Is Cold Calling a Bad Idea?
July 8th, 2011 by Bob Bly
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I won?t deny cold calling can work.
Yet in 99 out of 100 cases, I tell people who ask for my advice never to cold call.
The reason is that, even if the prospect on the other end of the phone expresses interest, the very fact that you cold called him puts you in a weak position ? for three reasons.
First, people by and large want to deal with vendors who are busy and successful, not those who are desperate and need the work, right?
Well, when you cold call, your prospects assume that you are not busy and you need the work.
After all, if you were busy, you would not have time to sit there calling strangers and asking them for their business, right?
Second, cold calling puts you at a disadvantage when estimating prices and quoting fees.
A large part of what determines how much you can charge is the law of supply and demand.
When the demand for what you sell outweighs your supply, it?s a seller?s market and you can name your own price.
By cold calling, you are signaling to the prospect that the demand for your services is less than the supply ? the amount of time you have available to render those services.
Therefore, prospects generated by cold calling are more price resistance ? and more likely to haggle.
Third, cold-calling puts you in a weak position as you close the sale and negotiate terms with prospects.
Again, cold-called prospects know you want and need their business.
You are perceived as being easy to hire, and therefore prospects feel they can dictate deadlines, payment schedule, work arrangement, and other terms.
Why is cold calling so ineffective?
Because it violates the ?Silver Rule of Marketing.?
The Silver Rule is a universal principle of marketing and selling, first stated to me many years ago by my friend, marketing consultant Pete Silver.
The Silver Rule of Marketing states: ?It is better for them to come to you, rather than for you to go to them? ? where ?them? is your potential clients.
You can see why the Silver Rule makes sense.
If you go to a potential customer, seek them out, ask for an audience, and plead with them to buy from you, you are seen as needy and desperate.
Your prospects think you can?t be any good at what you do.
After all, if you were good, your book of business would be filled to overflowing ? and you wouldn?t be spending your valuable time on the phone, dialing for dollars.
The only prospects who buy from needy and desperate vendors are those looking for the low-priced bid.
So cold-calling risks dooming you to being the low-priced provider.
When ?they? ? prospects ? call you, instead of you calling them, the dynamic reverses.
They call because they have a need or problem ? and because they are hoping you might be able to give them what they need or solve their problem.
But how do you get prospects to call you?
There are two methods. The first is good, and the second is better.
The first method is to generate inquiries through traditional marketing.
This includes Yellow Pages advertising ? magazine ads ? TV commercials ? direct mail ? radio spots ? billboards.
When someone calls in response to your ad in their industry trade magazine, you know they have either an immediate need — or at least have some interest in what you are offering.
Otherwise, they would not have called you.
However, all they know about you is what they read in your advertisement.
Therefore, they may not be convinced that you are the right one to hire.
The second method of getting people to call you eliminates this problem.
This method is to establish yourself as a recognized expert or authority in your field.
You can do this through such activities as: writing articles or a column for your industry trade publication ? being interviewed as a guest on radio talk shows ? writing a book (e.g., Tom Peters writes books on management) ? giving speeches as industry meetings ? writing a blog ? distributing a podcast ? publishing an informative print or online newsletter on your specialty ? writing a white paper or special report.
When people call you because they read your book, they ? like prospects who respond to your ad ? are telling you that they have a definite or possible need.
However, the people who call after reading your book ? unlike those who merely saw your ad ? are already predisposed to buy from you.
After all, your prospects are skeptical of advertising claims.
But authors are perceived as experts.
You?ve heard the phrase, ?We wrote the book on it.?
When you are the one who wrote the book (or the article or column or content-rich Web site) on the topic your prospects are interested in, you will be the one they call first when they need help solving problems in that area.
Action step: Think about how you can establish your reputation as a leading expert in your field or industry. Can you volunteer to be a speaker at the next big industry conference? Publish a white paper on your area of expertise? Write letters to the editor? Start a blog?
Best place to start: write an article about the solution to a big problem your prospects have and publish it in a magazine, periodical, or on a Web site where they are likely to see it.
This entry was posted on Friday, July 8th, 2011 at 9:30 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
July 8th, 2011 at 9:43 am
I’m not sure who said it first, but “People love to buy, but they hate being sold to.”
July 8th, 2011 at 12:49 pm
I won’t deny article marketing can work (to borrow a phrase).
I agree this is an excellent way to build credibility and customer inquiries.
I do article marketing and it does work well.
But I also continue to do cold calling every day and here’s why:
1) It continues to work
2) It is actually one of the easiest things I do
3) The quality of prospects obtained is excellent
Let me respond to the “Silver Rule.”
I don’t doubt this is true, but I have never looked at cold calling that way.
Sure, if I felt I were begging people because my business was slow, results
would undoubtedly suffer and that feeling would be conveyed.
I’ve always felt that as a roofing consultant, the projects we’ve installed are
performing so well, with so few complaints, we’ve got time to call even in the
rain!
I am sharing something truly valuable with these people. I am an expert in the
field.
I always begin with an inquiry – a sincere question not just a sales pitch, to determine
whether there is any need for our services.
