Cold leads vs. warm leads: Does it matter when sales prospecting?

Discover how prospecting cold leads vs. warm leads impacts your lead velocity rate, accelerates your sales cycle, maximizes ROI, and boosts conversions.
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Your prospects probably don’t like cold calls. In reality, who does?

According to Hubspot,cold calls can come off as obnoxious or intrusive — making some prospects less receptive and polite when responding to them.” 

But don’t think targeting leads who’ve shown interest is any better than cold outreach. 

Why? Because interest doesn’t mean intent. Converting warm leads into hot ones is also a lengthy and time-consuming process. 

So, when it comes to cold leads vs warm leads, which ones should you target?

In this article, we’ll explore:

  • The differences between warm leads and cold leads
  • How they affect your B2B prospecting success
  • And how you can optimize your sales prospecting strategy for each one

What is a cold lead in B2B sales?

Cold leads in B2B sales are the key decision makers (KDMs) at organizations who match your ideal customer profile (ICP) but aren’t aware of you or your products and services. In other words, they’re potential customers who have never indicated an interest in your products or interacted with you.

Where can you find cold B2B leads?

Where can you find cold B2B leads?

Some of the most common ways to generate cold leads include:

  • Online directories: Business listing websites like Google My Business (GMB), Yellow Pages, and other local directories contain a treasure trove of all the businesses in your niche. Simply scrape these websites to obtain a database of cold leads. 
  • Social media platforms: The KDMs that fit your ICP are active on platforms like LinkedIn, Twitter, and Quora. Use sales intelligence tools to collect their contact information and obtain insights on triggers that prompt them to buy from you. 
  • Events: Whether virtual or in-person, industry-specific events like webinars or conferences are filled with prospects who are already interested in listening to what you’ve got to say. Events give you an opportunity to build relationships and provide value to your prospects before trying to sell to them. 

The challenges of cold leads when prospecting

The challenges of prospecting cold leads

Here are some common challenges SDRs face when prospecting cold leads:

1. Time-consuming manual processes

The biggest challenge when it comes to finding B2B cold leads is “having to do it,” says Adam D'Angelo, SVP of Sales & Customer Success at UserGems. 

Today, if you want to close a sale, you can’t target random accounts and hope something sticks. You’ve got to target the right accounts and send personalized messages/emails to pique their interest and move them down the pipeline. 

There are multiple tools that score leads and deliver relevant contacts automatically to help SDRs discover leads. But some businesses still rely on complex and time-consuming processes that involve collating data from various tools just to find potential prospects. 

Adam also points out that they’ve got to guess which insights or triggers are meaningful and use multiple sources to identify and cross-reference our data.

For example, his team would use ZoomInfo for account and contact discovery and hop on LinkedIn to discover ideas to help send personalized messages. That’s lots of manual work for an average success rate of a few percentage points.

Plus, there’s no guarantee that your tools will give you reliable contact information. In fact, SDRs have spent loads of time getting account data only to discover that it isn’t accurate when they start outreach. 

”Cold leads typically require more qualification and discovery. There’s a higher chance of them needing to be nurtured. Additionally, because of this, they can take longer for me to move them through the top of the sales funnel.” -Aron Johnson, Outreach Partner, Panorama Education

2. Poor lead quality due to sales and marketing misalignment

Picture this: 

You’ve filled up the top of your funnel with leads, and you’re pumped to make some calls and close some deals. But you only get lukewarm responses from the other end, and the conversations get awkward when you find out that your prospects don’t need your product or can’t afford it. 

And your emails? Ignored and deleted for the same reason — they don’t need it or don’t have a big enough budget.  

This happens because of sales and marketing misalignment. When sales and marketing teams aren’t aligned on buyer personas, they waste time prospecting the wrong people.

Does this mean you’re better off if you try selling to companies already familiar with your products?

Short answer: Yes and no. 

For a more concrete answer, you need to understand the basics of warm leads.

What is a warm lead in B2B sales?

A warm prospect or lead is defined as a company or individual who has shown interest in what you’re offering by:

  • Signing up for a newsletter
  • Exchanging contact details for a lead magnet 
  • Filling out a form requesting more information on a product or service 

It’s an intermediate step between cold and hot leads, where your prospects may still be evaluating other options on the market.

