In my last post I went through the math on traditional cold calling.
There’s an alternative way to get meetings with prospective clients, but sales people don’t generally use it. Oddly enough they often do use it when they need a job and in this case they call it “networking”. I had to come up with a cool name for using networking in sales so I call it “social calling”.
Whatever you call it, I think the math on the effectiveness of a networking approach vs. a cold calling approach is pretty interesting…
Some background math
There’s a professor of psychology at Oxford University called Robin Dunbar and he did some research on how many relationships we all have. He figured out that we have about 150 relationships we can maintain (this number should be higher for sales people and entrepreneurs involved in developing their business.)
If you know 150 people and each of your connections (“first degree connections”) know 150 people then you can be referred to 150 x 150 people = 22,500 people.
Don’t be a plonker
The data above suggests you can get a referral to 22,500 people. Now, as you know, if you’ve done any selling at all, referrals work way more effectively than cold calls.
This is because of trust.
When a friend tells me that I should speak to you, I usually do. I do it because my friend is vouching for you. If I don’t do it, then I risk meeting my friend at the next social get-together and having my friend asking how I got on with you. If I say I didn’t take your call, I risk making my friend think I am a serious plonker.
So when you use a referral, even if it’s from your aunt, the buyer has skin in the game. Hence the conversion ratio is drastically different to cold calling where the prospect does not treat you as another real human.
Back to the math
The clearest way to take a “social calling” approach is to use Linkedin to look up who my friends know that I want to connect with.
Here’s some data from my experience doing this:
- Time taken to research my contacts’ contacts to find someone I would like to speak to (“2nd degree connections” in Linkedin speak), 20 minutes
- Time taken to write an email to my friend to make the intro, 10 minutes
- Time taken to follow up for the intro when friend forgets about it etc., 16 minutes (4 emails at 4 minutes each—easy emails to write)
Here’s some conversion data based on my experience of doing this:
- 50% of the time on Linkedin my friends actually know the people they are linked to (50% of the time they connected with someone and have no real relationship)
- 50% of the time with the follow-up above I get an appointment with the target person (yes, referrals really are that effective, see “plonker” above.)
Doing some math
- Total time invested to follow up for an appointment with each identified contact = 45 minutes (46 minutes actually but that makes the next part messy, so 45)
- Conversion rate to appointment 50% * 50% = 25%
- Total time to get an appointment 45 minutes times 4 (1/25%) = 3 hours
Therefore, using a social calling approach most people will take 3 hours to get an appointment with someone in the 22,500 people they can reach.
Cold or social?
If you buy in to my data and math above, it makes sense to use social calling (networking) approaches to sell your product or service. In terms of time, a networking approach will get you an appointment in 3 hours vs. a cold calling approach that will take 9.75 hours. It is 3.25 times more efficient.
There is not enough data for me to say that “cold calling is dead” but I think the math above does suggest that sales people and business owners should make a networking approach to prospecting a major part of their sales and marketing mix.
Many owners do start out with a networking approach but eventually lose sight of it as they use up their initial obvious relationships and then go on to hire sales people that are trained to cold call (only).
I have found that with social networks like Linkedin making it much easier to see who-knows-who, a networking approach to selling can be carried on indefinitely and at scale. Maybe it’s time for you selling to become more social…