Platt Perspective on Business and Technology

There aren’t any good cold call marketing or sales campaigns anymore: some thoughts concerning general principles

Posted in reexamining the fundamentals, social networking and business by Timothy Platt on May 14, 2017

There are a set of basic principles that keeping proving themselves as relevant and even compellingly so and across wide ranges of potential application. They usually more commonly arise in discussion in specific specialized contexts, but the principles that underlie them keep coming up and in a diverse range of otherwise seemingly unrelated contexts and circumstances besides the ones that they might be best known for. And one of them that is more commonly expressed in a more monetary theory-specific context is captured in an empirically validated finding that is commonly referred to as Gresham’s law.

Gresham’s law states that even a potentially strong currency, with a valuation that is based upon a solid established correlation between unit of currency available, and product and service value available in the marketplace, can become diluted and weakened if too much of it is put into circulation. The more units of that currency that are out there in circulation, for every unit of productive and marketable value available in its national economy, the less those units of currency are or can be worth.

Imagine a nation with a strong currency that suddenly as a matter of policy, turns on the printing presses at its Treasury Department and floods the market with more and more of that money – and without any corresponding increase in the actual productive and market-facing value that its economy can maintain and that this money is supposed to represent in trade and transaction. If this approach is carried out too fully and for too long, that currency can plummet in value until it becomes essentially worthless. And that is why Gresham’s law is often summarized as “bad money drives out good,” and “bad money drives good money out of the marketplace.”

The basic principle underlying this is clear. Valuation and realizable value and their stability, depend on reaching and maintaining a critical balance: here between the levels of actual productive value that is created and maintained in an economy and in its markets, and a transactionally equivalent (monetary) value to that, that is supposed to represent it according to a set and agreed to value-for-value exchange rate.

Now let’s consider how this principle has its counterpart in other business processes and in the relationships that hold between other types of numerically scalable metrics. And let’s consider this in marketing outreach terms for purposes of this discussion. Let’s consider how this might apply in a phone center outreach setting and with a strong valuation baseline as a starting point that would be equated here with the once strong valuation of the above cited currency example, from before its printing presses were turned on and simply left on.

There is no such thing as perfect in the real world, but there are actively and carefully thought through examples of good and of intended best. As a baseline positive example that I am familiar with in detail, I turn here to one from my own work experience as a point of comparison here.

One of the industries that I have worked in as a consultant is automotive retail. And my largest scale assignment in that arena involved my taking an interim Chief Information Officer position with a large, roughly $400 million dollar automotive retail group with both new and used car sales outlets, and auto maintenance and repair shops, and direct business-to-business collaborations with for example, a partner financial service for setting up auto loans for their customers. Their goal was to offer a one stop shopping experience for their customers and both for purchasing a new or used car or truck and for maintaining these vehicles. And one of the core objectives that I went into that job with, was to remediate and expand a new but dysfunctionally disconnected call center that had been set up for the business as a whole.

There were a number of phone system and networked computer system hardware problems that I had to help unravel in turning that facility around, as well as significant software disconnects and related problems. Those issues are all worthy of consideration and discussion in a blog of this type, and I have in fact at least briefly touched upon at least a few of them in this blog. But my focus of attention here is different from that and in fact involves a basic functionality that I was trying to both maintain and strengthen while working there: their customer and potential customer calling system per se, that this new call center was supposed to facilitate and streamline.

Let’s consider the types of calls that the phone representatives working there were expected to make:

