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Is there a better way to search for new business than the dreaded “Cold Call?”By Lee R. Van Vechten
The above question is asked over and over again…the question is without
age. Marketing and sales executives
in the 1970’s ask the question and in this new Millennium, with its global
market influences, the question is still asked, “Is there a better way?!”
The question suggests that the answers applied to the problem (or
opportunity if you will) are less than satisfactory.
Thus, the search goes on. Given that mistakes can occur, i.e., hit or
miss marketing programs or less than exciting results from multiple channel new
business forays, it appears that the solution will be forever elusive.
Are we doomed? Is there
truly a magic bullet? As
disappointing as this may sound there is no magic bullet but we are not doomed.
As Bill Parcells of professional football coaching fame and coach Joe
Paterno, coach of the Penn State’s Big Ten Team so often expound… “It’s
back to basics.” I would add, plus
one. All
new business programs must first identify the objective then clearly identify
the problems that will be incurred while attempting to accomplish the objective.
The entire exercise boils down to problem solving 101. Symptoms Vs.
Problems
So often we address symptoms of problems vs. the problem itself.
This then leads to new business program dissatisfaction or outright
program failure. Here are two
abbreviated case histories to demonstrate the point. Company: Catalog Promotions firm; promotional product sales to institutions and businesses. Products:
Product offerings were both manufactured onsite
and from outsourced product suppliers for organizations celebrating events and
who wish to promote these events, e.g., “We love our teachers week.” Sales
Channels: Catalogs drive business into the
order entry and or customer service center, manufacturer’s reps/exclusive
distribution representatives and telephone sales. Size
of business: Approximately $50,000,000. Margins:
50% plus Identified problems: 1.
Costs to convert leads to new business, e.g., product sample requests
that never purchase vs. those that do. 2.
Flat, overall growth rate in the business was documented. 3.
Loss of repeat business, as in 35% of the customers never repurchased,
i.e., customer lifetime value was seriously impacted. 4.
It was difficult to measure anything but direct mail response rates,
nothing seriously measured in either phone channel (inbound/outbound).. 5.
Direct mail marketing culture and their unwillingness to really change
(telephone selling has its own needs and unique culture). Notice
that the above five points are all symptoms of the problems not the problem
itself. The problem or objective is
how do we grow this business given our current marketing environment.
Over simplified? I don’t
think so.
The solution was integrated marketing (which is an article in it’s own
right). Both proactive account
management and samples/lead conversion via the phone were the answers.
What was $2,000,000 in sales volume is now $4,000,000.
How was this accomplished? Via
a proactive, telephone sales program/department in a territory configuration.
They dealt with all the symptoms and the problem successfully within four
months of the start-up program. How
was success measured? Comparison to
a control group (where nothing was changed) and measuring the true cost of sales
and enhanced lifetime customer values. Case example two…
Company: Service Provider (B-to-B) Services:
Records management (safe and inexpensive storage of currently unneeded paper
documents). Also records
destruction when needed and provide records on a demand and on a real-time
basis. Sales
Channels: Field Sales force; all new business
driven, no account maintenance, 15 years plus was recorded for customer lifetime
value.
Size of business: Approaching one
billion dollars. Margins:
“Unbelievable” Identified
problems 1.
Appointments for field sales organization or (if you will) productive
prospecting by the sales team needed improvement. 2.
Internal lead qualification center (“the telephone staff”) was unable
to provide enough sales leads for the 100 plus reps in the field sales
organization. Quality of the leads
was also an issue. 3. Reps’ felt prospecting was a waste of their selling talents and requested more from support sources in order for them to meet their new business sales objectives/quotas/goals. 4.
Informal and less than productive direct marketing campaigns that
assisted with direct marketing lead generation.
No real measurement of this activity as to what was working and what
wasn’t. 5.
Cold calling from purchased lists was just brutal and very expensive! Cost per lead was prohibitive. 6.
Strange as it may seem…same problem, growth; the need for new business. The rest are symptoms of the problem. The Solution The
proposed solution was to merge two company-calling centers into one centralized
facility. Turn the lead
qualification mission into a sales (selling organization) mission as opposed to
a staff
support mission. This is a subtle change, but politically (internally) an
important change. Establish an
outsource program, business to business, lead generation unit to test lists and
marketing concepts before installation of these programs into the “new and
improved” inside sales unit. Finally,
to develop a two-step direct marketing campaign asking the suspect to do
“self-analysis” which can be scored. If
the self-assessed score was low…the
suspect most likely won’t request information and or a problem solution.
It’s those high assessment leads that the new inside sales unit will
call to either qualify, sell or both (for and with the field organization).
What are the measurements of success?
The true cost to convert a prospect/suspect to a customer.
Who, incidentally, will be on the books for 15 years plus! What are the anticipated problems for both examples? Anticipate
two problem topics, tracking the event and cost per lead.
Field selling organizations traditionally are light on detail or lead
feedback information. Automating
that process on the enterprise database helped that problem immensely.
Secondly, pairing of inside and field reps also had great value.
Finally, all programs were tested by the outsource agency first;
adjustments were made where needed; training topics were identified; and based
on these experiences, plus tons of call monitoring…. clear rules of the day
were identified for the program. Then,
and only then, was the program turn-keyed into the inside selling team. Flat Growth
In our first case example one of the problems was flat growth.
After investigation it was noted that fully 35% of new business had no
sales activity in the last 12 months. Thus,
in order Territory value previous 12 months: $750K 35% loss of accounts and volume ($200K) geographic
territory assigned
$550K Program
handles all accounts that purchase $1,000 or better during the previous 12
months (active and inactive accounts). All
sample leads and catalog requests were called first then mailed in those
territories, if appropriate. Any
large, unidentified new piece of business over $2,500 was called immediately. New budget
established equaled…. 1.
35% incremental gain on the $750K 2. 20% reactivation target of all inactive accounts in the territory $40K (X) six territories! 3.
Sample and catalog requests business conversion was budgeted at 200% gain
over mail statistics previously recorded in the past six months. Results
Six territories exceeded previously recorded sales results by close to
100%. What was $750K was now 1.45
million. How did they measure the
program? The control group barely
reached $750K. The name of the new
program? Managed accounts!
And therein lies the answer to the problem.
Manage your account structure with an efficient, proactive, inside
selling resource. Summary
In 26 years of consulting in this
business arena I have never seen results less than 30% gain and traditionally
it’s 35% plus at a lower cost of sales. Why
aren’t more companies using these tools?
I haven’t got a clue! Lee R. Van Vechten is president of F.G.I. & Affiliated Publishing Companies, and Partner in The Van Vechten Group, Freehold, New Jersey, a management-consulting firm since 1977, specializing in turnkey telephone sales installations for businesses; specifically the creation of telephone selling resources for clients. Lee's book can be found on Amazon.com |