The outbound industry is evolving... and what to do about it
Over the past few years, I have had countless people come to me who are trying to build a company similar to Lead Cookie.
They look at what we built and want to model something similar.
Yet my advice to them is often a wake up call...
Be careful.
The outbound Industry is evolving... and it's getting way harder...
In this post, I will share:
Why I believe the outbound industry is evolving
What I envision as the future of the industry in 3-5 years
What to do about it
1. Why the outbound industry is evolving
To explain my viewpoint, let me walk you through the past few years of the outbound industry. First I will talk about cold email, and then about Linkedin.
The slow decline of cold email
I started doing cold outbound prospecting almost 12 years ago for my first company. It was easy pickings back then...
In my early cold email campaigns, I would send 100 cold emails by hand (before automation tools) and close 3-4 clients.
Then cold email got flooded. Tools like Mailshake, PersistIQ, and many others entered the market. While these tools made cold email way easier to manage... they also opened the doors to a world of spammers.
Add to the mix Aaron Ross publishing Predictable Revenue which became a must-read for the business world. This lead to nearly every tech savvy business getting into the space of cold email...
Aside from Aaron, several other internet marketers started selling video courses on "Proven cold email scripts." Once again... more crap just flooding inboxes around the world.
Over the course of a few years, cold email volume went from hardly a thing, to endless spammers flooding your inbox...
This meant it was harder to get results, harder to get responses, and results from this channel plummeted.
The law of shitty click-through rates
The ironic thing is that the tactics that Aaron Ross published in Predictable Revenue were true effective tactics... at that time.
But once you publish a tactic like that in a book, then everyone imitates it.
Once people start creating video courses about how to do a tactic, everyone follows...
And so kicks in the law of shitty click-through rates.
This concept from Andrew Chen is basically the concept that every marketing tactic is great when it starts, but then everyone starts doing it and people become immune to the tactic. So then new tactics have to be formed.
Gmail and Outlook made cold email deliverability harder
Over the course of 2019, all of us who were in the cold email space noticed something massive happen... cold email deliverability rates dropped drastically.
In 2018 and prior, it was easy to register a new email address and then start sending outreach campaigns. The campaign wasn't always effective, but you could at least show up in someones inbox.
In 2019, that started changing. More and more emails were landing in Spam folders. My peers and others in the industry were running around asking "What the hell is going on?"
There was no major announcement. We just saw deliverability drop drastically.
Over time the industry started learning more about best practices for deliverability, but this still took a hit.
It's impossible to send at the volume that you could 2 years ago and not end up in spam.
It takes at least a month if not longer to "warm up" a new email account to start sending cold email campaigns.
And even despite all your best attempts to do this safe and well, you still have a higher chance of ending up in Spam than you did a few years ago.
Cold email can still be effective... but it's getting harder.
Enter the rise of LinkedIn
As the law of shitty click-through rates mentions, there will always be a new channel or method that people flock to. When cold email got harder, everyone flocked to LinkedIn.
I dove heavily into the LinkedIn game in early 2017. In those days, I was converting deals and calls off of LinkedIn left and right. We didn't even have to be salesy for our clients. Just reach out, and people would engage and buy.
It was a gold mine in those early days and as long as you had a decent value proposition, you could produce results.
Yet over the past two years, we have seen once again a giant rise of spammers and low quality crap on LinkedIn. There is so much noise, so many automation bots, and so many people sending generic, spammy, messages.
With this being said, LinkedIn can still be effective. But it's getting harder...
I'll dive more into that in the second half of the article in "What to do about it.”
LinkedIn is changing
Beyond the rise in noise on LinkedIn, we are also seeing the platform change. For an outsider, they may not see much but for those of us who are close to the platform, we are seeing updates that signal their longer term intentions.
For example:
3 years ago you could send 175 connection requests per day. Over the past 3 years they have slowly scaled that back to a max of 75 connections per day.
