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The perfect formula for new business

Executive Summary: How to cut through the noise and devise a sound strategy

  • Social Media
  • Events/Shows
  • Search Marketing
  • Email
  • Telemarketing
  • PR
  • Direct Mail
  • Advertising

These tools are all available to the new business developer. Some are on trend and some are very much out of fashion, but which should be a focus and how do they all interact?

It is certain that human interaction remains vital, both for activating a lead and nurturing it through to business conversion. The key benefits of personal contact include:

  • The ability to identify a true need
  • Enabling an opportunity to be accurately evaluated to see if it is right for your business
  • Ensuring opportunities are not missed
  • Increasing conversion from opportunities

This paper takes a look at the world of business development/developers. There are so many statistics and schools of thought that for any marketing agency, proactive outbound/cold new business is a minefield of conflicting opinions and approaches, all of which can be fully justified and backed up by statistics and data. But which is really the best strategy and approach?

Alchemis is a lead generation telemarketing agency, so it would be fair to assume that we might dismiss other approaches and methodologies and sing the virtues of the telephone, but that is not the case and research shows that all lead generation practices have their place. Telemarketing has received bad press for a number of years and more recently the death knell has surprisingly been sounded from a number of new business agencies themselves. However, our research indicates that the phone is far from dead and, if deployed strategically alongside more contemporary methods, should be the lynchpin of any new business strategy.

Interaction via phone can:

  • Generate leads in its own right
  • Complement and maximise spend on other lead generation methods
  • Filter poor quality leads and save time
  • Increase the chance of conversion by generating a genuine personal relationship

As well as lead generation through cold calling, ultimately, all new business tools can and should be used, but the phone has a natural and complementary relationship with each and should be used to enhance their effectiveness and vice versa. It is certainly not the case (and has not been for a long time) that battering prospects over the phone will generate business, but clever deployment of targeted calls will generate quality leads and research continues to show that the higher value business conversions require a much higher level of human interaction.

The Perfect Formula:

Regularly touted in the national press, “scientists” can create a perfect formula for pretty much everything from parallel parking to the best pint, greatest day and perfect Christmas tree. See Appendix 1 if you are interested in learning these secrets.

All of this is, of course, nonsense and based on spurious research and statistics for the benefit of a light-hearted article. So, is there a perfect formula for new business?

The reality is yes on one front and no on another and it depends on which way you view it. There is certainly no generic answer as each business, service and product needs to be taken on their own merit and then overlaid with timing, targets, approach, etc. The list is endless. However, if you break it down into its simplest form, the following definitely holds true.

Strong proposition + right target + right timing + right cost + right approach + rapport+ bit of luck = new business success

Is it really that simple?

Well yes it is. Of course there are lots of nuances and variations, but ultimately, if you get these components right, you will generate leads and business. It is about breaking each part down and working out what will ultimately work for your agency or business and that process is not straightforward.

So, what are the main barriers?

Marketing Sherpa, in their 2012 Benchmark Report (Research and Insights on Attracting and Converting the Modern B2B Buyer), produced the following graphic of barriers to marketing success. This is looking across multiple market sectors, but certainly this reflects our experience and the information given to us by clients using Alchemis, where lack of time, skills and tools are the main reasons for outsourcing business development.

Chart: Lack of resources presents greatest barrier to B2B marketing success

Within the basic formula, the following is true of the individual elements:

  • Proposition – identifying the key hooks and selling points within your proposition is not always easy. Some agencies know exactly what it is, but others require help to unearth those key messages. These need to change and evolve with the market. What works today may not in three months.
  • Targeting – data can be cut in so many different ways, but using real intelligence to identify targets and ensure you have a solid, qualified list is key. Good quality databases and data are expensive and hence often unobtainable for individual marketing agencies.
  • Timing – speaks for itself. Talk to someone at the right time and you’re in, but the reality is this is rare. You increase the chances of timing by having regular, well-timed communications with someone and engaging with and nurturing them over time.
  • Cost – it is a cost driven market and the best creative, solution or pitch does not always win. Getting the balance right between competitive, yet profitable pricing while not devaluing the quality of what you offer is key.
  • Rapport – however clichéd, if someone likes you, the propensity to buy goes up exponentially.
  • Luck – hitting that prospect when the incumbent has let them down or just as a newly appointed Marketing Manager is keen to bring in his own ideas and agencies is all about the luck in timing. New business often comes with a dose of good fortune.

The real question mark sits over the right strategic approach.

Often agencies will batter the doors down of prospects through calls, social media, emails and events, but get nowhere. Sometimes, you can’t see the wood for the trees and an external perspective, combined with sound consultancy and recommendations can make all the difference. However, varying services will be touted as the best solution and approach to business development, but which suits your company, service and skill set?

