What is cold calling?

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Cold calling is making a phone call to a prospective customer without having a prior relationship with them. This does not include former customers or prospects that have expressed an interest in your products or services or filled out a form on your website for more information.

It’s picking up the phone and dialing someone you don’t know to solicit them.

In today’s digital world, it’s easy to think that you can solely rely on email automation and inbound marketing strategies to convert customers. While these strategies are important, cold calling should be a part of your marketing approach as well.

While cold calling overall has a 2% success rate, a sales person doing cold calling of high-quality leads can convert as many as 18% of their calls.

That’s why more than 41% of salespeople say their phone is the most effective sales tool they have.

What is cold calling good for?

Cold calling can be an effective way to reach new customers. It should be a part of a sales rep's regular sales prospecting strategy.

Many prospective customers may not be aware of your company, products, or services, or they might be using a competitor. And, they aren't likely to be searching for you online.

Outbound sales — using cold calling techniques — help find prospective customers that otherwise would not be in your sales funnel or know of your company.

Businesses that use and benefit from cold calling

The types of businesses that use cold calling are wide and varied. Here are some of the most common industries that use this marketing strategy as part of their sales efforts:

  • Healthcare
  • Retail
  • Ecommerce
  • Education
  • B2B sales
  • Communications
  • Financial services
  • Nonprofits

Nearly any business can benefit from cold calling.

The pros and cons of cold calling

Like any marketing strategy, cold calling has advantages and disadvantages.

Advantages of cold calling

Cold calling is a great way to improve your lead generation and recruit new customers into your sales funnel.

When you connect with someone on the phone, you have an opportunity to make a human connection. You can adapt your sales approach based on the interaction and use the information you get to craft your follow-ups.

A sales person doing cold calling can also use it to hone their sales pitch. When you’re on a call, you get real-time feedback to gauge the effectiveness of your approach. As such, cold calling can be great training and be used as part of sales coaching.

Disadvantages of cold calling

There are some disadvantages to cold calling as well.

The average sales rep makes 33 cold calls each day. If you’re converting two of those, you’re doing well. However, the other 31 rejections can wear you down. Most people don’t enjoy getting unexpected phone calls from a telemarketer. You may hear their frustration or they may hang up on you.

Additionally, reaching decision-makers on the fly has become more difficult. As people screen calls more often, it can make it hard to catch prospects at the right time. This is one reason why you should have a separate cold calling script for when you land in someone’s voice mail.

How do you choose between cold calling and other options?

It really isn’t an either-or situation. Cold calling should be a part of your sales marketing strategy, but so should networking, referrals, inbound marketing, and outbound marketing. It takes a holistic approach and consistent strategy to be effective.

What to avoid with cold calls

The list of what you should not do on cold calls could stretch for several pages. If you’ve been on the receiving end of a cold call (and who hasn’t?), you probably already have a good idea of what doesn’t work.

Here are a few key things to avoid when making cold calls:

  • Not connecting with decision-makers
  • ‌Rushing through your script and not listening
  • ‌Trying to close a deal without establishing trust
  • ