How to start cold outreach to get your first paying customers
This is the second article of my three part mini-series on demand gen. If you haven’t already, check out the first article: Demand Gen First Principles.
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In last week’s article, I outlined that the three channels to acquire new customers are outbound, inbound, and partnerships. This is a deep dive on outbound.
My focus will be from the perspective of startups trying to acquire their first paying customers, though many of these principles apply to outbound demand gen at mature businesses.
Why do cold outbound to acquire your first customers?
Early on in your company journey, speed matters. Your technical co-founder will be pushing you to onboard new customers to get product feedback, your overeager investors will be asking about traction, and your whole team will be wondering how you’ll outmaneuver competitors who have more resources.
Compared to building an Inbound or Partnerships channel from scratch, Outbound is the fastest way to generate new business. It will work for any business if done correctly, and you also have more control over the companies and personas you target.
Perhaps the greatest inherent strength of outbound as a channel is that it will give you better data on your GTM motion faster than other channels. This will help you (1) more quickly refine your ICP, and (2) shorten your sales cycle since you can more quickly define personas involved in the buying process of your ICP
How to do cold outreach
You should approach cold outreach with the same mindset as a scientist approaching an experiment. There are many variables you need to be aware of, and you need to be methodical about testing and measuring the most relevant ones in comparison to the “control” group.
Here’s the process:
1. Identify companies to target
2. Identify personas within the target companies
3. Determine channels
4. Put together tactical plan
5. Execute on plan
6. Review results
7. Incorporate learnings and repeat
Identify companies to target
Desired result:
Identify a few extremely specific segments of your target market to test outreach effectiveness
How to approach this:
Before you have any paying customers, you don’t truly know your ICP. This is okay. Doing outreach will give you data to determine which companies have a problem that resonates with what you’re trying to solve.
Your initial theories about the company profile of your ICP should include (1) firmographic data you can use to search for companies within sales intelligence tools, and (2) “why” the company would buy your product or service.
The “why” is what’s most important here. The firmographic data is just a set of indicators that may happen to be common among companies that have the same “why”.
If you’re just starting out, you won’t yet know which firmographic data points are the best indicators of companies that have the same “why”. Your primary goal when you’re first starting out should be to figure out what these indicators are.
To do this, revisit the scientist conducting an experiment analogy. A scientist methodically changes variables in each experiment because they’re trying to test the impact of each variable or combination of variables on the desired outcome. Similarly, design your outreach so you can test firmographic data points to determine what are the best indicators that the company needs your product.
Hypothetical example
Let’s say I built an ERP system for farms*. My initial theory on the variables that would be the best indicators of why someone would buy my product might be (1) type of farm, (2) size of farm, and (3) if the farm has been around for over ten years or not:
1. I initially might think that my software can serve every type of farm, but I can segment this market further. Maybe there are nuances specific to either livestock farms or produce farms that make existing solutions particularly painful for one of these segments
2. I expect mega farms will require an enterprise grade product, and my product is barely beyond an MVP. I’m not sure if small farms could justify paying for an ERP system like mine, but I want to test this. I think that medium size farms have the pain point that I solve, so I’ll test this too.
3. My theory is that farms started in the last ten years are more likely to be early adopters of technology than farms that have been in operation for longer, so I’ll test this.
*I know very little about the agriculture industry. All of these assumptions are for illustrative purposes only
End result on hypothetical example
Based on these three variables, here are the eight types of companies I’ll target initially:
1. Livestock farms, medium size, less than 10 years old
2. Produce farms, medium size, less than 10 years old
3. Livestock farms, small size, less than 10 years old
4. Produce farms, small size, less than 10 years old
5. Livestock farms, medium size, more than 10 years old
6. Produce farms, medium size, more than 10 years old
7. Livestock farms, small size, more than 10 years old
8. Produce farms, small size, more than 10 years old
I’d then go to my sales intelligence tool (Clay, Apollo, ZoomInfo, etc.) and save searches with each of these filters. If the search yields too many companies, I’d either incorporate testing a fourth variable or narrow down the search for each segment by adding another filter (such as location).
