As my long-time blog readers know, before becoming a marketing recruiter I owned a B2B inside sales consultancy called "Reliable Growth."  Essentially, I taught companies like NCR and Aflac how to research, identify, and develop new business with a phone, an internet connection and a fax machine.

Telemarketing was the lynch-pin of my campaigns.

My campaigns always involved tightly choreographed, sequential steps and sought to establish permission-based relationships with highly targeted prospects over a 6-8 week time frame.  Each interaction was like a chess move.  You can see the gist of the method in this page from my old manual.  This small portion of my process is based on the un-improvable work of Jim Cecil -- the father of nurture marketing.

Needless to say, I know a thing or two about cold calling.  Indeed, I have made many thousands of ice-cold calls in my life -- and if the telephone were a slot-machine, I would be waaaay up in my winnings.

But there's rejection -- and lots of it.

After all, a cold call interrupts the prospect's day.  It's an intrusion, and most folks don't like to be intruded on.  The cold call loser focuses on this element and takes the rejection personally.  The cold call winner simply "moves through the target" (as they say in the Navy SEALS) by regarding cold calling as a numbers game.

Here are five basic truths about cold calling:

1. You cannot wait for the phone to ring.  You simply MUST reach and touch your prospect.  After all, no one is waiting for your call.
2. What gets measured gets done. "How was your day?"  Good question!  There's nothing as devastating to an opinion as a number.  Get yourself a contact database and track your outbound dials.  If you don't count your dials, your production will lag.
3. The best campaigns involve multiple steps, such as 1.) calling the prospect to verify that s/he is in fact the decision maker, 2.) asking them three closed-ended questions about their current  situation -- thereby disqualifying most prospects as potential new customers, 3.) getting the qualified prospects' permission to send them a HIGHLY PERSONALIZED sales letter, 4.) FAXING the letter, then snail-mailing it the same day, and then 5.) following up no more than 72 hours later to verify their receipt of the letter, answer any questions they may have, and mutually agree on the next steps in the relationship.  To position yourself as a potential resource for institutional buyers, you must be "unintrusively persistent" in your approach:  Our society is famously over-communicated, and B2B prospects are very good at tuning out marketing messages -- especially if they "already have a supplier of what you're selling."  You must have a reliable process in place to address this reality.
4. The most successful reps are "light on their feet" and can talk outside of the script.  Patter works better than droning.
5. The best reps know their product inside-and-out and can put their product "solution" into the context of how the prospect thinks, how they buy (logical vs. emotional), what they fear, what makes them mad, what are their top three daily frustrations, etc.

Which brings me to the point of this blog post:

Today on iMedia, Sean Cheyney, VP of Marketing for AccuQuote, has a nice piece called 5 Ways to Screw up a Cold Call.   His tips include ...

1. Make your own calls:  Using appointment setters can be dilutive to the brand and to the initiative.
2. Don't insult your prospect:  Patience is a virtue.  Listen to the prospect and don't try to shoehorn your product or service into every prospect's business on the very first call.  Or as my dad used to say, "Take things a step at a time: You can't get from first base to third by running across the pitcher's mound."
3. Be prepared and speak clearly: Practice what you're going to say and keep your message to 45 seconds or less.  While I might take issue with the 45 second time frame, I would say that your first call should have an "arc" with a beginning, a middle, and an end -- and the end should always be an open ended, "what's your opinion" type question.
4. Know your customer: The most common way to screw up a cold call is to not know anything about your prospect's business.  Amen.  This should actually be # 1 ...
5. It's a two-way conversation:  According to Mr. Cheyney, "If you talk at me, you'll annoy me. Talk with me and you have a shot."  Yup.

Sales reps get hung up on cold-calling (no pun intended), but an old sales manager at Aflac had it right when he told his reps "I don't care if your own mother refers you to a prospect:   If you have never spoken to the prospect before, then your first call is always a cold call."  Truer words have never been spoken.

So given the above, here's my question: "Is cold calling an effective part of your company's marketing mix?"  Why or why not??

Are you a Sales Manager?  Do you know a Sales Manager?  Good!  Send them this post.  They'll be glad you did.

Now then:  If you are a regular reader of my blog, then you might know that I was a frozen food trader throughout the 1990s.  A "trader" is basically a sales rep who does much of his own buying.

I learned more about the nature of negotiation, price competition, manufacturing, intermodal logistics, and international trade while working at AJC International than at any other time in my life.  It was awesome.

In 1997, I bought more than $14 million worth of frozen beef and pork for my own account -- and I sold almost $32 million in frozen food to more than 17 countries throughout the pacific rim.  Have you ever haggled with a beef packer in a falling shortrib market?  Me too!

None of this makes me a hotshot.  It simply means that AJC forced each trader to think like a small business owner, and it paid its traders based on two metrics:  Booked revenue and invoiced revenue -- which was "booked revenue adjusted for actual storage, handling, inspection, shipping, insurance, interest accrued on inventoried product, bank surcharges, customer credit, and quality claims."  Whew!