3 years ago, automation bots were not being tracked by LinkedIn. Today, if you use most automation tools they will notify you and potentially suspend your profile if you do not listen to their warnings.
LinkedIn recently shifted all outbound prospecting messaging from their primary inbox to the "Sales Navigator Inbox." This means all of your sales communication now exists within a paid product from LinkedIn. If you cancel Sales Navigator, you lose access to those conversations... LinkedIn is locking you in to Sales Navigator for life.
3 years ago, we saw virtually no "hand slaps" from LinkedIn in any of the accounts we ran. Over the past 6 months, we have seen a small increase in these across client accounts. While nothing has been beyond a warning email thus far, we are seeing LinkedIn crack down on high-volume outreach.
It is clear from these changes that LinkedIn is throttling back the volume play. They know the platform is flooded with spammers and they are aiming to make this a better place for everyone.
I've detailed more on my predictions of the future of LinkedIn in another article if you care to see more of where I believe this platform is going.
2. What the outbound industry will look like in 3-5 years
Think about this for a moment...
Google and Microsoft own the outbound industry
95% of business cold email is controlled by Gmail and Outlook (which is owned by Microsoft).
LinkedIn is owned by Microsoft.
Outside of cold calling, nearly all B2B sales and outbound prospecting communication is now in the hands of Google and Microsoft...
They control the communication channels.
And they have the ability to change those channels at their discretion.
Where this industry goes is in the hands of two tech giants...
LinkedIn will monetize prospecting...
At the moment, InMails suck. They are one message amidst all of the organic outreach messages that you get on a daily basis. As a result, they don't convert any better than organic outreach and they just cost more money....
But what happens when LinkedIn says "You can only send 10 organic connections per day. You have to pay $10 per connection beyond that."
Or if they say "Want to send a campaign of messages to CMO's? Great. That will cost $50 per delivered message."
There are rumors of LinkedIn turning into a PPC marketplace for humans. The higher the value of the contact, the more it will cost to deliver them a message.
No one knows exactly how it will evolve but one thing is for sure from the trends. Organic and "free outreach" will drop on LinkedIn, and paid outreach will go up in costs.
This will force higher quality outreach and knock out a lot of the spammers. These are just my predictions, but I feel pretty darn confident that some variation of them will come true.
Cold email deliverability will only get harder
One thing is for sure. Gmail and Outlook aren't going to "lighten up" on their Spam restrictions. It's only going to get harder and harder to land directly in someone’s inbox and get your message seen.
And even if you are able to get your message delivered, you will be sitting aside countless other cold emails pitches that are deleted in a moment.
The amount of noise and volume will only increase making this channel harder and harder to produce results for.
Yes, cold email will still be possible to get results from. But you can expect it to become more and more challenging.
What won't change... personalization and relevance will always prevail
One thing that won't change about outbound is that a personalized and relevant message will always prevail. This will stand out in someone’s inbox or on LinkedIn messages and rise above the noise.
And outbound won't "die" but it's going to get harder. It's going to get forced into a world where more work and personalization is required to be effective.
In 3-5 years, outbound will be low-volume, and highly personalized
We are already seeing this trend happen, and it is only going to happen more and more. Within 3-5 years, mass spamming and templated campaigns will be a thing of the past.
We will be looking at only small batch campaigns, and personalized messages as the only way to produce results in outbound.
The costs of outbound will increase at the same time. LinkedIn will raise prices to do any sort of volume with outreach as they own the B2B messaging channel.
Outbound will always be there.
But it's only going to get harder, more expensive, and more personalized....
A note on cold calling
For the sake of this article, I haven’t written too much about cold calling. But it’s worth mentioning here that cold calling is still effective for certain industries. When selling into large organizations, or old school blue-collar industries, it is still extremely effective.
And I am sure cases could be pointed for more modern tech companies using cold calling as well.
While cold calling will always have it’s place, I foresee many industry campaigns where cold calling just isn’t an option.
