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Why Cold Outreach Will Always Prevail Over the ATS

by Oct 18, 2013, 6:45 am ET

response time - dials to leads.jpgApplicant tracking systems are wonderful. They help you post a job to your own site and to many job boards, track submissions, and bring up those candidates again for new job searches. They also allow you to figure out who is where in the hiring pipeline, and keep things neat and organized. Some of them even intelligently pick the most relevant resumes that are submitted directly to the company or from third-party job boards such as Monster or CareerBuilder. However, when it comes to finding real talent that is a perfect match for the position, the ATS falls short compared to the good old-fashioned sourcing and recruiting process.

When filling a position using an internal ATS, it comes down to one of these two scenarios:

  1. Your perfect candidate (or set of candidates) responds directly from one of the job boards you used to get the word out, and your internal process and intelligent systems allow you to identify this perfect candidate from the myriad of other irrelevant submissions. If this is you, you are in luck! Not only do you run a very efficient shop, but you are operating at a level most of other readers of this dispatch can only aspire to. However, the majority of submissions you will get from eager candidates responding to job boards are not at all relevant to your search. If you have lots of potential candidates flowing through to current job openings, given the current state of affairs, chances are you will not be able to tell the wheat from the chaff until several days after you receive the submission.
  1. You do a search on your ATS and find a candidate who seems like a good fit. The subject submitted his CV for a different position a few weeks or months ago. You think to yourself, “I am sure he still looking; let me give him a call!” Unfortunately, if you come across a submission that is over a week old, you don’t have a candidate who was hand delivered from your ATS. What you do have is some cold outreach to do to make sure the candidate is still looking and/or interested in your job description.

Cold outreach, the most frequent method to finding skilled talent both relevant and looking, has being studied in far more detail and experienced far more advances in the realm of sales than in the practice of recruiting. The recruiting industry — especially in sourcing — lacks the process, structure, and rigor that pre-sales and lead generation enjoy in sales. Most tools are devoted to either finding people or tracking them once converted, leaving the most painful step, the cold outreach, out of the picture.

Reaching out cold to a set of candidates is not only one of the most time-consuming tasks, but it could have the largest impact on the cost of sourcing as well as the reputation of a recruiter among the candidate community. This is just math … most cold emails have between 3 percent and 5 percent conversion rates; in other words, people replying to you to say, “yeah, I am interested, let’s talk.” That means that whatever activity you do pre-email such as researching and composing has a 33 to 20 multiplier in cost!

Think about that for a minute. Performing outreach to a candidate cold and not locking in that candidate is probably the largest cost driver in terms of working on placement. Tracking outreach performance should be a business imperative, not a nice to have.

If recruiting is thought to be in the same realm as sales, an analogy made many times by contributors to this site, then a study done by Professor Oldroyd (self-servingly used by InsideSales for its dialer product), a faculty fellow at MIT, on response rates to web leads are applicable to recruiting. The study (see graphic above) shows that the ability to make contact and qualify an inbound inquiry diminishes by six times within the first hour. After 20 hours every additional dial or outreach to that inquiry actually hurts your ability to make contact.  Extrapolating this study to recruiting means that trying to reach back out to any candidate who reached out to you over 10 hours ago may turn this outreach cold. Not only is this candidate no longer “yours,” but you are back to the inglorious economics of the cold outreach.

This data should make you think differently about applicant tracking systems. Your ATS, or any other aggregator of people’s profiles for that matter, from LinkedIn to Github to Dice, should be thought of as phone books with varying amounts of information. The cost of obtaining a contact should be added to the time spent doing additional research to really figure out if the target is a good fit for search, and that total immediately multiplied by 20 or 30 — depending on your emailing skills. These dynamics favor those recruiters with great communication skills and the ability to identify targets who will find what the recruiter has to offer compelling. These are similar traits as those enjoyed by great salespeople.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Keith Halperin

    Thanks, Manny. If I understand the gist of your article: it’s very important to quickly get back to those who’ve expressed an interest in you if they seem suitable. This is consistent with what I say about most of my colleagues having a short time window to work with potential candidates- we don’t have time to create and develop L-T relationships with potential candidates, we need real candidates ready to work NOW.

    “That means that whatever activity you do pre-email such as researching and composing has a 33 to 20 multiplier in cost!”
    Could you elaborate on this?

    Cheers,

    Keith “Catch You at the Philosopher’s Club Sometime Soon” Halperin

  • http://www.grouptalent.com Manny Medina

    Hey Keith – if an email send has 5% conversion rate, that means that, on average, one would have to send 20 emails to see one response.