Identify personas within the target companies
Desired result:
Determine who within each company is the right person to reach out to
How to approach this:
You sell to people, not to companies. The person who feels the most pain generally has the greatest incentive to want to buy something to make a change. You should target this person.
Here are definitions of personas commonly involved in the buying process:
-Users: those who will be using your product
-Champion: the individual who will advocate for you among their internal teams
-Decision maker: the person with budget authority to make the final purchasing decision
-Influencer: though they may not use the product or have a final say on the decision to purchase it, they have influence on the process
For simpler products, the user might be the decision maker, so this persona is who you want to target.
For more complex products and organizations, personas are either above the line or below the line. This refers to the line of decision making authority.
In some situations, personas above the line might not know that the users (below the line) have a pain that’s causing a business impact. In these situations, it’s better to chat with users or other folks below the line to get a perspective on the quantified impact of their pain first before having conversations with personas with buying authority. This will give you more credibility in your conversations with decision makers, and it might be an easier “in” to have a warm introduction from a champion who feels the pain than going directly to the decision maker who’s unaware of the issue.
In other situations with enterprise products, personas above the line may have some type of initiative or know they need to solve a business problem. The solution will involve folks below the line using new tools or changing processes. In these situations, prospecting to personas below the line won’t be as effective because they don’t feel the pain or have the same incentives that personas above the line do to solve the problem.
When starting out, I’d recommend testing outreach into at least two different personas across each target account so you have a basis to compare if one persona is an easier wedge than another. If you’re targeting an enterprise account, you can target more than two personas because there may be many similar personas who sit in different offices.
Hypothetical example
In the same ERP system for farmers example - this product will touch many functions, but the personas who likely feel the most pain from inferior current solutions might be farm owners, CEOs, presidents, CFOs, controllers, and accountants.
Not every target account will necessarily have all of these functions, so I might segment these into two categories: owner/CEO/president (I’ll call this farm owners and executives), and CFO/controller/accountants (finance and accounting personnel)
End result on hypothetical example
Within each of the 8 company categories we identified above, I’d ensure that I prospect into a mix of the farm owner and executive and finance and accounting personnel personas.
Determine channels
Desired result:
Test an omni-channel outreach strategy with the channels your buyers are most likely to respond to
How to approach this:
The most common outreach channels startups use today are email, phone, LinkedIn, and physical mail.
You shouldn’t focus on what’s easiest for you to scale, you should focus on what’s the most likely channel your buyer will respond to. It’s a best practice to use multiple channels per target because even the same persona at different companies may have a bias towards one channel over the other.
Hypothetical example
Larger farms that have a back-office team handling accounting may have folks that spend more time each day online, so email, LinkedIn, and their work phone number may be effective here.
In smaller farms, the owner may do their own bookkeeping while also managing responsibilities in day-to-day farm operations. They might be away from their desk most of the day, so mobile phone and physical mail might be more effective.
Put together a tactical plan
If you had infinite time and resources, you would send highly personalized, value additive touchpoints to every company in your ICP every week. Unfortunately, outreach is still a time-intensive process and you need to prioritize.
If I had 100 accounts that I wanted to target for a low to mid-sized ACV product (<$100,000) to SMBs or mid-market companies, here’s how I’d approach them:
Tier 1: top ~10-20 accounts - These are accounts where I have a lot of confidence they’re experiencing the pain that my product solves. I can reference multiple event triggers and am pretty certain who the decision makers are that I need to target. I may even have first party data that they’ve interacted with my website. On these accounts, I’m doing very high touch, personalized outreach for every touch point.
