In the June Research magazine, I discussed “cold calling success zones” and sketched out the numbers you need for success in this sales activity. If you are cold calling, quit because you failed, or know you need to do it, my cold calling calculator will help you determine what you have to master in order to succeed. You will find a link to the calculator at www.billgood.com/coldcalling.
In this article, I’m going to pick up where that left off. I am going to show you how to get each of your statistics in the success zone. As you read this, I strongly suggest you go to my calculator and fill it in as I go through the statistics. This is a good way to get an excellent understanding of this process.
I’m going to start with an impossible scenario. Given my assumptions, embedded in the tables nearby, you could raise $5 million in new assets per year from cold calling if you have 97 hours a week to devote to prospecting and selling, which is of course ridiculous.
We are going to assume a two- or three-appointment sales process. Let’s say half of your first appointments don’t pan out. Obviously, then, 50% of first appointments produce second appointments. Some people will buy on the second appointment. But let’s further assume that 50% of second appointments produce a third appointment. Based on your own statistics, you can certainly see how this affects your selling time.
A couple of notes about terminology:
Cherry: One who is interested and qualified and willing to receive investment literature.
Hot Prospect: Someone very interested, and financially qualified, who sets an appointment. Mostly, hot prospects are sent from cherry leads.
Six Vital Skills
Years ago, cold calling was really easy. You would get a hold of my tax-free bond funds script, learn and apply the concept that we are only looking for people who are interested and qualified now, make 60 calls an hour, generate three cherries an hour, and you could open 200 new client relations a year. Different ballgame today. Yes, cold calling still works, but every single element has to be “in the zone.”
Come along with me as we take a look at each of the skills necessary to grow your business through cold calling.
Prospecting skills are almost totally a numbers game. If you can generate enough prospects per hour so that the rest of your statistics add up to a reasonable amount of hours required for cold calling and selling, you’re doing a good job.
The key statistic is: cherries per hour. I suppose there’s a scenario where you can generate less than one per hour and still succeed, but it would be rough.
With that said, if we change our “cherries per hour” from 0.5 to 1.0, we cut the number of prospecting and selling hours from 97 to 57.
Let’s see what happens if we increase it from 1.0 to 1.5.
Now you are required to do 27 hours of cold calling, and an additional 17 hours of selling per week. The total is 44 hours. The greenest rookie could make it. It would take discipline. Many, many hours of work. But it could happen.
You still can’t get there from here, but I wanted to show you the dramatic effect that a change in the “cherries per hour” statistic has.
Now the question becomes: How do you increase cherries per hour?
Call during optimum hours. For calling business owners, professionals or highly compensated corporate employees, follow this schedule:
7:30 a.m.–9:15 a.m., Monday–Friday.
4:30 p.m.–6:00 p.m., Monday–Thursday.
This gives you 14.75 hours. You need another 13 hours. So add to 9:15, just keep going until you hit noon. More or less that gives you your 27 hours of cold calling. You will have to jam your appointments in afternoons, and probably a couple of evenings.
2. Appointment Setting
Your skill at setting appointments is measured by “cherries needed to get one hot prospect.” In my example, I am assuming a truly poor skill level. But that’s where most people start. To improve your appointment setting skills, the most important thing is to have a good script.
In my October 2012 Research column, I put it all together for you with “How to Master the Second ‘Cold’ Call.”
Let’s suppose you can just improve your appointment setting skills by 20%. Instead of it taking 10 cherries to get a hot prospect, let’s assume it takes eight. You just cut your prospecting and selling time from 44 hours a week to 35.
3. Appointment Prep
A skill that plays a big role in your overall sales success is appointment preparation. The quality of your oral presentation, backed up with a professional looking written presentation, affects both your closing rate and the size of the new account.
Let’s assume (gasp) that it takes you 10 hours to prepare for a second appointment. Your total prospecting and selling time just ballooned to 48 hours. But if you can trim your prep time from two hours to one hour, you pick up two hours a week. This is obviously not a huge change but we are trying to carve out a life. Every little bit helps.
In my opinion, the size of the new account depends upon the quality of prospecting, and perhaps even more important, upon the thoroughness of the initial interview.
Possibly a decent number of questions to ask is 40.
If improved interview skills could improve the average assets per new household from $250,000–$350,000, you just cut off nine hours of prospecting and selling time. Now you are down to 16 hours cold calling per week, and another nine hours of selling time per week. A rookie is beginning to have a life. Not so much yet for a midrange, or especially high-end, producer.
5. Presentation Skills
By “presentation skills,” I mean the combined quality of your oral and written presentation. While this is obviously impacting the size of the new account, it will also impact of the number of hot prospects required to make a sale. If you can get this down to 10 appointments per sale from 25 appointments per sale, you just moved into the success zone big time. You now need eight hours of cold calling per week, and six hours of selling time per week, for a total of 14 hours a week. Rookies and mid-level producers can both make a living here.
6. Closing Skills
As you improve your selling skills, things get even more interesting. A skilled sales professional should be able to close about 50% of the people with whom he or she has a first appointment. That takes our “hot prospects needed to make one sale” from five down to two.
What started out as a 97-hour week is now five hours—three hours of cold calling and two hours of selling. Even a top-of-the-line producer could squeeze that.
-- Check out these other Cold Calling stories by Bill Good: