August 27, 2014
This post was written by Marco Massaro, the founder of Masswerks.com
I run a web consultancy that works with internet startups and high growth companies. We provide strategic UX, design and front-end development services.
Most of the projects we receive are referrals from happy customers who told others about the great work we did for them. Those referrals then come to us with a similar project or needs and the cycle repeats. This has been the main way my consultancy brought in new work and clients.
But as anyone who runs a web consultancy may know, this industry can be feast or famine. One month you might have project inquiries piling up and another month might be very slow.
When this happened to my consultancy recently, I needed to find a new method to bring in projects without relying on just referrals.
I was recently chatting about consulting with my friend Neal Kemp, a YC S14 alum who used to run a development consultancy. He mentioned how he was having a great deal of success generating new project leads using cold email marketing. After hearing from Neal about his success with this marketing tactic, I decided to give it a shot for my consultancy.
In the rest of this post I will detail how I closed a $15,000 consulting project with my very first cold email campaign. I’ve outlined my entire process from beginning to end, including what worked, what didn’t, improvements that I could have made, my results, tools I used, resources and more.
Note: To respect confidentiality agreements and the privacy of the client, I will not go into much detail about the client or project.
Start With A Plan
To start my cold email campaign, I needed to have a plan. Who was I going to cold email and how would I get them to hire my consultancy? Where would I find the right companies who needed my services?
Identify Your Ideal Client
As I mentioned earlier, my consultancy works with internet companies. I love working with these types of companies because they move fast, have little to no bureaucratic structure (until much later) and are obviously tech savvy.
That means no hand-holding, rarely having to explain a certain technology or trend and getting paid upon completion of the project (I’m very much against Net D terms).
Normally, we work directly with a CEO, CTO, co-founder, product lead or a marketing head. These people usually “own” the product, from UX and design to strategy and development. They are also normally the key decision maker who can greenlight a project.
Make sure you can identify your ideal client. What types of companies do you want to work with? Who are the people at these companies that can say “yes” to you?
Create A Company Profile
The next step, after identifying your ideal client, is to come up with a company profile. The company profile is a detailed breakdown of the types of companies you want to target.
I’ve outlined my company profile below with explanations. You can also download the template to create your own. I highly recommend using this template as it will make the process of finding companies much easier.
Internet: technology, SaaS, B2B, B2C, social
Industry of companies you want to target. I also used some popular keywords here to specify the types of internet businesses
USA, UK and Europe. English only.
The location of the company. I avoided companies who didn’t conduct business in English (as depicted by their website or product).
At least $200,000 in funding and no round later than a Series A.
In order to make sure companies could afford my consultancy, they needed to have funding (or revenue).
I focused on seed and Series A companies for a few reasons.
In my experience, seed companies were very developer focused and lacked any design or product lead. This is where my consultancy could really help by providing design and UX support.
The Series A companies I’ve approached or worked with in the past usually had raised a big round and were on a hiring spree. I found that these companies also had a lot of new projects they needed to start right away.
In my experience, companies that had raised a later round weren’t a good fit for my consultancy because they usually had internal design and development teams to handle all of their projects.
$500,000 to $1,000,000 in revenue (if no funding)
If the company had no funding, that was OK, as long as they had some revenue. Its important that the company had some type of cash flow so they could afford my consultancy and weren’t operating on a shoestring budget.
I targeted smaller companies who didn’t have a lot of employees. Companies with many employees normally had in-house teams to cover design and development.
Person To Email
CEO, co-founder, CTO, CMO, Head of product
These are the types of people within the company that I wanted to send my cold email to and who I normally worked with in the past.
Finding Your Ideal Client
Now that I had my company profile complete, I needed a place to easily find companies that matched the company profile I put together.
I chose CrunchBase because its one of the most comprehensive and well-known resources for internet companies. You can see funding, revenue, employees, keywords, websites and much more. There are also a ton of other market research resources available out there.
A great thing about CrunchBase is that you can see newly funded companies. This meant I could see companies who recently received funding, which meant there was a good chance they needed some form of help.
Extracting The Leads
Now for the hard part. Browsing through each company on CrunchBase, viewing their website and finding the right email address takes a really long time.
Instead of doing all of this manually, I decided to outsource the entire data extraction and data entry process.
Remember the template above that I said would come in handy? Here’s where you’ll need it. If you hire someone like I did, you’ll want to provide them with this template so they know exactly what to look for.
