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What is the average conversion rate of cold calling between potential clients and small business (1-19 employees) from advertising on Google and Facebook, i.e if a business is talking in the phone with 100 clients, how many will make a deal?
Hi
Thank you for your question on the average conversion rate of cold calling for small businesses and its comparison with advertising on Google and Facebook.
In short, cold calling 100 potential clients can yield anywhere between 0.3 deals to 6 deals while social media can yield around 2 deals. However, for Google, the conversion rates will vary according to industry.
I have explained my methodology below in detail and provided an overview of understanding the conversion rate.
OVERVIEW AND METHODOLOGY
Cold calling is a sales and marketing technical to increase sales. It is also known as sales prospecting and is undertaken by service providers to contact potential clients and pitch the services to be able to generate a qualified lead and subsequently, close sales (Close.io).
Advertising is another channel of marketing to accomplish the same results – reach out to potential customers digitally and thereafter, generate sales. Google and Facebook are few of the prominent advertising channels for businesses.
Cold calling involves three steps: activity of cold calling, reaching a few potential clients and thereafter, establishing a few qualified leads and lastly, conversion of qualified leads into sales (Close.io).
The conversion rate is calculated as if 100 cold calls are made and say, 10 qualified leads are generated and 5 are converted into sales. Then conversion rate is calculated as 5 / 100 = 5%.
I have looked extensively through company reports, leading media sites and blogs of renown in the marketing space to identify conversion rates pertaining to small businesses. However, the information is not exclusive to small businesses. Conversion rates vary according to marketing channels and industry but they always include all types of businesses including small businesses. However, since cold calling is a major sales channel for small businesses, it can be assumed that the conversion rates across the board provide a conservative estimate for small businesses. I shall explain this further as cite the data.
CALCULATION
Marketo report calculated the cold calling conversion rate (also known as sales prospecting) at 0.99% (Industrial Marketer). The conversion rate for Social Media is 1.95% (Industrial Marketer). A dated report by Direct Marketing Association quoted cold calling conversion rate at 6.16% (Direct Marketing Association). A Kenan-Flagler Business School study finds cold-calling to have a 2.5% success rate (LeadFeeder Blog). Another study conducted by Keller Research Center at Baylor University, Texas, finds the success rate of cold calls as 0.3% (Baylor University).
Using these indicative conversion rates, we can take a range of applicable conversion rate to be between 0.3% and 6.16%. These could give us the range of deals that can be made.
Google AdWords has a conversion rate of 1.91% (ecommerce) till 7.91% (finance and insurance) (Uhurunetwork). SmartInsights provides the benchmark conversion rate for Google AdWords across industries (Smart Insights). Comparing the conversion rate for Facebook to Google is not possible since Facebook campaigns using Pages can have very high conversion rates. The Uhurunetwork report provides an in-depth analysis of when to use Facebook ads vs Google Ads. In short, Google Ads have a wide reach however, Facebook Ads might be the only option for small businesses with small marketing budgets.
We can assume that social media (Google and Facebook) have a conversion rate at an average of 1.95% (Industrial Marketer) and 1.91% for ecommerce (Uhurunetwork). Therefore, the conversion rate is 1.95 + 1.91 /2 = 1.93%
Using these statistics, if a 100 clients were approached through cold-calling, we can expect the following success rate (deal):
Lower bound: 0.3% * 100 = 0.3 deals (meaning around 300 cold calls needs to be made for 1 deal to materialize).
Upper bound: 6.16% * 100 = 6 deals
For social media (Google and Facebook), we can expect 1.93% * 100 = 1.93 deals to be made if 100 potential clients are reached out.
CONCLUSION
To conclude, cold calling 100 potential clients can yield anywhere between 0.3 deals to 6 deals while social media can yield around 2 deals. However, for Google, the conversion rates will vary according to industry.
I hope the research is helpful. Thank you for using Wonder!