Priceonomics

This post is an adapted excerpt from the blog of HipLead, a Priceonomics customer

If you receive a cold sales email in your inbox, what are the odds that you respond back to the solicitor and say “I am interested in your product!" You might not, but in reality, 2-5% of people reply with interest to a well-targeted, business-related cold email.

A wide variety of tactics can dramatically improve “interest” rates when cold emailing people. Most notably, if a sales email engages in some "gratuitous name-dropping," the recipient is 111% to 468% more likely to open the email.

We ran three experiments to look at the effectiveness of name-dropping in cold emails. We investigated what happens if you mention: 1) A famous company that happens to be customer 2) A famous investor of yours, or 3) A person you know in common. We learned that name-dropping never hurts. But not all name-dropping is created equal.

What is Social Proof?

"Gratuitous name-dropping" is more politely referred to as social proof, the psychological phenomenon that causes someone to think you are great because they know that other people think you are great. For example, for a startup, it can be hard to get an investor to be the first to commit seed capital. Once you have one investor who is well known, however, it’s easier to raise money from other investors, because they trust the initial investor’s opinion.

Social proof is especially important when you’re interacting with someone who doesn’t know you. That means that social proof can have a huge impact on sales, particularly when cold emailing someone. Just how big? Let’s walk through our three experiments in social proof.

Experiment 1: Mention a Famous Customer

In our first experiment with social proof, we tested whether prominently mentioning well-known customers in an email led to more interest from people who were cold emailed.

In the baseline, a list of “famous customers of our product” was buried at the bottom of the email. But we compared this email to one that prominently mentioned a famous customer.

The result? It tripled the number of people who replied to the email and said, “Yes, I’m interested in this.”

There’s an old expression that no one ever gets fired for choosing IBM. A corollary to that could be: no one gets fired for choosing the vendor that IBM chooses.

Experiment 2: Gratuitously Mention a Famous Investor

In our next experiment, we simply mentioned an investor of the company in the sales pitch. This campaign targeted technology companies, so in the introduction of the email, we mentioned a famous technology investor who was an investor in the company. In the baseline, we did not mention the investor at all.

Mentioning this technology investor doubled the conversion rate in terms of people who wrote back and expressed interest in the product.

Keep in mind, these people were not tricked into opening the email by the mention of the investor. These people responded to the email and asked to talk to the company about the product. We pitched the same product in each email, so the words you choose really matter!

Experiment 3: Mentioning a Shared LinkedIn Connection

Finally, what happens to email conversation rates when you mention that you know someone in common? In the experiment, we mentioned two LinkedIn connections that the sender had in common with the recipient, very prominently. In the baseline, we did not mention any shared connections.

By far, mentioning shared LinkedIn connections was the most effect social proof tactic for increasing conversions. 25.5% of the people who received this email wanted to know more about the product, versus just 4.4% who received the baseline email.

Conclusion

If there is any one conclusion from these experiments, it's that words matter. With the same product, but different words when you pitch it, you get very different results. Mentioning one of your famous customers can increase conversion rates by 208%. Gratuitously mentioning a well known investor in your company can increase conversion rates by 111%, and just mentioning several shared LinkedIn Connections can increase rates by 468%. 

So, in the future, expect lots of emails in your inbox like this: "Y Combinator company (intro from Kevin Daniels) used by Uber marketing. Time to chat?"

For our next post, we investigate a test for quantifying whether a movie is sexist. We probably have some shared LinkedIn connections. To get notified when we post it →  join our email list.


Published Oct 7, 2015


Woah. We are flattered you shared our blog post!

If you want to be notified when we write a "halfway decent" blog post in the future, leave your email here below.