techcmo-ai-b609

Fallacy of the 30 Second B2B Cold Call

mahesh@techcmo.ai (Mahesh Kumar) — Fri, 17 Feb 2023 03:38:59 GMT

B2B Cold-Calls Don't Work

Too often SDR Leadership sells the fantasy that a 30-second phone call with the right hook will get a prospect to a meeting with the sales team. What most don’t realize is that they are mainly getting prospects who are the outliers or exceptions.

A simple stat, cold-call connect rates between 1% and 3%, confirms that these are outliers. Viewed another way, 97% of the prospects that met your target ICP criteria are not reachable. Is this any way to run a critical business function, where we ignore 97% of the addressable market?

The reason most organizations fall in love with a cold-call approach is that soon after the outreach starts, these outliers surface at a fairly quick rate - these are prospects eager to take a call, the prospects open to just hearing about a new product/solution pitch even though they have no buying intent, etc. We then forward project these early successes, aka outliers, and just assume that the trend will continue for the foreseeable future at the same pace or even accelerate with the addition of more resources.

However, there is this stark reality that no matter the amount of effort or investment, in a cold-call approach, the addressable market taps out at 5% of the total addressable market. This is why a call-heavy strategy always ends with us hitting a brick wall. I say us here because I’ve personally experienced this with several vendors that operate in this model and a poll of many CMO/CRO peers confirms this pattern. Initial success, followed by hitting a brick wall.

The second major problem with a cold-call approach is that quality of prospect engagement is very superficial, which is the polar opposite of what a serious B2B buyer/user wants. This results in many of these so-called opportunities not proceeding further in the sales funnel. Lots of effort and promise, but little outcomes.

What a Cold-Calling Company's Pitch Sounds Like

Caller: “Hi I’m so and so. Can I take 29 seconds of your time to tell you about (INSERT MOST UNBELIEVABLE OUTCOME HERE).
Prospect - “uhhh… I guess”.. (Prospect’s actually thinking - “Why did I pick up the phone this time, I never do. Grrr…”)
Caller - Reads out generic 30 second pre-written spiel about product and company.
Caller - “How about we book a call next week, I have my calendar right here” (The presumptive close. Nice!)
Prospect - “Ok, next Tuesday at 2pm”. (Prospect is actually thinking - ‘what’s the quickest way to end this call’)
Caller: “Great I’ll send you an invite with our sales rep, is your email abc@xyz.com ”
Come Next Tuesday - The Prospect No-Shows
Cold Calling firm - “Don’t know why he didn't show, he did accept. We’ll keep trying to get him to a meeting.........”

We’ve all experienced cold calls for credit cards we don’t need, so-called ‘Free Vacations’, and ‘You’ve been chosen for ….’ B2C calls. Those calls sound exactly like the B2B example shown above. These companies are projecting a B2C approach onto the B2B domain. Cold-call tactics might work in the vast B2C ocean of consumers - many millions or even billions. Here it is much easier to play the percentage game and still come out ok. In a B2B scenario, the number of ICP Accounts is more or less fixed, and number in the thousands or tens of thousands depending on the segment and geo constraints. Your success in the market depends on maximizing yield within this fixed set of accounts. No amount of multiplication by 3% will get us to the pipeline goals.

This B2B yield-maximization is only possible with a much smarter approach

This approach consists of 4 key pillars.

Multi-modal - Engage with the customer in the media of their choosing or prefence - whether it is email, social media, phone, or ads.

Marketing & Messaging DNA - In any channel the message you craft is supremely important. Message that isn’t so generic that goes right over the prospect’s head. Messaging must be smartly tailored - mass-customized with a from Product Marketing lens. You need SDR leadership that has this skill - it comes from a Product Marketing or Demand Gen DNA.

Strong Feedback Loop - In any B2B GTM model, the signals are not always strong. Due to small numbers, you need the ability to not only read weak signals and but also separate signal from noise.

Transparent - Any outreach is successful when there’s full transparency and visibility so everyone knows what is happening and can provide input/feedback. Too often appointment setting providers use a black box approach. Beyond a vague definition based on company size and industry, the is customer in the dark on which accounts are being prospected, the lead quality etc. Any vendor must volunteer radical transparency without being asked.

The above strategy has several advantages. First, this strategy gives us the best opportunity to increase the addressable market manifold. Second, it brings more aware and engaged prospects to the meeting with sales. As a result, the chances of progression of the opportunity increase significantly. Finally, this approach also acts as a filter for those who’ve essentially been ambushed in a phone call, i.e. these prospects under the normal course of business would not have taken the meeting but felt somewhat compelled or pressured to do so.

Magic of the 3-Week Moving Average

mahesh@techcmo.ai (Mahesh Kumar) — Fri, 17 Feb 2023 03:38:57 GMT

3-Week Moving Average, a span that is 'just right'.

Moving averages are an excellent way to measure progress in pipeline building because they smooth out the day-to-day or weekly variations. Moving averages have historically been used for financial reporting with 50-day, 100-day, and 200-day moving averages as the most commonly used ones.

What is the ideal moving average for an SDR team?

We use moving averages to track our performance trends over time due to the inherent variability that accompanies pipeline generation. The three key aspects to develop a moving average are:

Measure/Metric : The measure or metric must be simple to use, not subject to gaming, and meaningful to the business. For the SDR function, the best metric to capture the volume of output is the Number of Held Meetings and the Number of Qualified Held Meetings . Held meetings are quite easy to track, leave little room for ambiguity, and are also meaningful to the customer - in this case the salesperson. Likewise Qualified Meetings also have a binary outcome with little room for ambiguity.

