345: Encore Episode – Cold Calling 101 for Founders
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On today’s The Startup Chat we discuss cold calling. We’ll tell you what cold calling is, why you should do it, and how to do it effectively. Steli is the rock star of cold calling between the two of us. He’ll tell us how he has made cold calling work for him and his business.
Cold calling is a channel that can be effective for your customer base. If you have some worries about cold calling or if you’re wondering if cold calling will work for you, then give this episode a try.
Here are today’s points:
- What is cold calling?
- Why should you cold call?
- The 2 questions to ask yourself about cold calling.
- How to learn if your competitor cold calls.
- How to get started.
- The reasons cold calling can be stressful.
- How to cope with cold calling anxiety.
Steli: Hey, everyone, this is Steli Efti.
Hiten: And this is Hiten Shaw and the Startup Chat and today we’re actually going to talk about cold calling. One reason is, you know, one of us is an expert on this I would say and that happens to be Steli. So I get to ask him a lot of questions about this as he kind of talks about it. So this is almost like a Cold Calling 101, I would say.
Hiten: I’m sure we will get into some advanced stuff. For context, I’ve had teams where we’ve done a ton of cold calling. My cofounder has a whole bunch of funnels and things like that where there’s a bunch of cold calling, as well as inside sales and things like that going on. Also, you know, one thing I would say before we jump in is, for a SaaS business to scale you have to go outbound, meaning you have to go find a way to email, call prospects, potential customers, people you don’t know yet. This can be for partnership reasons, this can be for sales reasons, and this can be for many other reasons as well. So I’m eager to hear all the cool stuff that you have to share about this topic.
Steli: Yeah, and this has been consistently a topic that listeners have been asking us to talk about. It’s kind of a list of things where people ask us about it and we are experts in but selfishly at times, you know, I’ll admit we’d rather talk about something more fun. We’ll talk about something we DON’T get to talk about every day with each other but this is just one that’s been kind of consistently enough requested that we thought, all right, let’s do one and share as much value as we can on this topic because a lot of founders struggle with this. So I’ll let you ask the questions and I’ll give the best answers I can.
Hiten: Sounds good. So, yeah, cold calling. What is it? Why should we do it?
Steli: Well, cold calling is the act of calling somebody that didn’t expect to hear from you and most of the times it’s also somebody that doesn’t know you or company to service and didn’t consent to, or was aware of, you having his or her contact details. So it’s not calling your friend who didn’t expect the call but it’s calling somebody that doesn’t know you or didn’t know you had their phone number and wasn’t expecting to be contacted by you. The reason you do it is because you’re typically trying to prospect, which means trying to discover or find out if THAT person within the context… that person or that business could be a customer could be a good fit for your product or service that you’re selling and make them aware that your product or service exists and that it could be a solution to one of their problems or a better solution to something that they currently are a customer of and then help them transition from where they are now to becoming a customer of yours.
Hiten: Gotcha. So how do I know whether I should be doing cold calling or not in my business? How do I make that decision? I’m not doing it today. What do I do?
Steli: Yeah, so it’s a tricky question. It’s a good question. So there’s a few things that you could ask yourself. One is are my customers buying today in any way, shape, or form by being cold-called? Is being called or using the phone to buy products a channel that my customers are open to?
Hiten: So are they already getting phone calls?
Steli: Phone calls that result into something productive.
Hiten: Got it. Okay.
Steli: So that’s one question. The next question is are our competitors – this is where we’re trying to answer the same thing but we’re going about it in two different ways. You could look at your customers or your potential customers and see how do they buy and then you can go to your competitors and figure out how do they sell? So who of our competitors is doing cold calling successfully? Who of our competitors has tried it and not doing it anymore? Is this something that is a standard or successful way of selling in our market based by what our competitors do?
That’s another way of kind of approaching should we even consider this or not because chances are if your customers don’t tend to buy this way and if your competitors don’t tend to sell this way, it does not mean that cold calling should be off the table and can’t be done but the chances that it can be done are dramatically lower. There’s a good reason why it hasn’t happened yet. Right?
Hiten: How do I find this stuff out?
