Cold Email or Cold Calling? Here’s How To Decide
What’s the best way to connect with prospective clients, email or calling?
As with all things, it depends.
In a perfect world, you’ll have the resources to do both. But most companies aren’t that lucky!
In this article we’ll look at the advantages and disadvantages of email vs calling.
And then explore what you need to consider when deciding between these two options.
And we’ll break down the ROI on each.
Let’s get started!
Advantages of Cold Email
It’s not a coincidence that cold email has exploded in popularity for sales prospecting. Cold email works really well.
One reason for this is you are able to get your message directly to your intended target. Executives are believed to ‘live’ in their in-box. And research suggests that’s true. A survey by Exact Target (now Salesforce) found that 91% of people check their email every day. And that number is growing.
There are no gatekeepers blocking your way. And it’s cost effective, too.
Here are some other reasons sales reps love cold email so much.
Time is money, and email is very time efficient. It takes a LOT less time to mail merge 1000 people than it does to call them up. This extra time can be used on high-value activities.
Also, email research can be done at any time of the day, for example evenings. There’s no need to use prime working hours to conduct prospecting activities.
For prospects, cold email can be a very positive experience. Messages can be heavily personalized. And the decision maker can deal with the message at a time that’s convenient for them.
Cold email is also very affordable. It doesn’t cost much to develop and clean data. And email delivery costs are low.
Best of all, follow up messages are FREE (or nearly free). There’s no incremental cost to sending a second, third or fourth message.
Finally, as more people shift to ‘work from home’ email may be the only form of prospecting that actually works.
Disadvantages of Cold Email
No prospecting method is perfect, and cold email is no exception. Here are a couple of areas where cold email doesn’t deliver (pun intended!).
The obvious challenge for cold email is delivery. Many senders find their messages end up going to spam, which is a waste! It’s better not to send a message at all than to have it going to the dreaded spam box!
Fortunately, there are lots of things you can do to avoid your email going to spam. But even then it’s a genuine challenge for many cold emailers.
Related to spam, another problem with cold email is that most recipients get too much of it. They get messages that aren’t relevant to them. And their overall experience with cold email is poor.
Back in 2014 The Radicati Group reported that email use is growing year over year. They found the average amount of business related email was 121 messages per day. And that was expected to increase to 140 by 2018. Judging by my inbox, that number has long since been surpassed.
This ever-increasing tsunami of email makes your outreach message very easy to ignore. Executives are getting overwhelmed and they just don’t have the mental bandwidth to respond to messages that aren’t of immediate interest.
Advantages of Cold Calling
It’s tempting to believe ‘cold calling is dead’. It’s not.
With well-planned, relevant targeting cold calling can be incredibly effective. And as it decreases in popularity, calling can put you ahead of other vendors.
Cold calling has two characteristics that distinguish it from ANY other b2b lead generation methods.
First, is the opportunity to have a two-way conversation. You might think that decision makers don’t want to speak with vendors, but that’s not really true. In fact, more than half of C-suite executives say they prefer to be contacted by phone.
Cold calling provides an opportunity to establish rapport and make an immediate connection. And by speaking with an actual person you can gather information, and identify other stakeholders.
Second is your ability to influence and guide the conversation. When you are asking questions, you are automatically steering the topic where you want it to go. Used well, this can be a very powerful tool.
It’s a mistake to underestimate the power of cold calling. There is no better method for gathering information about your prospects. And to see how likely they are to adopt your solution. Consider some ways cold calling can help you understand your product-market fit:
(1) You get immediate feedback. A negative response is usually accompanied by a reason. This is valuable!
(2) Verbal communication is very nuanced. Regardless of the response, you can glean information way beyond what’s possible via text.
(3) You get an opportunity to practice and refine your elevator pitch. This may sound unimportant. But you need to practice your value proposition to be concise and effective.
(4) You have the opportunity to hear specific objections. This is valuable information that will help with future planning.
(5) You’ll learn how to listen to concerns and can address them directly.
Disadvantages of Cold Calling
Unfortunately cold calling isn’t perfect. And in some industries it can even get a bad reputation.
The biggest problem with cold calling is that it’s interruptive. When someone’s deep into a task the last thing they want is a call about something they don’t consider important.
That’s why relevancy is so important in all forms of prospecting. If your solution isn’t highly relevant to the prospect, then it’s of ZERO interest.
Another issue with cold calling is the difficulty of catching someone at the right time. Your solution might be perfect for the prospect. But if they’re away from their desk when you call, then all bets are off.
With more executives working from home now, you may not be able to catch them at the office at all. And they may not appreciate you calling them on their personal mobile phones.
Then of course there is the dreaded gatekeeper. Protective office managers can make it nearly impossible to connect with your intended prospect. These well-meaning staff can make cold calling very inefficient and costly.
The biggest challenge with cold calling is cost of implementation. Setting up an effective calling program costs BIG bucks. And the ROI isn’t guaranteed.
At the bare minimum, a proper calling campaign requires staff to make the calls, and maintain an up-to-date database. The staffing costs alone are significant, and cost several thousand dollars per month.
Oddly enough, one of the final challenges with cold email is the callers are TOO good. Many callers are paid on a commission basis. As such, they’re relentless about booking a meeting, given half an opportunity.
