Is Prospecting Really a Numbers Game?
Is Prospecting Really a Numbers Game?
Is Prospecting Really a Numbers Game?
One of my former sales managers was fond of saying "it's a numbers game". Translated, this aphorism meant that in order to meet a sales quota, the representative must make dozens and dozens of calls in order to improve the odds of finding new prospects.
But is it really true? I know I grimaced whenever I heard this said, but I had no real data to challenge it, and if I did, it was politically unwise to do so.
Paradoxically, one can make thousands of outbound "dials" to B2B targets and experience very low connect rates. Today's prospects are obscured behind not only traditional gatekeepers such as administrators, but also technical gatekeepers like voicemail and email. Contacts are on the move (LinkedIn members know this well), businesses are acquired, merge with others or just go under. Persistent calling may add to your volume, but not to your connect rates.
This notion that prospecting is a numbers game may be derived from thelaw of averages and theLaw of Large Numbers. Law of Averages is also known as the gambler's fallacy (how appropriate!), or the idea that the roulette wheel will yield the color black because it's come up red three consecutive times. In sales vernacular, a rep might say "I've made 79 calls so far, so the next call I will get a live prospect". There's no factual basis for this assumption--the prospect is not in on the game, just as the roulette wheel has no memory. The rep might just as easily get an appointment on the first call of the day. I've seen it happen, and I've also seen the rep start calling at the exact same time daily to improve the connection odds.
The Law of Large Numbers applied to prospecting would suggest that a rep could make 10,000 calls but the percentage of hits would settle in around theexpected outcome. For instance, one could make 80 calls (too small of a sample for the LLN) and expect to reach 10% or 8 contacts (although I think that's high). Law of Large Numbers dictates that if you then make 8,000 calls, you would still probably settle in around 10%, but youwould end up with more contacts. The bigger fallacy is that making this many calls is sustainable, hence we cannot prove that making 80 calls a day will get more prospects.
There are so many other factors involved. Teleprospecting is not a controlled environment. Even when you have the right contact information, you may never be able to catch this contact live. Or you could attempt to reach the contact by dialing him 50 times, but there's no guarantee this will work either.
LNN is frequently applied in gambling and investing. Casinos probably appreciate LNN's "guarantee" of certain results despite the randomness of gambling. LNN says the casino can absorb a hot gambler because over the long term the sample is so large, the average losses will settle in where expected.
Roger Conway is a well-known angel investor in the Silicon Valley who was profiled recently in the LA Times("He's start-ups' best friend"). He compares investing in start up companies as a "hit" business, suggesting that if you continue to invest consistently you'll have many failures but a few hits will guarantee success. His success average is one-third failures, a third break even, a few make money and a few are home runs.
"I've tried to figure out why we can't reduce that failure rate," he said. "But there's really no way to do it.It's the law of averages." (My italics)
I think he really means the Law of Large Numbers, which would theorize that he and his team could look at 10 or 100 times the number of investments and still hit the same averages. That I buy. I think it's fair to say that his team is using the same evaluation techniques consistently. There are just so many other factors: market acceptance, management team, competition, and market conditions.
It's the same with teleprospecting. The objective is to find prospects, and to do so one must speak live with contacts. The better your information going in, the better your chances of connecting live. Making 80 random calls per day will not increase your hit rate, while making 80 researched calls per week might. Quantity over quality seems to be an outdated notion in 2010.
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