Steli: Well, if you have customers or if you talk to people that are potential customers, you just ask them. Hey, you know, how do you typically buy today or, hey, have any of our competitors ever contacted you? If they already have, let’s say a solution in place they’re using some kind of a marketing tool that we’re trying to sell. We would ask them, oh, you chose this marketing tool? How did you choose this? Did they reach out to your cold or did you sought after them? How did it happen? So you just ask the customer how do you buy? Has anybody ever cold-called you? Did any of our competitors ever cold-call you? Same thing you can do with your competitors. We actually wrote about this – oh, no, we haven’t published this yet.
But I have a blog post that talks about this little hack of like getting in touch with your competitors to learn about how they do business. So you could literally call in your competitor and without lying, you know, you could make the appearance of being a prospect without saying it outright and just go, hey, I looked at your service or looked at your product and I’m pretty curious. How well are you guys doing? Are you really big already? How long have you been in business? Ask some questions that would suggest that you are interested in their credibility and interested in if you can trust the brand of the business.
A lot of times a junior sales rep will be on the phone with you so they will tend to just answer all your questions and as you ask these, you can ask, hey, how do you guys grow today? Is it mostly – do you spend a lot of time on marketing PR? Do you guys do cold calling and cold outreach? How do you grow your customer base? I’m curious to know how you guys are planning to keep growing this business if I’m able to use this product. They will just tell you. They will just tell you what they do. So you just call your competitor to ask outright. That’s the most direct route to that information. But you could probably just do some Google searches and see if they’ve written about this.
You could probably do cold calling and then competitor name or cold calling and then your market or cold calling and your customer segment or something like that. You might stumble over some articles, blog posts, interviews where people talk about this stuff.
Hiten: Yeah, I like. Yeah, okay, so let’s say that you’ve figured that cold calling will work for you and you’re ready to start doing it. What would be the steps that, you know, you would recommend somebody take? Like, for me, just to give you some context, I’d have a lot of anxiety around where do I start? How do I get people’s numbers? What do I say when I get on the phone with them and how do I keep following up? If that makes sense and also like this is an anxiety all founders tend to have especially in the beginning, which is how do I get money out of them in this process with this kind of channel?
Steli: Yeah, so those are all excellent questions. I think that – so let’s take it one step at a time. So I think first it’s about a mindset shift, right. So when you’re cold calling, you’re doing a harsher version of outreach and hustle in marketing than you typically are used to as a founder. With that, that’s typically what creates the anxiety. It’s like, oh, shit, I’m calling somebody. I know it’s a channel that a lot of people don’t enjoy or might be annoyed by. Maybe it’s something I don’t like. I don’t like when people cold call me, so because of all these reasons, you have anxiety because you’re like, well, I’m calling somebody right now. I’m interrupting somebody.
They’re probably going to be annoyed. Usually, the first reaction the people have will not be super positive and inviting and welcoming and that then translates into you approaching this with an attitude that’s set to fail from the get-go. Like, you’re calling with the expectation of failure and then that materializes itself and you’re like everybody hates being cold called. This isn’t working. I hate it. People hate it. A lot of times founders will heavily, like they will have a day where they’re like today I’m going to do cold calls and then they will just suffer through the day and kind of hesitate and postpone and, like, make a call and the person hangs up on them.
Then, oh, my God, they’re suffering. Another hour until they have the curse, so get the next call in. They’ve spent the whole day and made like 20 calls or something and they really didn’t accomplish anything. It’s just a horrible experience. So with those cheerful words and picture painted, I think that you have to have a very matter-of-fact realistic point of view on this. Cold calling is a way that billions of dollars of services have been sold around the world, industries have been built, people are being called. Sometimes they might not like it. Just like they don’t like that there’s a popup ad somewhere that their favorite TV show is interrupted by advertising. We don’t like a lot of things. We find a lot of things inconvenient but that doesn’t really matter. The question that matters ultimately is if you have a service or product that’s good and you have good intentions and you’re trying to truly figure out if your product and service could help the customer, then it doesn’t matter if they’re annoyed. It doesn’t matter if it’s polite or not.