• They were supposed to call current customers with cars and trucks under warrantee to remind them when their vehicles were coming due for free services that were included in the terms of their purchase agreements. This included checkups and oil changes and a variety of other manufacturer or dealer provided basic maintenance options. And as these services were already covered and paid for as benefits to these customers, these calls were essentially always welcome and appreciated.
• These call center representatives were also supposed to keep for-fee maintenance and repair customers informed on information that they would need for scheduling work done. So for example if a customer needed repair done on their car that called for a replacement part that had to be special ordered, a phone rep would call that customer to tell them when this part had arrived, and certainly if there was going to be a delay in that so they could schedule their repair work. When special order parts where back-ordered and there might be delays in their delivery, this offered real value to the customer and was also generally appreciated.
• But these phone representatives also made sales calls, and to both established customers as their current vehicles began reaching a certain age, and to new and prospective customers as well.
• Let’s focus here on those new and prospective customers who had never purchased anything from any of the storefronts owned and run by this dealership group. Like essentially every other auto dealership, this business purchased lists of potential customers who were supposed to have been carefully selected and prequalified for inclusion on the basis of their meeting specific demographic and other qualifications. They would for example all live in an area that this dealership had found to match that of its current active customer base. Dealerships would specify where their customer catchment areas were when entering into agreements with these list aggregator businesses that they would purchase these potential new customer lists from, so they would only pay for leads from their area.
• And prospective customers included on these lists would have to fit a realistic profile for income and related criteria that would make them financially capable of buying a new or used car. And they would selectively include people with active driver’s licenses.
• And critically importantly, these lists needed to be up to date as the people most sought after were ones who might be interested in buying a car or truck, but who had not already done so somewhere else. Old listings tended to include people who had done that and who were no longer in the market to buy again.
• This is just a partial list of the types of filtering criteria that these leads aggregators use in assembling the lists that they sell to dealerships. To add one more, dealerships of necessity insist on buying exclusivity in their leads contacts lists; they do not want to buy leads that that aggregator is simultaneously selling to other, competing businesses, or that other aggregators are also selling to their business clients.
• So there were a variety of criteria that would go into assembling these lists, to increase the likelihood that anyone called on one of them would both drive, and would be interested in purchasing a good, reliable car or small truck of the type that this dealership group offered, and that they would want to do so in the right area geographically to make that one of their showrooms a good choice for them.
• In practice, one of my work responsibilities while there was to manage these leads list provider contracts. And I worked with one of my best sales managers there in doing so. The basic questions that came up in this due diligence exercise were very simple:
• How many of the prospective customer leads that were provided by each of the aggregators that they were in contract with, actually turned into completed sales? And what did this business actually pay for these leads when the overall cost of the complete lists paid for was amortized across those much fewer successful sales? And how did this cost compare with the potential profit margin that this dealership group could expect from these completing those sales, net of having to purchase these sales leads in the first place?
• It turned out that many of their leads providers were failing them for the low levels of conversions to completed sales achieved from their lists and a couple of them consistently, month after month failed to yield even one completed sale at all. I had to find ways to get this dealership company out from under the contracts that they had signed with a large percentage of the lead providers that they were buying these lists from because quite literally, so few of the entries on them were leading to sales that the dealership group was losing money on them when leads costs were properly taken into account.
• I worked with some very good people there and both for the managers who I worked with and for their hands-on call center and sales personnel, and together we were able to turn that part of this business around. I add that I got to work with a good attorney on this too, as well as with members of their Information Technology staff and a wide range of others. And I hold that up as my positive example where all effort was being made to only call the people who would be receptive to being called and who would see value in doing business with this dealership.
• Even under the best circumstances, only a relatively small percentage of calls of this type, and certainly cold calls to new potential customers actually work out and lead to completed sales. But all effort was made to at the very least make sure that no perspective customers who were called would have reason to hang up feeling irritated. That, among other things meant not taking a high pressure sales approach and always being polite. It meant listening as well as speaking and it meant knowing when to end a call that was not working too, and doing so with a thank you.

There is no such thing as perfect in the real world but there is and can be good and there is and can be polite, and real effort can be made to limit call lists to target audiences that actually make sense to the merchant calling. And that is my positive end of the scale example for this posting and its discussion. And it brings me to robocalls and badly framed ones that would leave anyone receiving them wondering what type of scam was being attempted on them – or convinced that they already knew.

Think of the seemingly endless flood of those calls as a counterpart to turning on those Treasury Department printing presses and leaving them on, and seemingly endlessly. And this vast toxic background and context that any good practices calling and cold calling in particular would be embedded in, renders them valueless too and to all concerned – and certainly to any business attempting to make them.

And to complete this example’s narrative, I cite businesses such as Nomorobo that provide automatic blocking services to prevent scam, spam, phone phishing and other offensive calls from getting through – and for both robocalls and in-person calls as would come from a call center of the type just described.

Robocallers see their costs per call as being so low that they can make money even if only the tiniest percentage of their calls actually get through and succeed for them. They are not looking for repeat business, and certainly for more dubious businesses that pursue business this way, they are only looking for one time scores from anyone they can convince to buy into their pitch. They, in game theory terms, pursue a win-lose strategy with their prospective “customers” and they only need to win occasionally to win big, overall. So the types of Gresham’s law style calculations that I would cite here do not matter to them. Businesses such as the automotive dealership group that I cited above seek to develop and long-term customers and seek to pursue win-win strategies and those calculations can mean the difference between success and failure for them. And the dynamics of this disparity drive the shift in valuation of customer calls, and of cold calls in particular down towards zero – and even into a “loss at best” territory and for all, and certainly for legitimate businesses.

• Bad money drives good money out of the marketplace.
• Bad calling drives good out of the market too, in this case converting it and certainly in its cold call forms into essentially guaranteed money losing propositions.

You can find this and related material at Social Networking and Business 2, and also see that directory’s Page 1. And I also include this as a supplemental posting to Section VI (Some Thoughts Concerning a General Theory of Business) of my Reexamining the Fundamentals directory.

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