The Days of Cold Calling are Over

You just finished your annual sales meeting and among the highest items of importance on your list was to attain new customers.

While a terrific idea, it’s not a unique one.

Just about every business leader has figured out that sales has changed a bit in the past few years, but for the most part in the commercial integration business, it is business as usual.

So right before the meeting adjourns and strategy for 2014 rolls out, in at least a few of the board rooms throughout the AV integration industry, some CEO is going to say, “We need to hire some business development people [aka ‘hunters’] to cold call on all of these businesses that we aren’t selling to today.”

Plan noted and away they will go, begging the question, just how well does such a strategy work? Let’s do some math.

New Hunter Check List:

• Cost to run ad, review resumes, interview and hire: $5,000
• Base salary for hunter on a six-month runway: $40,000 (annual)
• Upcharge on salary to hire someone with experience and a rolodex that is likely inflated: $20,000
• Soft costs for benefits, training and expenses: $6,000 (15 percent annual salary)

So to hire just one person you are hopeful is competent to sell products, you’re looking at a minimum of $71,000 for the first year. That’s a lot, and based on the average industry margin of around 20 percent blended they will have to sell about $400,000 just to cover their costs and about four times that to truly be considered a success. Then there’s the inevitability that only one in four to five of these professionals that you hire will work out, meaning that one person will have to perform for four-to-five years to cover failed hires of the past.

Granted, just about every integration company has made a conscious decision to invest in new business development professionals. But if you asked them how it worked out, what would they say?

Instead of new business development hires, invest in retention, expansion and word of mouth. Did you know that you are 6x more likely to sell something to a current customer than a new one?

Most integrators merely pick the low-hanging fruit as they wait to hear about opportunities and projects from their customers. The key to growth is increasing wallet share or answering the following: How do we get more business from our current customers?

The answer is: take better care of them and get active in providing them with information about what else you can do to help them solve business problems.

Integrators often sell technology for the sake of its being cool; we rarely address what business problems we solve.

Make small, but meaningful, investments into your existing customers to provide greater service levels with the intention of knocking their socks off with your performance. Then, in turn, you can expand your working relationship, increase your revenue with them and earn their word of mouth (referrals), which will lead you to new business.

Whatever you do, think long and hard before pouring money into “hunters” who rarely work out but will cost you a small fortune.