Beware the statistics:

The new business world is becoming increasingly conflicting and contradictory, and to a degree, the traditional telephone-based agency is cannibalising itself, recommending different approaches to prospecting, and becoming the antithesis of simple. It has evolved beyond belief and numerous techniques are now open to business development professionals, each with their own merits and rationale, often backed up with statistics. All of this is creating confusion. New business agencies, consultants and in-house professionals have developed different schools of thought, and within our own telemarketing industry, in the search for USPs, different approaches have been devised and promoted at the expense of telemarketing. The result being the simple formula, which should be at the heart of any new business strategy, is often lost.

These are published statistics from a number of sources involved in various new business activities.

  • 70% of prospects feel cold calling is an unwelcome and unpopular approach
  • 4% of B2B marketing buyers find telemarketing annoying
  • 23% think telemarketing is very effective
  • 70% of B2B buyers are sceptical of cold calls
  • 72% of marketing professionals are open to targeted and informative telemarketing calls
  • 21% of marketing buyers expressed a “hostile attitude” towards cold calling
  • SEO and email saw a 50% decline in their overall effectiveness in 2011 versus 2010
  • 59% of agencies state that referrals are the most effective way of generating business
  • 58% of marketers learn about new agencies via emails received from agencies

If you were devising a new business strategy, these figures would offer zero clarity as to the best approach.

How could 70% be sceptical of cold calling and think it is unwelcome when 72% of marketing professionals are open to targeted and informative calls? And how could SEO and email see a 50% decline in effectiveness, yet 58% of marketers learn about new agencies via emails?

All these statistics have come from agencies or organisations selling various activities, targeting different markets and the surveys are based on different participant numbers, decision maker levels and ways of asking the questions. It is also worth noting that all this data is from in-house sources. There is no impartiality or recognised methodology/technique being used.

To highlight this, if you were asked – “Do you like cold calling?” how would you react? Recent SCi data state that 35% find calls at home annoying, as do I, so that question will include answers based on that opinion.

If asked – “If an agency offers you something different or interesting over the phone, would you find that annoying?” you would get a different answer.

Any business needs to keep abreast of its competition, and the reality is the new business world is moving on. No longer are companies focusing around the telephone, as was once the case. Social media, PR, speed dating, emailing are all part of new business agency propositions and they are compelling. They sound good, are being pushed and promoted by the media and agencies, and most of their selling points are built around the ever diminishing effectiveness of the telephone and cold calls as a medium.

However, the statistics make no sense and it is more an indicator that, far from the phone being a dying tool, it is the number of new business professionals, who are skilled enough, enjoy it and have a passion to be on the phone to generate high quality leads that is waning as other approaches generate the excitement factor.

A survey of past Alchemis employees who have moved in-house demonstrates that:

  • Email, social media, search marketing etc. take up 40-50% of their time, with telemarketing taking up the rest
  • They are important in generating incoming leads, but
    • 90% of incoming leads (however well targeted) still require qualification through a phone call
    • 80% of all cold meetings generated are initiated by a phone call

It could be argued that this is where we are using statistics to justify our approach, but if we introduce deeper findings from the survey:

  • An average of 60% of all the cold meetings initiated by the phone had received a combination of follow-up emails and had also been contacted through social channels, so it is about getting to all the different touch points, but the phone in most cases:
    • Remains the starting point and it allows you to identify those prospects who are then worth investing in through different mediums
    • Allows you to qualify incoming leads through different sources

The SCi emphasises the importance of human interaction and asked a group of buyers across a wide range of markets if they had either had a telephone conversation or meeting with a company before placing orders on their last three purchases.

The result was that 70% of buyers had received either a call or had a meeting prior to purchase, aside of how the initial lead had been generated.

The Solution:

So how do you cut through the clutter to achieve a coherent strategy?

This chart has been used before in previous reports, but it is interesting.

Chart: Changes in the effectiveness of B2B Marketing tactics

It would indicate that the effectiveness of telemarketing is on the decline, and this was 2 years ago, but in fact, it is indicating that all methods are delivering less. This could be a gauge of the economic climate and a tightening of belts, and effectiveness will inevitably be influenced by and proportionate to the investment in each channel. Alchemis figures show a 30% increase in business developed for clients using cold calling over the same period, so again, conflicting statistics cause confusion.

