Applying Sales Pipeline Management Techniques to Cold Calling and Lead Generation

Field sales people won’t make cold calls! I hear this statement or a variation on it from many managers. The reluctance seems to be universal. Even people, who have become experts at it, soon shrink from the duty if it ceases to be obligatory.

Where organisations have inside sales people who have the duel responsibility for lead generation as well as handling enquiries, I hear the same complaint. When asked, “how many outbound calls to strangers do you make each day?” the response is usually less than ten. Those who have no choice, whose role is to do nothing else, might laugh at this number. For top telemarketers, one hundred dials a day is the norm. For those who do nothing else, the issue becomes one of ‘conversion rate’ rather than the number of calls made.

Reasons given for avoiding the task include:

‘It is not the best use of my time.’ - Done badly, cold calling is certainly an easy way to waste time.

‘Decision makers don’t take calls from sales people.’ - True, except when they have a reason to.

‘It is not my job to generate leads.’ – If marketing isn’t generating enough enquiries, this is as good as saying, “I cannot meet my target”. The bell tolls for those sales people who even think these words.

‘I need to see people to be effective.’ – Many field sales people are more effective in face to face situations than when using the telephone to speak with strangers. At the same time, versatility is a vital sales quality.

‘I don’t like making cold calls.’ – It is easy for cold calling to become a phobia, something that makes one fearful.

For most sales people, achieving their sales target is necessary to support their family, standard of living, and career aspirations. If marketing is not producing enough leads to achieve the target, cold calling in some form, becomes a necessity.

How many leads do you need each week, month, or quarter? If you know your conversion rate, it is easy to work out. If you haven’t done this before, here is a step by step explanation of how to arrive at the answer.

First calculate your conversion rate. Count the number of leads you have received each month for the last six months. If you have lost the information, ask marketing how many leads have been generated in the period and divide the total by six. Next divide the result by the number of sales people the leads were distributed to. This will give you an average to work with. Now divide your number by the number of new business orders you won in the period. This tells you how many leads it took, on average, to win each order. This is your conversion ratio. If your result was 10, your ratio would be 10:1 – indicating that it takes ten leads to get an order.

Now calculate the number of leads you need in a period. Divide your target by your average order value and multiply the result by your conversion ratio. The result is the number of leads you need. For example, if your average order value is £10,000 and your target for the period is also £10,000, you need one order in each measurement period. If your conversion ratio is 10:1, on average, you need ten leads to achieve this result. If you have a surplus of leads, you don’t need to make any cold calls. If you have a deficit, you have some time to do something about it before your lead shortage turns into an order shortage.

Some people react to statements like this by pointing out that it is over simplified or not applicable to them, because of high order values or long sales cycles. Even if you sell aircraft to airlines, extending the measurement period will still yield useful information. High value sales usually require a team effort. In such situations it is appropriate to measure conversion rates for a team or the whole company, over a longer period.

The principal can always be adapted to the circumstances because the input (leads/enquiries/referrals etc) and the output (orders) are always measurable. If you collect and monitor the data, it tells you what will happen in the future. The alternative is to put ones head in the sand and trust to luck.

If the data indicates that you don’t have enough leads to work on, you have a few options. You can set about increasing lead generation through marketing, increasing referrals and introductions, or generating more opportunities through cold calling. There is another alternative - adjust your earning expectations.

Maybe the situation isn’t quite as stark. When is a cold call, not a cold call? When it is a warm call. Identifying people who have a need before calling and finding a way to communicate their opportunity effectively offers a way to improve conversion rates. ‘Rifle Shot Prospecting’ rests on forethought, planning, and preparation.

It is a numbers game after all. The smart approach involves working out the numbers in advance.

Article by Clive Miller

If you need to improve cold calling, increase lead generation, or develop pipeline management, we can help. Telephone +44 (0)118 933 1357. We will be pleased to discuss your needs or talk through some options. Alternatively Send email to custserv@salessense.co.uk for a prompt reply or use the contact form here.