  • http://www.grouptalent.com Manny Medina

    @Keith responding to your first comment, the gist it more that responding to potential candidates who comes to you on their own and are a good fit right away is very unlikely and very hard, especially when you are running at large scale. The most likely scenario you will find yourself in is cold outreaching (emailing, calling) candidates who look like good fits. And if that is the case, then it does not matter whether they are in your ATS or on a phone book, the outreach is cold. If the outreach is cold, then is expensive. If so, then prepare accordingly – track your campaigns, see what works and what doesn’t, make it personal, track subject lines, times of sending, frequency, etc. learn from what works and from your mistakes.

  • Keith Halperin

    Thanks, Manny. The That makes sense- I thought it also meant that whatever you did to research upfront would necessarily improve this.

    As far as your later comment, most of us don’t have time or resources to investigate these areas, useful though they might be…

    Cheers,
    Keith

  • http://www.thehiretalent.com Fletcher Wimbush

    I have always had a love hat relationship with ATS! Many functions are useful but in order to properly engage good candidates as Manny’s chart shows you need to react quickly other wise as Manny points out you basically start over in the engagement process. To me the only real benefits received from an ATS is one that allows you to identify the best candidates within 24 hours of their application and way to create a pool of people to cold source later on when you need to fill another position down the road.

    Aside from that to be truly effective you still need to look at most if not all applications and speak with as many potential A candidates as possible to create an effective pipeline of good people.

  • http://www.applythru.com Zane Edwards

    Good read, at the end of the day it is about interactive communication between people and there has been too much dependency on ATS due to the sure numbers of jobs and applicants. Fortune 1000 companies have to manage 100s of thousands of submittals per year and ATS is their current solution. Consider prescreening candidates, in addition to the job posting include a link that requests the applicant to answer a set of job specific questions so now your reviewing those responses and spending your recruiting time calling the best candidate rather than the ATS picking candidates based on guided sematic word/text/phrase search. Consider http://www.applythru.com

  • http://twitter.com/adamgodson Adam Godson

    I disagree. Cold-calling doesn’t prevail over the ATS, mostly because they’re not competing. The comparison of an ATS to cold calling isn’t a particularly good one – they’re generally tools used for different things. A good recruiter will use both well, like a carpenter uses a hammer and a square. A decent ATS should use matching technology to sort better candidates to the top or min qual questions to separate the unqualified. A good recruiter should also cold-call when required to difficult-to-find candidates. Declaring either method better than the other misunderstands the role of both.

    Second, while HR and sales are sometimes compared, that comparison is more likely made in the “hunting” mode rather than the processing of inbound inquiries. Frankly, there’s just a different user expectation in recruiting. If I submit a web lead for a quote for siding on a house, perhaps I would like to be called within an hour. But I have a hard time stretching the analogy that a candidate that applies for a job is 10x less likely to be interested if not responded to in an hour. I just don’t think that’s the expectation for the user’s experience.

    Third, the assumption about email assumes a sequential process, not a parallel one, which most systems do quite well. So, instead of writing custom emails to each person and having done research, send 200 emails at once with a CRM tool. Of course, picking the right tool for the job always depends on the job. That typically depends on how rare you believe the candidate to be. The ROI of candidate flow equation will roughly come out to the probability of success times the number of contacts divided by time. So if each email has a .05 probability of response and I send 300 messages in 20 minutes, my ROI is 45 candidates per hour. If phone calls have double the probability of success (.10) and I call 50 people an hour, I can net 5 candidates. Of course, that only works if you have the candidates to call/email, which is where discretion among and use of both methods is important.

    I think the point you’re trying to make is that it’s a waste of time to spend a lot of time researching a rare candidate and writing them a custom email instead of cold-calling them. That could be right – you’d simply need to calculate, the differences in probability of response divided by the difference in time to perform. But the point about a 20-30 fold cost difference simply isn’t true – you’re assuming that no research would go into a cold-call or that the person wouldn’t need to be found in that context.

    So, a declaration against ATS systems likely means you aren’t using ATS systems very well. The answer isn’t to just “do it the old fashioned way,” the answer is to be discerning in applying techniques to the right applications and gather data to be sure we’re doing so in the future.

  • http://www.grouptalent.com Manny Medina

    @Adam if a candidate has been sitting in your ATS for over 24hrs – or lets say a week to be generous – without being contacted you may well be dealing with a cold call. that is the point of the piece. At that point you might as well go to linkedin and find someone who is better qualified than the person who applied.

    On your point about email, using the same template to reach out to ALL candidates will most likely yield you inferior results than the numbers I cite here. the yield should NOT be measured in the number of people you can spam, that will only tarnish your reputation and get your domain spam-boxed + you will make HR mad for showing no results and damaging the brand. The yield is in the number of candidates you convert!