The key thing to note here is that statistics have been viewed in isolation and each approach has its own merits:

  • Email is cheap, but is becoming increasingly competitive and crowded. Following up cold calls with a relevant, interesting and engaging email is also quite a skill, but done properly, can be extremely effective
  • Social media allows you to interact through a non-threatening manner and establish an online link with key contacts and works very well when connecting with prospects nurtured over the phone as they know who and why you have approached them
  • Events are a good way to meet face-to-face, but a) there is no guarantee you will meet the decision maker and b) at an exhibition, the prospect is more interested in selling themselves rather than listening to you
  • SEO/PPC gives you volume of traffic, but can you guarantee the quality?
  • Direct mail is expensive, but according to a number of reports is making a comeback versus emails
  • Telemarketing is comparatively expensive, but it allows you to establish a direct interest quickly. It identifies buying signals and allows you to drive the conversation

What is more insightful is to look at how effectiveness can fluctuate if approaches are used in combination, primarily with the telephone. Based on the work we undertake as an agency and working in conjunction with clients, the following is certainly true:

  • Email:
    • For cold prospecting, emails are not, on the face of it, very effective, unless it is highly targeted with a very specific, relevant message. Even then, it is the follow-up phone call that sparks a call to action and generates the initial appointment. The phone allows you to grade the level of interest. Emails are a very useful tool to keep in touch with interested prospects once contact has been made over the telephone and, as relevant information has been gathered, can subsequently sound and feel highly personalised to each prospect. On average 40% of appointments generated by Alchemis have included a targeted email, following up the initial call.
  • Shows/Events/Seminars:
    • Tradeshows remain a popular tool, but the Marketing Sherpa statistics are looking at companies that exhibit, which is not common for marketing agencies. Our clients tend to use shows to pick up business cards and establish some kind of connection to the prospect, but in 99% of cases that will go nowhere if not followed up with a call after the show.
  • PR:
    • PR is a slightly grey area as there are no quantifiable links with telemarketing. However, calls can be timed and targeted around press releases and often speaking to prospects and gathering key messages from your target market can drive PR stories and messages.
  • Social Media:
    • This is the big area really as it is more about generating incoming leads. Social media is often touted as the tool that makes the phone easy to regard as a relic. Now that Twitter, Facebook and Linkedin have conquered the internet, cold calling seems as primitive as clubbing your mate and dragging them into your cave. As a social media sceptic, I have certainly been convinced of its value over the past 2 years as we have received good quality incoming enquiries through social channels. However, in comparison to the results we have achieved using the phone, it is a very small percentage of all the enquiries we receive. Social channels should be used to enhance telemarketing and once contact and an interest have been established with a prospect, interaction can then take place through Linkedin, Twitter or whichever is appropriate.
  • Search Marketing:
    • There is no doubt that this is important as of course you want people to be able to find you if they are actively looking for a service, but any incoming leads come with a health warning. Often there is more chaff than wheat and a lot of time can be spent chasing opportunities that are not key to driving your agency forward. If you have a dedicated telemarketer, they are able to invest time to follow up enquiries and qualify these quickly and effectively.

Conclusions:

The problem with cold calling is that most people misunderstand its purpose. The purpose of calling up complete strangers is to ask them whether or not they’re interested in a product or service, NOT to sell them that product or service. You don’t make cold calls to build relationships or establish a community. You make cold calls because it’s one of the most efficient ways to generate a business lead from nothing. Once generated, all manner of tools can be used to build and establish that relationship.

This sounds like a defence/promotion of the telephone as a tool and to a degree it is, but that is because it is so fundamental to developing business and far from being pushed to the periphery of the mix, it should be at the heart of it.

It is unlikely that a new business professional or business development agency would have the skills or time to cover all of these areas and, again, from speaking to ex-Alchemis New Business Managers, they will use their particular skill sets and outsource the rest. The old analogy of “you would not employ a plumber to fix your roof” is true in new business. To create clarity, you need to have experts in each field. We are not experts in implementing or managing social media or search marketing programmes, and we don’t organise speed dating events or large scale email blasts, but we are experts at having intelligent conversations and generating quality new business leads over the phone. We do understand how all of these channels interact and, while we know we may be perceived as the old fashioned and less exciting channel, we stick to our core skill, yet we work closely with social media agencies, PR agencies, etc in conjunction with our clients to maximise each channel.

Simplicity is best.

  • Know your key proposition
  • Know your target market
  • Use experts in each channel to deliver that message, and get them working collaboratively
  • Beware anyone that dismisses the telephone as a tool. The influence of the phone in B2B purchasing decisions is not on the wane, but skilled sales people with an aptitude for cold-calling seems to be

Add on the timing, luck and rapport and you should be successful.

It is that simple.

Appendix:

  1. www.telegraph.co.uk/motoring/news/6784428/Scientists-create-formula-for-perfect-parking.html
  2. www.telegraph.co.uk/news/newstopics/howaboutthat/2158104/Today-is-the-happiest-day-of-the-year-according-to-Cliff-Arnalls-maths-formula.html
  3. www.thesun.co.uk/sol/homepage/news/4597678/Scientists-discover-perfect-pint.html#ixzz2OC0FzVLy
  4. www.thesun.co.uk/sol/homepage/features/4681310/Formula-for-the-perfect-Christmas-Tree.html

One thought on “The perfect formula for new business

  1. Bertan Halil says:

    Hi Jim, good paper! A very interesting read.

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