What is 'Cold Calling'

Cold calling is the solicitation of a potential customer who had no prior interaction with a salesperson. Cold calling, also known as telemarketing, is one of the oldest and most common forms of marketing for salespeople. Warm calling is the solicitation of a customer who had previously expressed interest in the company or product. 

BREAKING DOWN 'Cold Calling'

Cold calling is a technique in which a salesperson contacts individuals who have not previously expressed interest in the offered products or services. Cold calling typically refers to solicitation by phone or telemarketing, but can also involve in-person visits, such as with door-to-door salespeople. Successful cold call salespersons should be persistent and willing to endure rejection. To be successful, they should adequately prepare by researching the demographics of their prospects and the market. Consequently, professions which rely heavily on cold calling typically have a high attrition rate.

The Difficulty of Cold Calling

Cold calling generates various consumer responses, such as acceptance, call terminations or hang-ups, and even verbal attacks. Marketing analysts estimate the success rate of cold calling is 2% for a skilled professional. Based on this estimate, only 5 out of 250 calls will be successful. Conversely, a warm call salesperson boasts a more favorable success rate of approximately 30%.

As technology advances, cold calling has become less desirable.  Newer, more effective prospecting methods are available, including email, text, and social media marketing through outlets like Facebook and Twitter. Compared to cold calling, these new methods are often more efficient and effective at generating new leads. 

Government regulations, such as the National Do Not Call Registry, have negatively impacted cold callers' efforts to reach potential clients en masse. Also, scam artists frequently use cold-calling as a method to defraud, which further hampers the effectiveness of legitimate cold-calling.

Cold Calling Examples

In the finance industry, brokers use cold calling to gain new clients.  Consider the movie "Boiler Room" in which a room of stockbrokers, crammed into tight cubicles, call names from paper lists hoping to pitch them on obscure stocks. The movie accurately portrays cold calling as a numbers game. The brokers receive far more rejections than acceptances. Those who secured lucrative deals seldom use the cold call method.

Some brands are known for their door-to-door operations. 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.

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