Tier 2: next ~40-60 accounts - Here’s where I’m trying to personalize at scale. There’s hopefully enough information about these companies and decision makers where I can reference an event trigger, but I’m leveraging automation tools to send similar messages to similar personas
Tier 3: remaining ~20-30 accounts - Firmographic data indicates these companies might be a good fit, but I can’t find out much about the company or the likely decision makers online. These touch points are mostly automated and less personalized.
For each tier, detail a process that includes the channel, timing, and messaging of each touch point.
For example, here’s what the first few touch points of your Tier 1 accounts could look like (move onto the next step if you don’t get a reply):
Day 1: Call
Day 1: Send email - reference event trigger 1
Day 1: Add on LinkedIn
Day 2: Send small gift in the mail with hand-written note - reference event trigger 1
Day 2: Send LinkedIn message - reference event trigger 2
Day 4: Call
Day 6: Call
Day 6: Send email - reference gift in the mail
Day 6: Send LinkedIn video message - reference gift in the mail
(and so on)
Even if you’re just doing light touch email sequences to your tier 3 accounts, you should be methodical about testing different messaging, calls to action, and subject lines so you can get a sense of what’s resonating with your audiences.
If I was only targeting enterprise accounts with a high ACV or my TAM only has a small number of buyers, I wouldn’t bother with the Tier 2 and Tier 3 approaches that use automation without personalization. I’d only do high-touch outreach. However, I still would find a way to prioritize accounts based on likelihood of generating a meeting.
Execute on the plan
This is much easier said than done, especially if you’re a founder and have dozens of competing priorities every day.
What I’ve found most effective for my workstyle is making specific weekly goals and frontloading account research and prep. This way, I can be more productive doing outreach during bite-size 30-60 minute windows throughout the week.
*One word of caution. I typically don’t include specific tactics since there are already plenty of great resources online, but before you use any email automation make sure you take the right steps to ensure your domain doesn’t go to “spam jail”. Best practices are generally to warm up your inbox and authenticate DKIM, SPF, and DMARC protocols. Here’s an educational article if this is new to you.
Review Results
The only way you’ll improve outreach effectiveness is by analyzing results and making adjustments. After a few weeks, you should have sufficient data to get a sense of what’s working and what’s not. Many sales engagement platforms have built-in analytics dashboards, but you can also output raw data into a BI tool to get more granular (this is what I prefer doing).
Recall all the variables that you decided to test. Look to see where among these you’re having the most success:
-Company segment
-Persona
-Channel
-Messaging
-*Combinations of any of the variables, such as persona/company segment combinations
*This is where I’ve gotten the most actionable insights in the past. High level averages on a single variable aren’t always helpful because as they say, “You can drown in a river that’s 6 inches deep on average”. Here are examples of some of insights that I found through this process from my work at previous companies:
-Value prop 1 resonates with CFOs and not CEOs, yet value prop 2 resonates with CEOs and not CFOs (based on number of meetings booked via emails to each audience with all other variables constant)
-Persona 1 is generally the decision maker at companies above 50 employees, whereas persona 2 is generally the decision maker at companies below 50 employees
-Cold calling is the best way to reach persona 1 at a certain company segment, but cold email is more effective for persona 2 at that same company
Incorporate learnings and repeat
If you found one variable (segment, persona, etc.) or combination of variables to perform statistically better than others, double down on that in your next outreach and don’t waste energy on the underperforming target area.
Similarly, if you found that one variable doesn’t seem to have an impact, don’t bother continuing to test it but consider testing another segment instead.
Final thoughts
You can spend an infinite amount of time segmenting your market and crafting personalized high touch emails. Done is better than perfect, but you need to ensure that your quality meets a certain threshold so you stand out from the crowd and demonstrate trust and credibility.
A good starting point can be to see how competitors or other big players in your target market do outreach. Balance proven methods that work within your market with ways to be unique and stand out.
Further reading:
-Sequoia PMF framework - helpful for creating messaging
-The missing customer criteria for your ICP
-29 trigger events and how to track them
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