Updated on April 24, 2023
Cold outreach might not be an overly popular tactic for sales, as it’s still considered as violating privacy regulations and SDRs consider it as a highly demanding approach, but it can actually be extremely effective for growing your business if you have the right knowledge, toolset, and sales force to execute it.
The purpose of cold outreach is to reach potential customers by exploring a legitimate interest to do business. This typically involves a direct email or phone call, however, other forms such as LinkedIn messages may also be used. With the right strategy, you can achieve strong results and produce a significant return on your investment.
When considering the ROI that one could get from a successful cold outreach campaign, there are many points to consider. For starters we need to have all the information for our total addressable market, have a solid knowledge of converting content, and follow the industry averages, to calculate it.
It’s definitely not simple math here, but let’s go over some basics that can help you determine whether your cold outreach efforts are worth a while.
Cold Outreach campaigns performance
Cold outreach campaigns are an essential component of any successful cold outreach strategy. They involve reaching out to potential customers who have not yet expressed an interest in your business or product.
The success of a cold outreach campaign is measured by its performance, which includes metrics such as open rates, response rates, and conversion rates. High-performing cold outreach campaigns can help businesses mostly to generate leads, set appointments, get trial users, promote discounts, increase sales, and grow their customer base.
However, achieving high-performing campaigns requires careful planning, research, and execution, as well as an understanding of your target audience and their needs.
To be able to measure whether a cold outreach campaign has a good ROI forecast you need to know exactly which factors will contribute to the success of the campaign.
Let’s have a look at an example cold outreach campaign.
By the name of this campaign, you can see that the target audience for this campaign is highly targeted to a particular set of users of complementary CRM software that would benefit from a sales automation tool.
Your target audience or ICP is the first indicator for the success of your campaign – you’ll have to research and explore your total addressable market very well and craft specific ICPs according to different pain points they have, and your solution or service could potentially solve for them.
After you have a rough count of how many people you can reach out to from that specific ICP, you can then set the campaign outreach target more specifically and calculate your end results based on that number of contacts.
In this particular example, there are only 500 contacts in the outreach list.
Now let’s go over the performance stats of this campaign: 60% of all 2140 sent emails were opened, meaning 1284, from which 26 got clicked on a link that was included, and the same amount of replies was received.
Judging by the industry standards, this cold outreach campaign has a larger open rate than the average of 44%, a slightly lower click rate than the average of 3.67%, and falls in the 50% of cold email outreach campaigns that have a reply rate below 10%.
What’s also very important here is to not forget about the bounce and out-out rates, which both are lower than the average of 2.17% for unsubscribes and 7.5% for a bounce rate.
Overall, we can say that this is a good-performing cold outreach campaign with 26 potential leads out of 500 contacted prospects.
Now, what’s even more important here is how many of these 26 leads will turn into booked appointments, paying customers, or whatever your conversion target might be.
Since conversation targets are different for each company and even for each campaign, we can’t have a fixed expectation of the outcome for every campaign objective. Depending on your conversion goal, you’ll need to calculate the success of your campaign based on some prior experience, in-depth research of industry standards, or just a needed number that you would like to achieve for that goal.
After determining the conversion rate you are expecting you can compare your campaign results and calculate the ROI of a single campaign.
For example, our conversion rate expectation for this campaign was 10% on booked appointments, with an estimated open rate of 44% and an estimated reply rate of 5%, ending up with at least 4 booked appointments from 500 contacted prospects.
Our actual conversion rate was 14%, 3 booked appointments which brings us to a close number to the expected conversion rate.
Having that said, although some of the results are below standards, we can say that this campaign had a large percentage of ROI on the given conversation goal.
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Cold Outreach ROI calculations
Besides the statistics of your campaign and the goal setting, you also need to calculate how much would it cost you to implement your cold outreach and how much you will gain out of it.
If you are a bit of a math fan you could potentially do the ROI calculations on your own, or you could also you a ROI calculator to get estimates on your cold outreach. To calculate the ROI of your cold outreach you’ll need to know the price per dataset, price per lead as well as price per conversion according to your average campaign results. If you are still in the planning phase and don’t have prior data on your outreach rates, you could calculate potential ROI based on the industry standards.
At Sales.Rocks, given the price per contact we can easily calculate how many contacts or prospects we need to get an X number of leads that will convert into X number of paid clients based on your average deal size.
Visit our prospecting ROI calculator to do your calucations with ease.
Once you have the number of prospects you need to get from your data provider (or Sales.Rocks) you can use your average percentage to calculate how much ROI will your cold outreach bring to your business.
Sales.Rocks Prospecting ROI Calculator
Cold Outreach ROI results
With both aspects of prospecting covered, the cold email outreach campaigns and the cost per prospect, we can how determine the success and ROI of our exemplary campaign.
If we take that a direct email address at Sales.Rocks costs maximum of €0.2, our list of prospects for the given campaign would cost €100 in total.
Now, if we give the campaign a daily enrollment of 30 new contacts, with 4 emails in the sequence, which follow up every second day, that would mean our campaign will end in approximately 22 days. In these 22 days, 3 appointments are booked and with a given conversion rate of at least 50% to a paid client we could end up with 1-2 paid clients in a period of a month. If our monthly deal size is somewhere between €200-300 and we have invested only €100 for the prospect list we double our ROI with a single campaign.
Calculating your return on investment (ROI) for your cold outreach campaigns is crucial for understanding the effectiveness of your outreach strategies. By measuring the success of your outreach campaigns, you can analyze what worked, what didn’t work, and what can be improved for future campaigns. Moreover, this will give you information on conversion rates for different industries and target audiences and will help you better shape your ICPs.
This information is essential for scaling up your outreach activities and achieving your goals. Without a clear understanding of your ROI, you may be wasting valuable resources on ineffective outreach strategies.
Calculations may vary, but if your campaigns break your ROI even and get at least bit higher than that, it means you are on the right track.
Expect the highest ROI of your prospecting