach? (reach rate)
- How many of the people you reach are actually qualified to buy your product?
- How many of these qualified opportunities do you close?
Once you have these numbers, you’re much better equipped to decide which part of your funnel needs improvement. You want to fix the part of the funnel first that will make the biggest difference to your bottom line. Usually you want to start at the top of the funnel and look at the quality of your leads and the average reach rates you're getting.
Improve your reach rate:
One of the main inefficiencies of cold calling that people don't take into account are reach rates. (That’s why we encourage you to call every signup within 5 minutes for inbound leads).
In cold calling there often is no quick fix to improve this number. If you talk with people who do cold calling, you’ll find that about 90% of their efforts are wasted on just trying to reach decision makers. Even slight improvements in your reach rate will yield significantly better results for your overall cold calling conversions.
Reach Rate Benchmarks: 15% or higher
These numbers refer to how many decision makers you reach (not gate keepers):
- 10% or less = you’re toast
- 15% = you’re doing ok, this is pretty much standard
- 30% = you’re doing great!
Qualify more leads:
The next common problem in your cold calling funnel might happen at the qualifying stage. If you qualify only a low percentage of people you reach, that means you’re calling bad leads (or less likely you don't know how to qualify people in the first place).
You probably need to have more narrow definitions of your target market and hence setting more criteria on what constitutes for a good cold calling lead.
Qualifying Benchmarks: 50%.
This might seem high, but if you have good leads, then you should qualify around half the people that you reach. If you qualify less than 50%, you need better quality leads.
Edit: To clarify, a qualified lead is a decision maker that you had the chance to talk to and ask the basic questions that would lead you to confirm that they actually should buy your product because they are a good fit. If you reach a decision maker but they hang up immediately that doesn't make them unqualified but rather decreases your reach rate.
Close more deals:
If your Reach-To-Qualify ratio is good, but you don’t close enough deals, you have a few basic options:
- You don't have product/market fit yet
- Cold calling is not a viable way to sell your product/service
- Your pitch sucks
Look at the way you're selling and evaluate if the pitch is sound. Have outside experts ( other founders/sales executives or investors) come in and evaluate your sales approach. If your pitch is good, you're likely having problem number 1 or 2 ( no product/market fit or cold calling isn't viable for you).
Closing Rate Benchmarks: 25% - 30% = you’re good.
If you close less than 25% of the people who qualify, you're probably in trouble.
Discover how to fix your funnel:
In general it’s best to start at the top of the funnel because these numbers will affect everything else that happens later on. Look at the benchmarks simply as a way to identify when to move down to the next step in the funnel, and keep in mind that the percentages might differ depending upon the specifics of your business.
Simply saying "How can we improve sales?" is not enough. You need to know your cold calling funnel to understand what's going on and spot real opportunities for improvements.
Need more help with optimizing your specific cold calling sales funnel?