The only thing that matters is, is this going to be a channel that allows you to help some people to buy really great service and to make business work? So you need to approach this with if people shout at me or if people hang up on me, it doesn’t matter. That doesn’t matter. I’d rather have three out of ten people hate me and some of them do business with me than have ten people that never knew I existed. That needs to be the attitude that you need to get to in one way or another to make cold calling work and to get at least rid of some of the anxiety, if that makes sense.
Hiten: Yeah, it makes a lot of sense. I mean, you know, the anxiety is the key. Do you have any actual tips on that because, I don’t know, I don’t cold call enough and when I used to I would still get anxious before every call, so I’d love to understand kind of the tips that you would give people because I would assume you’re not that anxious with it by now.
Steli: Yeah, by now, no. Still if you told me to cold call somebody I might still have like a two or three seconds of anxiety before I get myself into the right frame of mind but, yeah, usually I don’t have a lot of anxiety. I’ve made thousands of cold calls in my life. So there’s a number of things you can do. There’s some things that are very generic, like how do you – you need to put yourself in a good state, right, so how do you do that? For some people it’s listening to Eye of the Tiger, you know, or to a particular song, watch a movie, or watch a YouTube clip.
I know people that are watching some of my talks before they have cold calling sessions because it pumps them up. But, I don’t know, whatever gets you in kind of a competitive high-energy state of mind. Something that makes you go all right, let’s go, you know, and puts you into kind of that high-energy space. For some people it’s reading a book or poem. Whatever it is, there’s things that put you in an energetic, motivated state. If you KNOW what those triggers are, you might want to use them or utilize them. Besides that, there’s some reprogramming that you can do. One easy simple trick that’s super old-school in the sales world is you want to really reprogram away from failure as a negative and see failure as a stepping stone to success. So in this case, you know, I know that when – I used to know that I had to make – this was like 50 years ago – I had to make 100 cold calls to get, you know, three good conversations out of it. I know that I would probably reach, you know, 30 people out of 100, so there would be 27 people that would not want to talk to me in a productive fashion.
They would either hang up on me or yell at me or talk to me a little bit and then figure out it’s not a good fit. So instead of focusing on the success, instead of saying I’m going to do 100 calls and I need to get to these three people that are going to be interested in my service and feeling the pain every time somebody was hanging up on me or screaming at me or not happy about my call, I reprogrammed to focus on every day I need to get 27 rejections. I would, literally, have like a big jar and I would have pennies and I would say, all right, I’m going to throw a penny into this jar every time I get a no or a rejection or somebody hangs up on me on the phone.
By the time this fucking thing is full, I made a ton of money and I really moved the needle in my business or in what I’m doing. So now every time somebody hung up on me I was like, all right, mother fucker, one more penny in the jar. Let’s go, right, and it would create this kind of reprogramming of me feeling like I’m succeeding here. I’m progressing. You can do this with pennies in a jar or more old-school you can just take a piece of paper and make, you know, 27 boxes and go today my job is to get rejected 27 times on the phone. And if I accomplish that, chances are very high that I’m going to get three or four or five really good conversations out of it.
So you focus on that and that takes away some of the negativity of the hang-up because it actually is progress.
Hiten: I like the penny in a jar. It’s so physical.
Steli: Yeah, it is.
Hiten: I would do that. I’d be like, oh, that’s good. I could put pennies in a jar, great. Let’s fill this jar up. Let’s go.
Steli: Yeah, and then –
Hiten: Because that means you’re making progress.
Steli: You’re making progress. You know, at some point you become – because you’re getting accustomed to it, you become playful with it. So I literally had somebody that was like yelling at me and I was like, are you about to hang up on me? He was like, yeah, I’m just about to hang up on you. I was like, all right, listen to this. I threw the penny in and it does the cling. I’m like you helped me with my day, dude. Thank you so much. The guy was like, what? What was that? I’m like, well, listen, I have a jar and every time somebody says no to me, I throw a penny in there because I know if this thing fills up I’m going to be successful with this.
For every ten people that say no to me, one person is actually open to the ideas and, ultimately, I get a chance to change their life and make business work for both of us. That not ALWAYS works but there was one –
Hiten: I was about to say I’m sure that works.
Steli: No, and a lot of times people will hang up before you even get to do the whole spiel, right.