Imagine trying to cold call a remote company… much harder to get to the right person when there is no central phone system. And more and more companies are going remote.
The bottom line is cold calling has its place, and will always have its place. But shifts toward VOIP phone systems and remote work will make it even harder than it already is.
3. What to do about the changing outbound industry
Not using outreach yet? Start now before it's too late
First off, if you are not running outreach as a method of acquiring new business yet, then get in on this now. As I've said, it's going to get harder and more expensive. So get started now running your own outreach.
Download our eBook on LinkedIn outreach as a starting point or reach out to us at LeadCookie.com.
If you are running your own outreach... improve the quality
For those of you out there reading this who are running your own outreach campaigns. It's time to up the quality. We have been relentless on improving quality at Lead Cookie which has helped us become a leading B2B lead generation agency.
Look for ways to add more relevance, more personalization, and more segmentation to your outreach.
This doesn't mean you have to personalize every single message.
But it does mean instead of blasting out the same message to 5,000... you may want to consider breaking those 5,000 prospects up into 10 batches of 500 who each gets their own more relevant message.
For example, instead of going after CMO's of 11-50 person companies....
Go after CMO's of 11-50 person companies in cyber security, in Boston...
When you build a more narrow target, you can then make your scripts look way more personalized, even when being done still at a decent volume.
This "small batch" outreach approach is how we have evolved Lead Cookie and kept our results up despite a massive influx of low cost spammers into the market.
What we are doing at Lead Cookie
This brings me to what we are doing at Lead Cookie. While I prided myself on building a "productized service" in the early days, we have now been "un-productizing" over the past 6-12 months.
All of these industry shifts means that we have had to act much more like an agency than a productized service. It is simply where the market is pushing us to.
Some of the changes we have at Lead Cookie made include:
Targeting many "small segments" for a customer instead of one message to all prospects.
Adding cold email and phone outreach to our service line.
Adding appointment setting and follow up services to our higher-priced packages.
Adding hand-qualification as an option for our services where we check every lead by hand.
Setting up systems that allow for us to semi-personalize campaigns based on higher-quality research criteria.
Be flexible in volume and scope of campaigns for customers. We don't force everyone into the exact same plans, but will often mix and match volumes and service lines to fit their needs.
Raising our rates to be able to afford offering all of these quality increases.
All of the changes I just mentioned are very large business model shifts. Expanding our service lines has been a 6 month project, and it's still in the works.
Yet this is where we are being forced to go by the changes in the market so that we can remain relevant, and still provide value to our customers in these changing times.
What this means for other outbound agencies
Lastly, I find that it is my duty to write a word to all of the other outbound agencies and Lead Cookie copy cats out there. After countless people approached me and said "how do I do what you did?", I had to write this to say "that's not a wise idea..."
Yes, you can still build an outbound "agency" or "consultancy"
If you desire to build an outbound "agency" or "consultancy", you still can. There will always be room for that. No matter how these platforms change, there will always be a market for people to help with outbound prospecting in whatever form it exists in.
BUT, I put the words "agency" and "consultancy" in quotes for a reason. With all of the shifts happening in the industry, and the major players who are owning these channels, I no longer see this as a viable industry to build a done-for-you service in.
It's possible at the agency level. You can probably still build a $1M-2M business in this industry... but that will be a challenge.
I have come across only a small handful of outbound service companies that are doing $2M+. Even the industry leaders struggle to break that mark.
You will be constantly battling the shifting platforms which disrupt your procedures and tactics overnight... you will be pushing a boulder uphill watching customers churn out the backend.
Your desire to "remove yourself from the business" will probably be wishful thinking as this will always require high-level expertise to execute on these campaigns.
As the volume of outreach goes down, the quality, personalization and skill required goes up.
A company that requires skilled employees is the opposite of everything that is preached about in books like Built to Sell and the E-Myth.
It's possible to build a good business in this space still, but you should recognize what you are building is much more of a consulting company than a productized service.