  • Andrei Averkin

    Hi Manny! Do you think that Twitter might be a good alternative to cold-outreach, given that you can build a long-lasting relationship with your candidates?
    Andrei (bondiz.com)

  • Jim Johnston

    It seems that incorporating an above the funnel Talent community that enhances the capture capabilities, as almost all ATS have a capture rate less then 15%. If you can capture an estimated 200% increase in Talent capture and utilize tools to engage this talent with a Candidate Relationship Management (CRM) you solve two issues. It helps manage the recruitment/sales process by reducing the cost per capture, and automatically engages the talent with personalized information so that it helps move cold calls to warm calls. It will acquire more needed talent and delivers better ways to optimize and manage the talent pipeline. Most companies focus on recruiting out side of the ATS but have a perception that a new ATS will solve all the challenges. If you recruit outside of the ATS then evaluating tools that focus on the new landscape of recruitment will have a positive impact by increasing quality of hires and decreasing the time to hire. At the end of the day you still have the human factor of utilization of the tools and picking up the phone to fully cultivate the best talent to hire. 

  • Keith Halperin

    @ Fletcher: Well-said.
    @ Zane: Thank you for the infomercial.
    @ Adam: Very well thought and said. Do you know of a tool that will allow you to send large numbers of simultaneous emails (without running up against a spam problem) to candidates from @ Manny: somewhere between one-size-fits-all and completely- custom email is the sweet spot. However, I have no clue what that range is.
    @ Andrei: I challenge anyone who needs to fill significant numbers of reqs. quickly to exclusively use Twitter and/or Facebook. As I’ve often said: “If you have time to build a relationship with a candidate, you don’t have enough reqs.”
    @ Jim: Could you elaborate on this?

    Cheers

  • Andrei Averkin

    @Keith what if building relationships with candidates on twitter would not take so much time. Instead, an app will notify you when your candidates engage in “social activity” that you might want to respond to (posting a blog post, changing profile bio, tweeting a popular tweet,…)?

    Cheers,
    Andrei (bondiz.com)

  • Jim Johnston

    @keith Not sure what areas you want me to elaborate on but with the workforce today being more mobile and social they are looking for direct, easy and interactive ways to engage. There are ways to capture talent that is being missed today. Just measure any drop off of the 1 in 20 emails conversion rates. 19 of those interactions just ask to much “Buy Now” as they may only want to lightly engage. Companies like Amazon, Home Depot or any other consumer company utilized sales automation tools to increase capture rates and then by management of the pipeline convert those potential buyers to a customer. For example, the top job boards send out over 220 million emails each month with out being spam blocked. You can not rely on outlook to send emails that have no algorithms built in to enhance conversion rates. Until now it was to costly to put these systems in use for Recruitment but not now. This is not revolutionary technology in context but it is just now being positioned within Recruitment. The landscape is ever changing and technology can be leveraged to streamline and increase effectiveness. We have come a long way in the last decade from picking up a phone book and just making dials. We have had the ability to find people easier and faster with social media but the next phase is how to maximize this new talent pool above the ATS.
    Not sure if this is what you were seeking.

  • Keith Halperin

    @ Andrei. Thank you. I’d be interested in an app that notifies me that the person is ready NOW/very shortly to interview for a job or refers me to a qualified person is ready NOW/very shortly to interview for a job. Other than that: “no.”

    @ Jim: Thank you, too. I’d be interested in an affordable tool which would let me do something like the following:
    On another ERE question I responded that my client has DICE and a recent search gave me 144 results (a good number for what I’m trying to do) and the DICE Open Web gave me 21,059 results, which didn’t seem to be ideally refinable past some very crude ways. I’d like something that would let me upload those 21,059, then let me sort through those (with minimal eye-balling) to weed out 95% or more, and I’d then be able to email/text the remaining 1000 or less in (ideally) a single batch without spam problems. I’ve been told that X1 (http://www.x1.com/products/x1_search/?val=yahoo&utm_source=Yahoo&utm_medium=Affiliate&utm_campaign=Yahoo) will do something like that, but I’ve not actually seen it work for me.)

    Cheers,
    Keith

  • http://www.grouptalent.com Manny Medina

    Sorry for jumping back on this late. small fires turned into large ones ….

    @Andrei Twitter is indeed a channel for engagement management, but it is public (DMs gets old quickly, at least form me). so eventually you will have to move it to long form, ie email or phone, or gasp! in person. The problem, as per @Keith, of doing this at scale remains

    @Jim @Keith what would be really interesting is a Lead Scoring system – ala Marketo or Hubspot – applied to candidates. ie rules such as a- if this is your first outreach to a candidate, send personal message, b- if you already engaged w candidate, pitch opportunity, unless c- he just took a job elsewhere a week ago, etc. That way you narrow down to those with whom you have a real chance to add value to their lives and convert them.