Steli: But it has worked, right, and more than anything else, on the phone what really translates is the sound of your voice, the way you sound. If you sound like you’re having a good time and you’re authentic and you’re confident and you’re relaxed, even when they yell at you and I’m not speaking about like faking this. If somebody yells at you, you’re like yes, sir, I appreciate the energy. Well, let me tell you the – like, people tune out. They don’t even listen to what you’re saying. They just hear fake salesperson voice and energy. But if you’re having fun with it and they can tell that you’re not flustered by it, it turns people around. It makes people go this person seems to know something I don’t know.
They seem to be awfully confident and comfortable even when I yell at them and that’s not typically the reaction you get. So it can make a big difference. So, yeah, there’s this thing – I had one heckler that I’ll share with you real quick. We had one guy that was so funny, so confident, so outrageous in real life but anytime I would put him on a cold call, he would have a meltdown. All his confidence, all this outrageousness, all his humor, all his bravado was just gone. It was just gone!
Hiten: That’s awesome!
Steli: Melted away. In person he would give me shit. He didn’t give a fuck why – like, I was his boss. He didn’t care. He didn’t care about anybody. He was such a funny dude but, on the phone call, timid, like trembling, like a mess. I could not figure it out. He knew it and he knew all the things and we talked about the pennies and we did all this stuff and I just could not get him to break out of it and then ultimately what we did and what we came up with – I’ve written about this. There’s a blog post that we’re going to link into this episode of this. Ultimately, one day I was like this guy… I don’t know why but he’s so afraid of failure on the phone.
So what we’re going to do is we’re going to have him fail so horrendously and so brutally that the fear will go away. So here’s what I had him do and this was very painful. I had him call people and I would have him purposely be horrible on the phone. Like, I would have him for instance call ten people and stutter, like really, really badly stutter. He would just – I’m telling you, like right in the face sweating, just sweating. You could see him physical pain that he has to stutter now and have people hang up on him because he was like Hi… hi…. Hi… – not even being able to get the “hello” out.
I would have him stay on the hello for like a minute and people would just hang up, right, and I don’t want to be insensitive to people that are stuttering or any of that. This is not very politically correct but this was just helping somebody get through a breakthrough. So he would like stutter badly and have like 10 or 20 people just hang up on him. Then I would go and tell him, all right, so now do your fucking best. Stop stuttering and just do whatever you can and BOOM and just like magic he would be great on the phone. Why? He kind of – he was the worst version that he could be.
He failed in such a horrendous, such a painful way that after that, all the fear was gone and it was like, well, I had like 20 people hang up on my because I couldn’t say hello. What’s the worst that can happen with the next call if I can actually talk now, right, and be eloquent and get a sentence out? So I had him purposely fail, like really, really horribly to take away the fear of failure on the phone.
Hiten: Sounds pretty awesome and I love that. That’s killer. It’s like –
Steli: All right, but just to get some more stuff out there. This is really important stuff because if you don’t know should we cold call or not and if you don’t know how to get over the anxiety, that’s typically the first two steps that prevent most businesses that should be doing it to do it. All those founders that should be experimenting with it to go for it, right. So I think that we really – those are really fundamentally the most important things to clarify and touch on. Once you get over that, I think that there are some resources and we’ll share all that stuff but there are some really fundamental things.
You just need to think through the cold call in very basic terms. The first challenge is I need to reach people, so I need to have their phone numbers and there’s multiple ways to get those and I need to not just have phone numbers but I need to be able to reach a good amount of people, right. If I have 100 phone number – if I make 100 dials and I only reach one person every 100 people I call, chances are very low that this will ever work out. The funnel will never work out. The numbers just don’t pan out. This is the No. 1 thing that may or may not make a difference in cold calling campaign is what is your reach rate? If your reach rate is really high, you’re in a really good place. If it’s very, very low, you might be dead in the water.
Hiten: Can you define reach rate?
Steli: Yes, reach rate means how many dials did it take to connect with a person that I wanted to connect with, to connect with a person on the phone that was the person I intended to talk to.
