Cold calling success or failure is determined by two simple metrics.
Connect rate: how many dials on average it takes you to speak to a prospect.
Connect conversion rate: How many connects you need on average to set a meeting.
That’s it.
Super simple.
Most organizations that we speak to have around a 6% connect rate and 7% conversion rate on connect to meeting booked.
That means it takes around 240 dials to generate one meeting set (16 dials to get a connect and 15 connects to get a meeting 16X15=240)
If an SDR is making 80 dials per day, that means they’ll generate one new meeting every 3 days or 7 new meetings per month.
Let’s assume 75% of these actually show up, that means around 5 held meetings per month.
Dials per day | 80 |
Connect rate | 6% |
Conversations per day | 5 |
Connect conversion rate | 7% |
Meetings booked per month | 7 |
Show rate | 75% |
Meetings held | 5 |
Fairly simple math.
Now we need to calculate what it costs us to generate that meeting, and ultimately what kind of a return we are getting for the investment in the SDR org. The metric that we like to look at here is how much money do we generate (in future revenue) for each dollar we invest in the outbound motion. To get a full picture of this we need to understand what is happening after the meetings take place. Specifically, what is the close rate on those meetings and what is the average deal size?
Lets assume the close rate on shown meetings is 10% and the avg. deal size is $15,000.
In that situation each SDR is generating $120,000 in new revenue each year for the company.
Here’s a video walking you through how to calculate this number:
Now if we want to improve the SDR efficiency, essentially the return on our SDR spend, we’ve got three options:
Improve the connect rate on dials
Improve the conversion rate on connects to meetings booked
Improve the show rate
In our opinion the easiest lever to pull here in the shortest time frame is to improve the connect rate.
Why that out of the three options?
It’s completely process driven. You don’t need your reps to get more skilled. You just need to implement a better process.
That process is called channel validation. It’s the process of identifying which channels you can actually use to have a conversation with a prospect. The key things we’re looking to identify here are:
Does this prospect take cold calls
Are they an active user of LinkedIn
If we know the answer to these two questions we can make better decisions about which channels we use to reach out to them. And therefore make our SDRs much more efficient.
So to improve connect rates, we’re going to channel validate our leads before we reach out to them. And then only cold call the prospects that we know we can get on the phone.
By doing this we will see 20-35% connect rates when cold calling.
This drastically changes what is possible from a cold calling standpoint.
| Without Channel Validation | With Channel Validation |
Dials per day | 80 | 80 |
Connect rate | 6% | 20% |
Connects per day | 5 | 16 |
Connect conversion rate | 7% | 7% |
Meetings booked per month | 7 | 23 |
Show rate | 75% | 75% |
Meetings held | 5 | 17 |
In this new Channel Validated reality each SDR is able to generate $400,000 worth of revenue. This is a 233% increase on our previous position.
Now remember, the reps aren’t actually performing any better yet. You’re able to achieve this improvement simply by improving the process that your organization operates.
Now one thing we haven’t done yet is factor in the cost of channel validation. This is important as that is going to affect the ROI of our investment in the SDR organization. So let’s do that here:
So even factoring in the additional cost associated with Channel validation we’re able to massively increase the return on every dollar invested in outbound calling. The SDR in the same company could now genertae $400,000 in revenue with everything else remaining the same. The only thing we changed was the connect rate on cold calls.
Again this all happened without any upskilling required to your existing team. You can achieve this process simply by executing a smarter outbound process.
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