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March 05, 2014 at 01:31 PM
Technology has driven historic changes in consumer marketing. But despite the billions of dollars being spent in the business-to-business (B2B) and business-to-consumer (B2C) sectors on inbound marketing e-newsletters, social media, blogs, podcasts, video, white papers and certain “permission marketing” techniques used to enhance brand awareness among customers and prospects — most companies, including many that sell business insurance, aren’t seeing results.
This is because, if you set aside industrial commodities purchased through supply chain management (where the needs are explicit), most discretionary purchases such as insurance don’t lend themselves to inbound marketing, which is designed to leverage the prospect’s awareness of his needs to reduce your cost of sales.
The belief that inbound marketing should work in B2B–for financial advisors, this translates to marketing to business owner prospects–contradicts a fundamental precept underlying B2B marketing and sales for more than a hundred years: that most decision-makers don’t know they have a need (for many products and services) until they talk to a salesperson. And insurance is arguably the archetype of this class.
So while one of the functions of advertising is to pave the way for the salesperson, does increasing the budget and moving it online obviate cold calling and personal networking?
Despite the enthusiasm of today’s marketing managers for inbound, products like insurance often require that credibility and relationship precede the discussion of need. And with the decision-maker busy doing the day-to-day job of running the business, there’s often no window for inbound marketing to break through. That’s why traditional interruptive prospecting techniques such as cold calling, networking, events and direct mail still work and why inbound marketing continues to struggle.
Cold calling does get a lot of bad press. Many producers, particularly those who lack proper training, are uncomfortable with the technique. And competitive marketing solution providers make much (perhaps too much) of decision-makers’ complaints about cold calls.
But if you look at the cost-per-lead for the initial appointment with a decision-maker, and you include all the costs (which many conveniently ignore), inbound marketing actually increases the cost of sales compared to cold calling, rather than decreasing it.
A simple Excel spreadsheet can tell you whether inbound marketing, or any technique for that matter, is better than cold calling.
| Without Inbound |
With Inbound |
|
| Target Companies |
600 |
600 |
| Inbound Marketing |
||
| |
$2,000 |
|
| Search |
$1,000 |
|
| Blogging |
$1,500 |
|
| Total Inbound |
$4,500 |
|
| Cold Calling |
||
| Dials/Contact |
5 |
4 |
| Dials Needed |
3,000 |
2,400 |
| Dial Rate |
12 dials/hour |
12 dials/hour |
| Hours Needed |
250 |
200 |
| Appointment Rate |
8.0% |
10.0% |
| Appointments |
48 |
60 |
| Total Cost |
$5,000 |
$8,500 |
| Cost/Lead |
$104.17 |
$141.67 |