Our objective in this 3-week moving average is to obtain both a volumetric measure of the outcome of the SDR's outbound efforts and a qualitative measure of the efforts. Note that the Qualified Meeting Held metric is dependent on other factors such as the customer’s situation, priorities, and the salesperson’s ability to influence the customer to take the next step.

Time Unit : Unlike a salesperson, who will be checkpointed on monthly, quarterly, and yearly metrics an SDR needs a much shorter time window. SDR action is much more fast-moving and results are achievable in a shorter time period when compared to a salesperson. The chart to the right shows that weekly numbers can be highly variable, which is why we need a moving average to know the trend.

Why the 3-Week Moving Average is Best?

There are several common choices for moving averages. 2-week moving average, a 4-week moving average, or higher. We select the timeframe such that it informs us of the general trends of meetings held and we can also take timely corrective action if the trends go wrong. Both a 2-week and 4-week moving have challenges. A 2-week moving average is susceptible to large variations making it less useful as a moving average metric. A 4-week moving average - essentially a monthly moving average, has a longer tail - i.e. each data point carries with it the influence of 3 prior weeks. Which can be quite misleading both on the upside and downside.

Our studies show that for SDRs a 3-week moving average on held meetings is the ideal metric. Yes, it is an odd number but it gives us both the smoothing effect and also does not lull the team into a false sense of achievement that a longer time span may provide. It also allows us to take quicker and more timely corrective action. Any corrective action could take a few days to a week to work its way through the system, hence a 3-week average ensures that the end-to-end lead time of observing a trend and taking corrective action is held to 4 weeks or less.

Why Not Use Metrics Such as Pipeline?

Certainly, the total pipeline built is an important metric to track. The pipeline metric adds some subjectivity as it depends on a person’s judgment of an individual on the Opportunity Amount. This we know from experience is highly subjective especially when an opportunity is just created in the system and is in its early stages. The pipeline number is also subject to much more variability. For example, even when we use preset default numbers for Opportunity Amount, there is much variability because larger accounts drive the number up, whereas smaller accounts drive the number down.

A View From the SDRs Perspective

What is a SMART Pipeline

mahesh@techcmo.ai (Mahesh Kumar) — Fri, 17 Feb 2023 03:38:54 GMT

Why a SMART Pipeline is not just another Sales Pipeline

One of the most challenging tasks in company building is creating a robust and repeatable sales pipeline. Many companies rely on an external partner to help with building a pipeline. Companies ranging from Series A funded startups looking to grow revenue to established Unicorns that balance growing revenues and watch key business ratios, benefit from an outsourced partner.

Too often, outsourced partners take a cold-call-heavy approach, which seems to produce immediate results and creates a sense that the problem is solved. However, time and again it is noted that this scattershot approach (Yes, let’s call it what it really is), hits a brick wall. This is because a small number of already-primed prospects that exist are easy to convert to a meeting. However, the vast majority, over 98% of prospects, require a different approach and will not convert over a phone call.

A SMART pipeline, as we call it, accounts for both the primed prospects and the 98% of prospects that respond to a different strategy. Let’s walk through the key elements of what distinguishes a SMART Pipeline from just another pipeline.

Sales Accepted : A baseline criterion of any pipeline, regardless of other factors, is that an opportunity must be accepted and taken forward by the sales team. Without that critical filter, it is just slightly better than an MQL. A Sales Accepted Opportunity can be filtered in different ways. Some apply the MEDDIC criteria (Metrics, Economic Buyer, Decision Criteria, Decision Process, Identify Pain, and, Champion) or some other home-grown sales accepted criteria. These criteria are much more valuable further down the sales cycle and almost impossible to discern in the early stages of penetrating new accounts. A simple top-of-the-sales funnel criteria and an immediate/binary measure are whether the prospect is willing to take steps past the first meeting. This litmus test is an effective way to demarcate the hand-off from pipeline generation activity from sales activity.

Metrics Driven : This may seem fairly obvious but all metrics are not equal. A holistic set of metrics is required to measure the final output (aka qualified pipeline) and also a set of intermediate metrics that enable the team to forward-project for future weeks and months. Without this dual approach, metrics are usually a surprise for management because they never saw the early signals.

Achievable in a Reasonable Timeframe : Meetings with a Director at a Fortune 500 company are a good first step. However, without a specific project or budget authority this persona is an influencer or champion of the product/solution at best. This leads to a long sales cycle. Any pipeline you generate must be convertible to a sales win in a reasonable timeframe.

Repeatable Within a Market Segment : The downside of cold-calling is that it is never repeatable. Every single contact you get is an exception because you’ve been unsuccessful with 98% of the rest. A SMART pipeline should follow a process and methodology that is repeatable within a market segment so that increasing investments will lead to increasing returns. This is never achieved with today’s call-heavy approach.

Transferable Insights to Marketing and Sales : An offshoot of a holistic approach to pipeline generation is that patterns can be discerned much more easily because there’s a method to it. Ultimately, marketing and sales teams must benefit from knowing that certain use cases seem to resonate with certain market segments. Or a pattern of pain points/initiatives that we notice with engaged prospects. These insights are useful to the broader organization for future planning, informing content strategy to increase inbound leads and maximize the ROI on the investment in an external partner.