That's not a bad thing, but recognize it for what it is.
One approach is for outbound firms to consider diversify into other service lines
Another alternative approach is to sell outbound as one service line amidst a wider range of marketing services. Instead of just doing outbound, sell a package of Outbound, PPC, Content, Social Content, etc.
Nate Freedman of Tech Pro Marketing does a great job of this. Outbound is one tool in his arsenal of a larger retainer that he sells to his customers. This keeps Nate resilient from churn and platform change as his company is not built entirely on one channel.
The challenge with this is to not turn into a generalist agency just like everyone else. This works for Nate because he has a vertical niche. He is focused on a specific industry.
So consider using outbound as your foot-in-the-door offer to sell a wider array of marketing services.
Go upmarket and sell training
Another angle I am seeing firms take is going upmarket into training services.
Jason Bay of Blissful Prospecting is taking this angle. While his company was once focused on done-for-you outreach services, he has now focused at going up market and training sales organizations on modern outbound prospecting techniques.
This evolution of done-for-you to training is a common trend that many service organizations go through as they evolve through their career.
Recently I interviewed Jay Baer of Convince and Convert which is a marketing firm that has been around for nearly 12 years. The firm started off like many other marketing agencies doing fully delivery for their clients.
Then about 7 years ago Jay set a vision of being a "Strategy Only Firm". Over the course of a 5 year plan, they transitioned the firm to drop all done-for-you client work and now only are hired to do digital strategy and training for their clients.
This model is common among agencies and is one to consider as a path through the noise.
Use your outbound skills to build a new business
Now the approach that I am currently taking is to use my outbound marketing skills to build an entirely new company. Over the past year I have been working on building up Content Allies.
Over 60% of the revenue from Content Allies has come from cold outbound... I'm using my existing outbound skills and resources to build a new company that has a more stable business model.
One of our long time Lead Cookie clients, Chris Sears, has done this with his app Sport.ly. Chris is an outbound sales expert so he shifted his energy and focus toward promoting and attracting interest in an app he launched and built.
This is an opportunity that I feel like anyone can take...
If you are good at outbound, then why not spin up a new company and use your outbound skills to generate sales for it?
While there will be a whole new set of challenges that come with running a second company, I can say that building an outbound agency is actually wayyyy harder than a content agency for many reasons. Content has its own set of challenges, but man... outbound is a hard business to build.
Or... become a sales arm for another company
Don't want to start a second company? What if you consider joining forces with an entrepreneur who has a great business, but who is poor at sales and marketing.
As an outbound prospecting company, you could literally transform your team into the outbound sales organization for a growing company. You can be "acquired" and turn yourself and your sales team into the outbound organization for a company with a strong and compelling value proposition.
Obviously, you would want to pick this relationship wisely, but it's a path to consider.
At Lead Cookie, we are entertaining the idea of partnering with select companies who we believe we can bring tremendous value to and earn more on a performance basis. These could turn into business partnerships, revenue shares, commission structures...
This isn't a clear path, but if you find the right potential partner then this could be a powerful combination.
5 years from now, outbound will be harder and more expensive
While I can't predict the future, I will stand behind this statement.
In 5 years, outbound will be harder and more expensive than it is today.
Google and Microsoft will decide where this industry goes.
The future of the industry is in their hands...
Some of you might be ok with that uncertainty...
Personally, I choose to think through my business model and build a company that can live for 20 years. In 5 years, I don't intend to be in the outbound industry as a service provider any longer. This is why I have become very interested in podcasting for business.
Maybe things change. But my current 5 year vision is telling me to get the hell out of the outbound industry...
I spent 3 years building a rock solid business with Lead Cookie... only to watch the foundation shift out from beneath it.
We will survive, and we are evolving. But 5 years from now, Lead Cookie will either be non-existent or a completely different company...
I write this message as a wake up call to all of those in the lead gen space.
Yes, you can still build a great business in this space. But just recognize what you are signing up for.