Steli: If you reach rate – I’ll throw that number out as benchmark. If your reach rate is lower than 10 or 15 percent, you’re probably dead in the water. You probably need to fix that before you fix anything else. The most cold calling campaigns will probably be somewhere in the, you know, 15 to 25 percent range, which is – if you’re 10 or 15 percent, it’s not great but it is something. If you can’t be – the higher you are, the better, right. If you can reach 30, 40 or 50 percent of the people you call, it’s money. It’s great. It’s going to change the economics of cold calling dramatically for your business. Not to say that’s the only thing that matters but it’s the first thing that matters. So reach rate is really, really crucial. So you need to worry – okay, how do we reach people? Then when I reach somebody, you just need to have the psychology of that person. You just need to remind yourself and this is the same thing with emails. I tell this – this is such fundamental stuff. We talk about this all the time. Just think through – when I pick up the phone and there’s a voice on the phone and it’s somebody I don’t know, what is my thought process? At first I think who the hell is this and –
Steli: Who is this? Does this person want to sell me something, and then so I’m like, all right, this is Steli from Close.io and he has, like, sales software? I go, all right, why the hell is he calling me? Right? And then once I know, okay, this is why he’s calling me, I make a judgement call at that point that’s typically this is NOT for me. I’m not interested. Because 90 percent of the time, people will think at that point, yeah, no, no, not for us… not interested. If you go through this step by step and you just understand the psychology of the person that’s being cold called, you can write a script that you can think through a way to cold call them that makes sense, that doesn’t go ten steps ahead of where they are in their mind or that doesn’t address questions that they don’t have.
You go step by step. You know, you say, hey, my name is… this is the name of the company I’m from, and here’s why I’m calling you right now. You didn’t expect my call. Now, let me briefly ask you… is this, in general, interesting to you? No. Cool. I get that. That’s what you would expect in this situation. Here’s why I still called you. I knew that you would probably say no. Here’s why I still called you, x, y, and z. Here’s the reasons. There’s five other competitors of yours that are using our service. There’s a lot of companies in your space that we’re doing x, y and z and see success. I wanted to share some of those numbers to even explore if we could work together.
Whatever it is that you do there but you just think through a call that has empathy, that takes into consideration who am I calling, what is their current mind space, what is their thought process when they talk to me, how can I in a very human way… in a real way, address these concerns that somebody has on the phone versus just trying to boo me through it or ignore it or just, you know, try to get around it. When I call them they will think who the fuck is this? What does this person want? Shit, this person wants to sell me something. I’m not interested. You need to have answers to these questions and you need to expect that energy from people.
If you do that, you’re going to be able to sound good. You’re going to be able to sound a little different than other people and still people will hang up on you, still people will tell you to fuck off. If I cold call a bunch of people for your company today and I’m pretty good at cold calling, people will hang up on me. People will tell me to fuck off. People will not buy from me. It’s impossible to just get everybody to like you but you’re going to get a good number of people to respond to you if your energy is good and if the way you cold call them is sympathetic.
Hiten: I like it. I don’t really have much else to add on my end. I think you really did the 101 on cold calling and, hopefully, after people hear this, if they’re not cold calling, they’re going to start thinking about how they can do that for their business. So do you have any other additional tips to share before we finish the episode?
Steli: No, I think this is fundamentally probably a good setup for people to listen to. If people listen to this and they go I want to get started but I have still some questions, shoot me an email at steli@closeio. We’re going to link up to some resources. If you go to Google and you type in blog.close.io and then cold calling. The first link that will pop up is all the blogs I’ve written and all the videos I’ve made about cold calling. There’s a lot of resources out there for you that are very creative. If you have questions beyond that or if you have questions based on your current struggles, or if you’re already doing it, just reach out to me directly.
One last thing that I’ll share, because you said at the beginning and I think it’s pretty powerful, is the most [inaudible] businesses – if you want to grow, you’re going to have to do some kind of outbound. It doesn’t matter if it’s cold calling or cold emailing. We have an episode. For those that probably will determine for one reason or another that cold calling is not a productive channel for them, check out Episode No. 14. This is an early episode that Hiten and I made about cold emails and how to write cold emails and how to succeed in it. Episode 14 of the Startup Chat, Cold Email… definitely check that episode out as well. If you have more questions, just get in touch with me.
Steli: All right, that’s it from us.
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Duration: 21 minutes