Once we determine the condition of their current status, we can note it accordingly and
call back when appropriate.
I’ve had great success with this method with everything from setting appointments for insurance
agents part time when I was in college (the agent wanted to hire me full time) to working on 46 story
downtown twin towers as a consultant.
The key is attitude, understanding, value and knowledge.
So many people who cold call are clueless, irritating and ineffective.
It doesn’t have to be that way. That’s why I wrote Cold Call Champion.
http://ColdCallChampion.com
July 13th, 2011 at 1:54 pm
I agree with Ryan McGrath’s comment: “people love to buy, but they hate being sold to.” I really hate it when I’m in a store and quietly admiring the items and suddenly a saleslady will approach me. This turns me off and I leave as quickly as I can.
July 13th, 2011 at 3:12 pm
That has everything to do with HOW the sales lady approached you I think. In retail they often are like vulchers. As far as cold calling working ornot it really depends on what is being sold. Certainly with any kind of service cold calling puts you in a bad position. Having a reason to call can help. Such as offering them a free report related to what you are selling, but information the prospect wants. In that sense cold calling simply becomes just another media for lead generation. There are still many industries that rely heavility on cold calling to generate leads and appointments for their sales force. It’s cheap and efficient…in some cases. The one thing massively wasteful is cold calling in person, rather than generating appointments via phone first.
July 13th, 2011 at 5:25 pm
Great post Bob! Enjoyed it.
July 21st, 2011 at 11:55 am
Great post, Bob! Really love reading your thoughts.
When I began freelance writing six months ago, I got one major client from cold calling. While it helped me get my feet on the ground, I now only call to follow-up after sending an e-mail or direct mail piece.
July 23rd, 2011 at 10:16 pm
Good article and advice when you have the time to write articles and publish a book to gain expert status. I see these as more of a long term tactic to generate leads and very much worth doing. But when the mortgage payment is due and you’re tired of eating PB&J sandwiches a short term tactic is needed to fill the seats on the Ferris Wheel with paying clients.
Cold calling gets you on the phone and in action. It’s simple and it simply works. All you need is a list, a phone and a script. Multibillion dollar businesses have been built on cold calling. I think all freelancers would love to have a waiting list of clients but until we attain that status cold calling in the toolbox shouldn’t be overlooked.
July 25th, 2011 at 3:00 pm
Oh for pitty sakes! What industry are you in?
Cold calling is a marketing tool that you have in your marketing tools box….if you are in an industry/segment of the country (like the Midwest)that accepts face to face / drop-in calls.
I have been introduced to CEO’s and President’s makeing cold calls. They are down to earth people who respect you for your courage to ask them for their business.
Get over it! Get on with doing what WORKS BEST FOR YOU and stop listening to people who think that social media is the new silver bullet.
August 1st, 2011 at 12:38 am
Well Julia, I certainly agree with you on using what WORKS BEST FOR YOU. But you don’t have to talk negatively about social media because I personally believe it is a powerful tool. I don’t like cold calling so I don’t use it. I prefer social media.
Have you ever tried it?
August 5th, 2011 at 2:06 pm
I’m sure that cold calling can work but if you don’t have a passion for selling it probably isn’t for you. I did about 300 cold calls and only got one small piece of business. So I don’t think it’s right for me.
As someone who loves to write, I’d prefer to spend my marketing time doing what I love. That means writing. So I blog. I comment on posts like this. I get into the discussions on LinkedIn. And I write my own white papers. It may not get immediate results but I feel like everything I do leaves a small imprint on the web and at some point I’ll hit a critical mass that attracts people to me.
August 6th, 2011 at 6:22 pm
I worry that internet-based freelancing is the new cold-calling. I started my business online, freelancing for Elance and Guru. As time has gone on, more and more of the assignments are content mills, and it’s difficult to find a client who 1) pays what the work is worth and 2) is actually communicative enough for the project to be completed once it’s been won.
Online freelancing appealed to me, because I was really intimidated by the prospect of cold calling. In the end, the online work has had a positive effect…I would rather deal with my clients face to face than through anonymous emails. So now I’m back out there, promoting myself through networking and word of mouth.
It’s all about finding the system that works for you. I know people who are cold calling geniuses. I’m pretty decent with pithy online proposals. Still others merely talk to people they know or call former employers and it works. You have to keep trying things until you’ve got your own system.
August 18th, 2011 at 8:39 pm
The challenge of cold calling is the smell of desperation that comes through the phone. I believe John Carlton would call this ‘selling from your heels’. Sure, cold calling has it’s place, and there are many millionaires who will atest to it being one of their foundations for future riches – they also moved on. If it’s the only lead source and this is where you atart from every time, best to head back and review your sales funnel and ask why you are not getting repeat and referral business instead.
August 24th, 2011 at 12:07 pm
These are all GREAT comments! I love the discussion that you started Bob, what great posts! I love much of what Ryan said. Cold calling works, and it’s easy, with the right attitude. What Bob said is also true though, and important.
As one who has participated in sales for all my life I believe both are necessary. I believe that these attitudes and practices need to “merge”.
