Cold Calling

What is 'Cold Calling'

Cold calling is the solicitation of potential customers who were not anticipating such an interaction. Cold calling is a technique whereby a salesperson contacts individuals who have not previously expressed an interest in the products or services that are being offered, as opposed to warm calling. Cold calling typically refers to phone calls but can also involve drop-in visits, such as with door-to-door salespeople.

BREAKING DOWN 'Cold Calling'

Salespeople have to find prospects somewhere, and cold calling offers a ready-made method for those who lack connections or the ability to pay for other forms of marketing. Thick skin is paramount for cold calling success, as repeated rejections beat down most who try the method. Sales jobs that require going door to door or cold calling via the telephone are often plagued by very high turnover.

The Difficulty of Cold Calling

Cold calling is a difficult task in sales because of the wide variety of responses from the potential customers, ranging from simple hang-ups to verbal abuse. Further, marketing analysts estimate the success rate of cold calling at 2%, and that is for skilled and experienced salespeople. In other words, salespeople who rely on cold calling have to burn through, on average, 49 rejections for every sale, resulting in not only immense frustration but also a lot of wasted time. Warm calling, which boasts a success rate closer to 30%, is much more time-efficient.

Cold calling is becoming increasingly controversial as newer, more effective methods of sales channels become available, including email, text message marketing and social media such as Facebook and Twitter. Compared to cold calling, these new methods are often considered to be more efficient and effective at generating new leads. Moreover, increasing government regulations, most notably the National Do Not Call Registry, have hampered cold callers' efforts to reach out to potential clients en masse.

Cold Calling Examples

In finance, cold calling can refer to a method by which brokers obtain new business by making unsolicited calls to potential clients. For example, the 2000 movie "Boiler Room" features several scenes that depict a room of stockbrokers crammed into tight cubicles calling names from paper lists and attempting to pitch them on obscure stocks. The movie accurately portrays cold calling as a numbers game. The brokers receive far more "no" than "yes" answers, but the ones who are successful regularly close big deals using this method.

Certain businesses are known for employing the door-to-door cold calling model into the 21st century. Southwestern Advantage, an educational book publisher, employs mostly college students to canvass residential neighborhoods. Likewise, Kirby Company sends its salespeople door to door selling high-end vacuum cleaners to homeowners.