”The reason warm is preferred over cold is that whether your hitting the lead's email inbox or ringing their phone, the lead recognizing your company or product's name makes for an easier transition into a conversation.” -Marc Lewis, Senior BDR, GRIN

Where can you find warm B2B leads?

Sources of warm B2B leads

Unlike with cold leads, it’s easier to find reliable account data for warm leads by leveraging the following:

  • Social media: I-scoop states that 84% of B2B buyers use social media to research solutions for purchase, making it a great way to “warm up” leads before contacting them. Position your company to connect with warm prospects on social media with high-value content and targeted events. 
  • Past customers: Previous customers are the lowest-hanging fruit in your demand gen. program and include former buyers, champions, and product users. Since they’re 3X more likely to convert than new leads, track job changes, and identify their new work email address and information to target them with email automation, gifting (direct mails), and ads.
  • Referrals and loyalty programs: Targeting former customers as warm leads isn’t the only way to close more deals. You can use them to get referrals for other, similar professionals. When a past or existing customer refers you to another business, it’s a vote of confidence and helps speed sales deals. So, set up an easy referral system, ask past and existing customers to recommend you, and offer rewards to incentivize them to provide referrals.

The challenges of warm leads when prospecting

By the traditional definition, anyone who shows interest in your product is a warm lead and has a high chance of converting into a paid customer. 

But this is rarely the case, as B2B customers now prefer to do their own research before speaking to a salesperson. And reaching out to a prospect simply because they downloaded an ebook can be premature.

The biggest challenge when it comes to prospecting warm B2B leads is filtering leads who have high purchase intent and are ready to buy right away.

Track sales trigger events to overcome this challenge

Here are some sales trigger events that help kickstart a new sales motion and improve your close rates. 

these sales trigger events are great sources of warm leads

1. Job changes

Ryan Iacoviello, Senior Account Executive at UserGems believes that old customers or ex-employees who worked a customer account at a new company is typically the easiest path to a hot lead. 

And it's the first thing an SDR should look for when trying to break into a target account, as it provides a personalized talking point. For instance, tracking power users for job changes helped Mixpanel generate more pipeline leads and hit 14X ROI in 13 months

Mixpanel is a product analytics platform that unlocks valuable customer insights for businesses looking to improve conversions and engage and retain their users.

They wanted to reach warm prospects who knew the value of Mixpanel and get into deals earlier to increase the likelihood of conversion. 

So, they pulled in product users from their platform and used UserGems to track job changes. And used a multi-touch outreach sequence to increase the response rate. 

Mixpanel customer quote on UserGems

2. New management

Apart from tracking users at other companies, Ryan also says that promotions are a good trigger as new executives are looking to make new changes.

B2B sales prospecting tools like UserGems track your CRM and product end-users to flag title changes (promotions) and give you their new work email and phone. You can integrate this data with your email automation tool to set up a sequence that congratulates them and provides useful content to help them in their new role. 

We also recommend that you set up an integrated campaign and add gifting or display ads to the mix to improve your response rate. 

Warm leads vs. cold leads: Which ones should you target?

As we move into the age of personalization and dark social — interactions we can’t attribute- link shares over private social media, messaging apps, forwarded emails, etc. — the line between warm and cold leads is blurring. 

Collin Brady, Senior Account Development Representative at UserGems, delivers this verdict on the cold leads vs warm leads debate:

 The true difference between finding a warm or cold lead really comes down to your relationship with that prospect."

The warmest lead you can reach out to is one that is already sold on your product. Having these leads automatically put into your CRM with all verified contact info and pushed into a sequence allows SDRs to connect with the warmest prospects with very little time and effort on our end.

But with cold leads, SDRs face the challenge of spending a lot of time combing LinkedIn, developing creative and personalized emails, and breaking through the cold intro of a call to connect with the person.

So, it's a ton of work trying to find something to connect with the prospect over a warm lead that already knows your product and the value your company brings.”

In short, for shorter sales cycles and more successful B2B sales prospecting, focus on warmer leads and finding the warmest paths into an account through sales trigger events like job changes. 

Why UserGems

UserGems helps you with pipeline generation. With UserGems, you can:

  1. Automate your repeat business when your customers and prospects join new target accounts, and then
  2. Identify the rest of the buying committees in those accounts.

The cool thing is we automate it end-to-end, from lead capturing & creation in your CRM ... all the way to enrolling them into your sales outreach or marketing emails or advertising.

Does automating your pipeline generation sound interesting to you?

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