One of the great things AJC required its traders to do was "cost out" every trade on a spreadsheet.  For example, a trader couldn't simply buy a truckload of frozen chicken legquarters for USD 0.135/lb FOB from a packer in Fort Smith, AR and sell them to a Chinese distributor for USD 0.2425/lb CIF Qingdao without accruing (and sometimes negotiating) the costs listed above.

Once the costs were known, the trader would write up the sale on a 3-ply form resembling the spreadsheet -- with one ply going to Accounting (who would tie back to the trade any ensuing bills), one ply going to Logistics (who would manage the movement of the load), and one ply being kept by the trader (who would constantly review his portfolio of deals with Logistics to make sure that they shipped in accordance with the terms of the contract).

As each load moved through the international supply chain (the transit time was usually 40-50 days), each trader had to actually approve the vendor invoices that got tied back to their individual trades.

Just like in real life.

It was not uncommon to get hit with a "lumping" or "box stamping" bill on an odd pallet of product taken from inventory to make weight in a container.  If mis-accrued, those charges came out of my paycheck as they were tied back to my trades.  Ouch.  Loads that arrived late were deemed "out of contract" by customers and short-paid (or "marked to market").  Those costs were also deducted from my trading P&L.

There was even a political and currency "risk premium" that each trader had to accrue, depending on the product's destination.  Products sold to Iraq carried a higher premium than the same ones to Singapore.

From 1993-1999, I wrote up more than a thousand trades, and I knew my costs cold.  It just wasn't kosher to wing it.

A Temple of Self-Interest

There was very little random motion in AJC's organization.  Everyone from the traders to the shipping clerks showed up to make money.  To this day, AJC remains a temple of self-interest.  So effective was the AJC costing system that one of my first engagements as a self-employed marketing consultant was to introduce the system to a local importer of vitamin raw materials.

AJC's training is so good that its competitors call it "Atlanta Junior College" because so many of its traders have left to start their own niche trading companies.  Very successfully, I might add.

Reality Check for the Sales Staff

So it was with great interest that I read Jaclyne Badal's article "A Reality Check for the Sales Staff" in today's WSJ.  The article states that "squeezed by global price pressure and customer demands, companies often strike deals that generate revenue but not profit."

But companies are getting a clue:  Dow Chemical just implemented software to analyze the profitability of deals.  One tactic Dow uses to cut transportation costs is to consolidate shipments (AJC did that eons ago).

From Revenue to Profit

Many companies are trying to boost the bottom line by weeding out products and customers that generate revenue but little profit.  According to Ms. Badal's article, sales managers and sales consultants suggest:

1. Calculate the true cost of each sale -- including actual storage, handling, inspection, shipping, insurance, interest accrued on inventoried product, bank surcharges, customer credit, and quality claims.  If you can tie back your marketing expenses, so much the better.
2. Examine individual customers -- especially if they are high maintenance.  At AJC, we used to call bitchy, low-profit customers Ankle-biters.
3. Share information with customers to justify price increases -- or to jointly control trading costs.
4. Consider using software that will block (or require approval of) unprofitable deals.
5. Keep the sales team in the loop and consider adjusting commission formulas.

Sales Manager Job Search Tip:

If you are a sales manager who is looking for new career opportunities, please take a look at your accomplishments in light of these suggestions.

• To what extent have you improved your employer's profitability by helping it get its arms around its costs?
• Have you developed and implemented any systems to track revenues, costs per sale, and net profits?
• Have you partnered with your customers to lean-up the value chain?

What are you waiting for?  Do these things NOW -- and by all means make sure they are accurately reflected on your resume.  You'll make more money and enjoy a shorter, more effective job search for your efforts.

DID YOU KNOW ... that only 12% of the Internet's content is reachable by search engines like Google, Yahoo, and MSN?  The other 88% of what's on the web is behind log-ins and registration fields -- so the major search engines cannot "spider" it.  Simply put, Google only gives you the tip of the iceberg.

As an executive recruiter, I use special software that gives me access to much of what's on the "Deep Web."  Very often, my candidates are the most thoroughly prepared candidates in any given executive search.  World-class company research gives them a serious advantage.

However, sometimes I use these software tools just for fun.  For example, today I used one of my tools to dredge up 16 freely accessible articles from the Harvard Business Review -- including the HBR classic "Turning Great Strategy into Great Performance."  See for yourself ...

1. Growth as a Process
2. How to Play to Your Strengths
3. Leadership in Your Midst - Tapping the Hidden Strength of Minority Executives
4. They're Not Employees, They're People
5. The Perfect Message at the Perfect Moment
6. Schizophrenia at GM (by Jack Trout)
7. Competing on Analytics
8. Turning Great Strategy into Great Performance
9. How Strategists Really Think
10. Outsourcing Marketing
11. Why Satisfied Customers Defect
12. Managing for Creativity
13. Your Company's Secret Change Agents
14. The One Number You Need to Grow
15. All Strategy Is Local
16. It's Time to Retire Retirement

If you're pressed for time, marketers MUST check out articles # 1, 6, 7, 8, 9, 10, 11, 14, and 15.  If you are in HR, be sure to read articles # 2, 3, 4, 8, 13, and 16.  Notice # 8 is on both lists.  I have bolded in red my personal favorites.

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