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Prospecting by the numbers – cold calling versus referrals

I am one of the weird individuals that enjoys seminars and webinars. This week I attended one of each. The seminar I attended was on the topic of business networking and was put on by a local business networking organization. I should point out that I am not a member of this organization. In fact, I am a member of another very similar organization.

The last portion of the meeting was fifteen minutes of comparing two prospecting methods – cold calling and referral marketing. While the presentation was a bit of a sales pitch to convince guests to join the group, I thought the presenter did a nice job laying out the case for how referral marketing (more specifically developing relationships with other professionals that are willing to refer business your way) is by far a much more efficient way of prospecting and closing new business.

Let’s take a look at the average statistics:

Cold calling

20 – twenty calls on prospects
10 – to speak to ten people
5 – five of which agree to meet with you
2 – two actually show up for your appointment
1 – close one sale

Referral marketing

5 – referrals from complimentary business professionals
2 – two that agree to meet
1 – close one sale

What amount of time do you think it takes to complete the cold calling activities versus the referral process? Without actually calculating it, I think we can agree that leveraging referral relationships much more efficient by a fair margin. I can tell you from personal experience that this is accurate.

So, why do so many professionals continue to make cold calls? A main reason is that they just don’t understand how to build referral relationships in the first place. Certainly doing so can take time. And many professionals are looking for the quick sale that cold calling can yield. But I would hypothesize that the quality of the sales closed through referrals is vastly better.

My question to you is – would you rather have a 20:1 or a 5:1 ratio?

If you see the value in meeting like-minded professionals, in order to build referral relationships check out a new way to network.

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External cannabalism

Last week I mentioned Entrepreneurs of Knoxville as a great place to brainstorm with like-minded professionals. The founder of the group, Leo Knight, and I have gotten to know each other over the past few years. Sometimes we see things the same, and sometimes we don’t.

At the last meeting I asked how a particular project was going for him. Apparently, it was not going at all. It’s seems that Leo’s client had decided to pursue a particular project with in-house talent, instead of engaging his services.

Your customer can often times be your biggest competition.

I have experienced the same thing with one of my projects. A few months ago, after numerous invested hours of laying out a plan of action, a potential client decided to try and replicate my teams services on their own. According to my contact, their solution “was not near as good or cool”. Apparently, being neither good or cool mattered.

So, how do you protect yourself from external cannabalism? Well, you can’t. If you are merely saving them time or money you risk losing the sale. And even saving them both time and money isn’t enough, because your prospect can choose to do nothing.

Your only play is to provide enough value that your prospect cannot implement the new product or service without you. And only you.

Feed your network!

Best ways to use GoGrabLunch.com to #businessnetwork

One of the common questions we get is where does our site work?

The answer is quite simple.  GoGrabLunch.com can help you network across the globe.  Our site works world wide.  Actually, we have members in over 43 countries.  This sounds impressive (and to me is to an extent considering this has all been done through word of mouth, with no marketing dollars spent).  Of course, in some countries there are two members.  But the base is set and I believe we will grow in other states and countries in due time.  In fact, we are trying to manage that growth to an extent.

So, back to my point.  GoGrabLunch.com works every where.  If you are a new member and there are limited lunch opportunities in your area we could use your help.  Spread the word about us to your contacts.  The more people that become members in an area the more networking opportunities.

Also, remember that if you are a new member it is best to grab someone else’s open lunch instead of planning your own.

Networking fail!

Say it ain’t so.  You mean…you networked all week and…and didn’t make a single good contact?  OK, enough sarcasm. It happens all the time.  And when someone does fail at networking it is usually for the same reason.  They don’t give it enough time.  Here is a short list of how time can effect your networking efforts in multiple ways:

  • You don’t dedicate enough time for networking in their schedule.  Depending on your industry you should be at one qualitynetworking event per week, at a minimum.
  • You don’t  give your relationships enough time to grow.  Relationships are about trust.   And that pesky little thing needs time.
  • You don’t take the time to truly understand what their contacts do.  And this limits your ability to refer them quality business.
  • You don’t take the time to evolve their networking skills.  I am constantly reading or listening to information about best practices for networking.

Stop thinking of this as a sprint.  Networking is a marathon.