A person from AngelList (we’ll call him James) found my consultancy listed and emailed me pitching his lead generation, email and marketing services. Yes, it was a cold email…oh the irony.
The timing couldn’t have been any better. He had the exact experience I was looking for including data entry, lead generation and cold emailing.
I hopped on a quick call with James and took him through my company profile so he’d know exactly the types of companies to extract from CrunchBase.
Next, I setup a Google Spreadsheet (download the template) where James would be required to input the company name, website, full name, email, position and revenue or funding of the company.
His process went something like this:
- Find companies on Crunchbase that fit the company profile
- Click through to the company website to make sure it was live, they were still in business and they were a potential fit.
- Navigate to an about, company, team or contact page to find the person and their email (if there was no email James would figure out the email format and use Rapportive, or skip)
- Head over to the Google Spreadsheet and fill out each field with the company name, URL, email, etc.
- Rinse and repeat for 500 leads
The total cost for outsourcing this data entry process and sending the emails (explained later) was .50 cents per lead, or $250. This was my total investment, besides my time. We capped it at 500 leads to start for this first campaign.
Once the spreadsheet was populated with the leads, I reviewed it for accuracy and made sure I didn’t already have a relationship with any of the companies James had found.
Sending Cold Emails
The next step was to write up the cold email pitch and send it to each lead from our spreadsheet.
First, I gave James an email address at my company so he could send out emails from our domain.
Next, I crafted a short email with the purpose of grabbing the recipient’s attention and getting them interested in my consultancy.
Here’s the email copy that was used:
What’s Good About This Email
- A short email subject that pulls the recipient in (a short subject also worked well for Alex from Groove)
- Address the recipient by their first name to make it personal (avoid sir/madam, to whom it may concern, etc.)
- Ask a question or touch on a potential need in the first sentence. Don’t open the email by introducing yourself or your company, instead put the attention on them and focus on their business. As Neville Medhora puts it: no one cares about you, they care about themselves.
- Hook them by creating value, rather than pitching your “services”. If you can help their bottom line or business grow, they’ll listen.
- Close the email by creating urgency and making them reply to get more information.
Some Positive Email Responses
For each response, James would reply with a friendly note and then CC/intro me. I would then come in to take over the discussion and sales process.
Email Breakdown By The Numbers
Response rate: 13.4%
Out of 500 sent, 67 people replied. 14 were interested and the other 53 were not interested, would keep us on file or had an autoresponder reply.
What Could Be Improved
After reviewing my sent email campaign, I was happy with the numbers for my first attempt, but could definitely improve my process next time. Here’s what could have been improved:
I used one subject and body for all 500 emails. Next time, I plan to A/B test subject headlines and the body to see what yields better open and response rates.
Integrate with a CRM
We didn’t use a CRM to track leads or help us manage the sales process. Everything was done in Gmail which meant things got hairy at times when trying to visualize where we were in the sales process.
Since we just used Gmail, we didn’t have any reports on opens, CTR, views, device, peak time or other detailed information about our campaign. This information is important for campaign optimization and tweaking.
Qualifying Leads & Negotiation
Now that I had 14 warm leads, the next step was to qualify each one to make sure they were a good fit for my consultancy. I used a similar process as outlined by Brennan Dunn to qualify each prospective client.
It looked something like this:
Great to meet you. [Company] looks really interesting and I’d love to help. Can you answer a few quick questions so I can learn more about your project?
- Do you have the requirements or details for your project?
- When are you looking to get started?
- Do you have a budget set aside for this project?
ABQ = Always Be Qualifying
Qualifying a lead is the single most important step in the sales process. If you don’t qualify, you’ll end up wasting time with leads who have no budget or aren’t in the market for your services.
Normally, most prospects will reply to that email with at least some description or overview of their project, a timeline and a ballpark budget. If they don’t disclose the budget then I kindly explain we have a $XX,XXX minimum project size and if that is a number they are comfortable with. You’ll know immediately by the type of response you get if the lead has a budget or not.
And Then There Were Two
After going through the qualifying process with all 14 warm leads, I ended up with just 2 that were qualified and were a fit for my consultancy.
12 others didn’t fit for one of the following reasons:
- No response to my email (or a follow up)
- Didn’t have the budget
- Needed a service that we didn’t offer
- Just interested in more information, but not ready to start (I follow back up on these types leads every few months as well)
You might be thinking…2 qualified leads out of 500 is just a measly 0.4% conversion rate, your results suck! That may be a small percentage, but in reality I just needed to close 1 of these 2 leads to cover my investment of $250 and also make a great profit.