One confusion is that “marketing” is NOT the same as “sales”. Marketing includes such things as: 1. How you answer the phone. 2. What are your company goals? 3. How are we going to treat the customer when: a. they ask for a refund, b. are happy with us, c. asking or complaining about prices?, d. have inquiries, e. how do we “look” am I dressed respectively and clean, does my building-office clean and organized. f. Do I pay my bills on time? These things, as well as my “copy” are all part of marketing, believe it or not. I have actually had my A/P bring me clients because of how I have treated them! It’s true! We actually had a major bank host an event for us at their facility where we were the only speaker! Just because we treated them uprightly.
Now, cold calling is NOT marketing. Your marketing “attitude” is part of it, but is not marketing per se. Cold calling is one tool in the sales process. It can work very well and is important for many reasons, some of which I will enumerate.
One reason is it can give valuable information to the sales person about many things. The condition of the market, how your company is perceived, how people respond to your product and your company. This can be very valuable to not only the sales person and their manager, but to the regional sales director (if there is one) and the marketing people and their management. Unfortunately, for many reasons we don’t have time for here, it doesn’t always get to the top decision makers.
Cold calling is sometimes the only way to reach some people. Many times I have found a client who is “stuck”, they just don’t know what to do, they are afraid, etc.
And, lastly, for now. Sometimes it just gets me started moving in the right direction. There are times when I am between scheduled appointments. Why waste time? I grab a couple of business cards and start knocking on doors, or making calls. It can be very fun!
Here is how. Make it a game, of sorts, at least in attitude. Don’t go out with a goal to make a sale, but to make a friend. If you have a legitimate, and GREAT product (I am lucky-I do), then you have no reason to beat someone up with it. Make a friend! I am there to inform someone that, if they have this set of needs, than I have an answer! And a great one at that!
Some examples are:
I was telemarketing one day. Not always an easy job, but one of numbers. This lady picked up the phone and in a very sultry voice said “h e l l o”. I never have a “canned” speech, but a list of things I need to cover and I know my company well so I know what to say and how to represent it. However, in this case, I answered back in the same sultry voice and said, “well h e l l o”. She said, very surprised, “who is this”. I said, “well who is this?” We both laughed. I apologized that I was obviously not who she expected and let her know that I was calling about financial services and said, “should I call back at a better time?” She said yes, I did what I said and called her back. We have had her as a client for over 20 years!
I have so many great stories of the friends I have made and clients we have had for the life of the business, but there I don’t want to take all the space here with that. Perhaps I should write a book? 🙂
Anyway, I affirm you all, you all have an aspect of it. They can go and work together. Make a friend. Have some fun. Not necessarily in that order. 🙂
August 31st, 2011 at 8:34 am
What we’re seeing whether we acknowledge it or not is the end of the ‘middle’.
Sales people who have learned to find decision-makers, get around gatekeepers, and pitch in 25 seconds or less by first asking questions.
Irrelevant in the Google Search Adwords universe.
A sales person can spend weeks on the phone developing and calling a list. And then the phone rings 10 times a week or more depending on the spend because of Adwords based on keyword bids.
What happens next when this warm to hot call is answered still remains the job of the sales person. For now….
Even so, an increasing number of services and products are now bought and sold with a ‘Submit’ button push leaving the need for sales people at any point of the transaction completely irrelevant.
September 21st, 2011 at 11:09 am
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November 2nd, 2011 at 2:26 pm
Cold calling will tell you if you are made for being a serious Private Equity guy and if your cut out for it. 90% of my cold calls are no, not interested and not interested now.
You have to learn how to build relationships fast, over the phone and how to over come all the bullshit objections to get to the real objection, which is usually trust.
Very few can raise money in the sum of millions and less have the skills to raise hundred of millions.
I use ‘My Sales Dialer’ dialer in my cell phone, to reach big number of prospectuses, I make on average, 150 calls a day when I’m not dealing with current clients. I spend a good 4 hours on the phone. Of the 150 dials I get about 3-5 business cards out.
November 5th, 2011 at 9:00 pm
“Best place to start: write an article about the solution to a big problem your prospects have and publish it in a magazine, periodical, or on a Web site where they are likely to see it.”
Whatever you are doing or suggest about this, Bob, I know you know what works.
Maybe each person has a special style that fits their personality though. Brian Tracy recommends “double the people you talk to each day, and thereby double your income.” A sales person I know, says he was making 50 appointments on the phone a week, and saw 10 people each AM.
Others say get referrals — go out there, get face to face with people, as many as you can handle and see — build the long-term relationships.
But I like your suggestion of publishing an article showing our expertise — especially if we are writers. Happy Holidays. And thanks!
November 29th, 2011 at 5:21 pm
Overall, I’d say cold calling is working for our company. It’s not the most efficient use of employee time, but it does produce results.
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December 20th, 2011 at 5:34 am
We have actually phased out cold calling entirely within our organisation. This is a massive sea change in how we do business. Ultimately, using direct mail (email and physical) has allowed us to increase conversion rates (by the time we get to speaking on the phone) by 19% and decreased our costs by 56%. Intelligent, direct marketing has proven to be one of our greatest company investments.
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