This sounds like a good thing! But it can waste a lot of the sales rep’s time. They get to meetings only to discover the prospect is only vaguely interested. And they’ve allocated time to someone with no real interest in their solution.
So Which Is Better? Cold Email or Cold Calling?
Which prospecting method is right for your business?
As with most things, it depends.
Here are a couple of factors that will help you decide whether you should be picking up the phone or crafting awesome emails.
Before you start, figure out the size of your data set.
If there are 500 companies you want to work with, and you’ll be contacting 2 people in each company, then you have 1000 contacts.
A thousand people isn’t a large number, and you want to get their attention any way you can! Consider combining phone, email, SMS, and social media to get their attention.
But for larger data sets it’s probably not possible to contact everyone a dozen different ways. So you’ll need to get really good at doing one or two things.
Most of the time that means combining email and Linkedin to get maximum exposure, for the least amount of effort.
Prospecting Is About Value Delivery
The size of your target market will impact your ability to deliver real value.
If your prospect pool is 100 companies then doing deep prospect research isn’t difficult.
But what if you add a few zeros? A 10,000 person data set comes with it’s own considerations.
So before deciding whether you should be using cold email or cold calls, start by understanding how many people you’ll be contacting.
After that, you need to know what keeps them awake at night.
Your job as a prospector is to be hyper-relevant to your prospects.
When you do your sales targeting right, your prospects will be thrilled to hear from you.
Every ‘touch’ you have with your prospects needs to deliver real value. So consider what’s the best way to do that.
Product – Market Fit
One thing you’ll want to ask yourself is whether you’ve achieved product-market fit. If you know your audience, and you know they need your solution then a higher level of investment may be warranted.
If you aren’t 100% confident about your messaging then start with cold email. You can test dozens of messaging variations. And you can refine your approach until it’s perfect.
Consider the scale of your company. If you’re medium to large then you may have the financial resources required to invest in cold calling (should you choose). And a bad hire won’t put you under if they fail to book any meetings.
Smaller companies should use cold email. It costs a fraction of cold calling, and there are fewer ongoing operational considerations. There’s no one to manage – it’s mostly automated.
Price and Margins
What’s right for your prospecting depends on the price of your solution, and your profit margins.
Consider the cost of cold calling. A full time caller might cost $4000 per month, including benefits. If they call 50 people per day then they could potentially book around 12 meetings per month (results will vary!).
You’ll need to know how many of those (ie) 12 meetings will convert to paying clients. If your solutions don’t have high enough margins then supporting a cold calling campaign will be difficult.
For low price or low margin solutions, cold email is the default prospecting method.
Conversion Rates By Channel
Related to the above, you need to know the relative conversion rates of the marketing channel.
Average call to meeting rates for cold calling are about 2%. But of course this number varies by industry and offering.
Email success rates range quite widely. At Sales Higher we’ve seen many clients achieve positive responses above 5%. But global averages are around a 1% conversion rate.
There’s a 100% difference between 1% and 2% meeting booking success. It’s absolutely massive!
So your actual conversion rate by channel needs to be known to decide whether to focus on cold email or cold calling.
Which Has A Higher ROI, Cold Email Or Cold Calling?
To calculate the ROI of cold email vs cold calling you need to know the relative conversion rates.
Let’s start with cold email.
The huge ROI on email marketing is well documented. An Ipsos-Reid report found it delivers a $40 return for every $1 of marketing spend.
And Monetate (now Kibo Personalization) found emails had the highest percentage of click-through rates, lead conversions, and the highest return on investment (ROI) of any other digital marketing channels.
Which makes sense. Email doesn’t cost much to send. So if you make a sale, your ROI skyrockets.
But there’s a problem with these numbers.
Most studies on email marketing ROI don’t differentiate between opt-in email and cold email. They’re not really the same thing. And it’s important to understand that.
Many lead generation agencies assume a minimum positive response rate of 1%. So for every 100 contacts, you’ll book at least one meeting. Certainly many campaigns perform MUCH better than that. But it’s a starting spot for your calculations.
Like email, the success rate of cold calling varies widely depending on the situation. But average meeting booking rates are around 2%.
The formula to calculate marketing ROI changes depending on circumstance. For this purpose we’ll be using the simplest way to calculate ROI.
(revenue – cost) / cost x 100 =
Say you contact 1000 people via cold calling per month. You get 20 meetings and 4 deals. Each deal is worth $5000
The cost of the campaign is $4000 for the staff + $300 for data + $700 for management and incidentals.
So our formula is ($20,000 – $5000) / $5000 x 100 = 300% → Pretty Great!
If you use cold email instead your numbers might be very different. You contact 1000 people and book 10 meetings and get 2 deals @ $5000 each. So revenue is only $10,000.
Fortunately, costs are much lower, too. You’ll need $1000 for staff to manage the campaign part time. And another $500 for the various tools your team will need.
In this case our formula is ($10,000 – $1,500) / $1,500 x 100 = 566% → Even Better!
In this example, cold email clearly has a higher ROI. But that can change if the sale value per contact increases. Or if any of the other inputs change.
Do You Use Cold Email Or Cold Calling?
How about you? Do you prefer cold email or cold calling? Why?
I’d love to hear about your experiences with each. Drop me a line on our contact form and let me know what works best for you.