Plus, we pitched these leads literally out of nowhere and they’ve never heard of my consultancy. Getting 2 qualified leads from a cold email who are a fit and have a budget is a huge win in this type of business.
Now We’re Talking
The next step was to hop on a call with both qualified leads to learn more about their project and goals. During this call I’d also normally explain our process, services and how my consultancy could really help their company (you can read that in our playbook).
I’d also prepare for each call by doing an audit of their current site or product and jot down notes on how they could improve their design, UX, messaging etc.
On the call, I’d offer the prospective client free actionable tips they could implement to improve conversion rates, sales, engagement, etc. The client instantly got value out of the call and regards me as an expert with his or her needs in mind.
Doing this strategy at the end of the call leaves a really good impression. When you get to sending your estimate or proposal to the prospective client, they’ll remember the value you brought just on a simple call.
Getting Down To Business
After the call I’d review everything including the project requirements, goals and our discussion to write up an estimate for each prospective client.
I use Ballpark to create estimates and invoices. Its a nifty app made by the guys over at Metalab. Every estimate outlines the phases of the project, deliverables, timeline, pricing and any other notes or fine print.
I sent out two separate fixed-price estimates for my prospective clients:
- $15,500 for a small UX and design project
- $43,250 for a large UX, design and front-end development project
The client who received estimate #2 replied promptly that they would review it and reply back within 1 week. A week went by and I heard nothing, so I followed up. Then another week went by and I still heard nothing.
To this day, I never heard back from that client, even with several follow up emails and a phone message. Keep in mind, this client was qualified and did have the budget (we discussed expectations on the call).
Unfortunately this is just the nature of the consultancy business. Sometimes clients go AWOL for no reason. Maybe they changed their mind. Maybe they didn’t have the budget. Maybe something came up. I’m not really sure, but there wasn’t much more I could do beyond emailing and a phone call.
Luckily, the client who I had sent estimate #1 to got back to me within one day via a phone.
“ Hey Marco..
Thanks for sending over your estimate. I took a look at it and everything looks good. Can we just make it an even $15k and get started? ”
Without hesitation, I said “deal”.
I was more than happy to come down $500…after all, $500 wouldn’t make or break my consultancy.
Keep in mind this was a freezing cold lead that we contacted out of nowhere and it turned into a contract worth $15,000. My initial investment was just $250, making my ROI a whopping 5900%.
I was thrilled that my first cold email campaign resulted in a success.
The negotiation for this project went smoother than usual. The client only knocked $500 of off my estimate which really wasn’t a big deal. However, this usually isn’t the case. In my experience, most clients (even qualified) will try to come back with a lower price than what was in the original estimate.
This is where you need to be confident in your price, expertise and have some decent negotiating skills.
Before I became confident in my pricing and valued my expertise, I’d almost always let a client have their way with some type of price reduction. After all, I wanted the project and to make money.
Sometimes this is OK… like if you’re just starting out, you really need the money or it’s a big client that could take your consultancy to the next level.
If none of these apply and you’ve been in the business for years, you need to command the price you deserve.
My favorite tactic to win clients over is by using leverage.
A lot of times a discussion with a prospective client will go great. They love the fact that you understand their needs and have the right skills. Plus you’re ready to start right away and you have experience under your belt.
When you send over a project estimate, you expect it to be a done deal, right?
The client comes back with a lower figure than you quoted. Instead of lowering your quote to meet your client’s counter, you need to leverage the situation to get your way:
- They invested a lot of time with you discussing their project and needs (on the phone and via email)
- You fully understand the project requirements, goals and can deliver results
- You have the skills, expertise and availability to get it done
- Finding someone new to do the project takes a lot of time and they need to have availability, the right skills, expertise, be brought up to speed, etc.
So here’s how you actually use the above to your advantage to win the client over. Normally this is all done on the phone, not via email, because you can put pressure on the client and create urgency.
You send an estimate for $20,000 and the client calls you (if they email you, try calling them so you can negotiate fast). Here is how I would negotiate:
Me: Hello, Marco speaking
Client: Marco, John from ABC Corp… I got your estimate and it looks good, but its a bit higher than I expected…can you do this at $17,000?
*Brief pause by me*
Me: I really want to do this project with you, but $20,000 is really the lowest I can get it done at…
Client: Ok…ummmm…I mean…I feel comfortable at $17,000 max right now…I think we’re pretty close to your estimate and we can get you the deposit right away…
*Long pause by me*
Me: John…I’d hate for us to not do this project because of $3,000… You know I’m perfect for this project and can deliver…We spent a lot of time discussing your needs and if we don’t work together you’ll have to go find someone else, brief them, make sure they have availability and the right skillset…it’s going to take you weeks. I’m ready to get started today and will hit a homerun for you
At this point, the client will hopefully say “OK” lets do it at $20k. I’ve used this exact script and its worked in the past. Most clients will realize it’s not worth wasting all of the time and energy spent up to this point to walk away over a few thousand.
Also, by talking on the phone you’re creating urgency and really forcing them to make a decision in a few seconds (whereas with email they have time to mull things over or not even reply).
If the client is still holding their ground, this is where you may have to negotiate a bit so you really don’t lose the project. I factor negotiating room into my estimates and only use it when I think the client might walk away (which has happened before).
Client: Yeah I totally understand that Marco, which is why I’m trying to work with you…But $20k is too much. We might have to pass on this one…
*Very long pause by me*
Me: Here’s what I’ll do because I like you and this project. Meet in the middle at $18,500…that’s my bottom line. I’ll send the contract over right now…
Say this part convincingly and confidently – most clients will say “yes” under direct pressure like this.
Client: Ummmm..alright Marco, I appreciate that…Lets do $18,500. Send me the contract.
Me: Thanks John, I’ll send it over to your email now.
I’ve used this approach in the past when a client holds their ground and it works very well.
All of the leverage is on my side here because I’m available, have the skills, can deliver, understand their needs, and so on. The client doesn’t have this type of leverage. All they’ve done is invested time and energy discussing their project and needs with me. If they walk away they wasted all of that time and have to go through the process all over again. Most clients won’t want to do this because they know how tedious it is to find good talent to hire.
Another note: sometimes when I didn’t negotiate I lost some really great potential projects. Some people say you should never ever negotiate, but I disagree. If you bake in some negotiation room in your estimates, you can come down on price without losing money if it’s a really great client that you want to close.
You should also weigh the potential business outcome of the project when you negotiate. If the project can really move your business forward or could be a stepping stone to that next level, then from a business standpoint it’s probably worth it to negotiate. If you do a great job on the project you’ll likely have repeat business from the client and referral inquiries coming your way.
Other Tactics To Try
Here are other negotiation and closing tactics you can try to implement with your consultancy.
Another tactic you can use to get clients to close quicker is to have a date issued clause. A date issued clause basically says something along the lines of “this estimate is only valid and can be accepted 30 days from the date issued.”
With this tactic, you’re forcing the client to make a decision otherwise the estimate becomes void after 30 days.
This is also a good tactic to use if you have clients that give you a response to an estimate months later. By that time you may not have the resources to complete the project or your interest and pricing could have changed by then.
24-48 Hour Discount
One closing technique I’ve seen (but haven’t tried myself) is having a discount offer right on the estimate. Somewhere on the estimate it says “a 5% discount will be applied if this estimate is accepted and closed within 24-48 hours.”
This closing tactic creates urgency and makes the prospective client feel like they’re getting a deal.
If you do use this tactic, make sure the discount doesn’t create a loss if they do accept it.
Contracts & Invoicing
Once the estimate is accepted by the client, I immediately begin the legal work and invoicing.
I send clients a service agreement to sign online with Hellosign which covers the services, duties, responsibilities, payment schedule, and all the legal jargon to protect my company and the client.
Once the service agreement is signed, I convert the estimate to an invoice with Ballpark and send it as a PDF attachment to the client via email. The invoice includes my business details and payment information. I require a deposit on every project before getting started via check or wire transfer.
After the deposit has been received and cleared, I set up a Basecamp project and invite the people I’ll be working with on the project. All of my notes, questions, deliverables and correspondence takes place over Basecamp to stay organized.
And then the work begins!
I still have a lot of tweaking and optimization to do to make my cold email marketing strategy better. My process is not 100% bulletproof and likely has some flaws or hiccups. Hopefully you can learn from my experience and use it as a blueprint to conduct your own cold email marketing campaign.
In the end, I’m happy that I was able to close a $15,000 project with someone I never met and had no connection to, all from a cold email.
It has been a great learning experience and I’m planning to scale up and tweak my process for my next cold email campaign.
What did you think of my process and approach? What could I have done better? What tools could I have used to make things faster or easier? Do you have a better process or other marketing ideas? Have better negotiation tactics or think mine are too aggressive?
Post a comment below and I’ll reply.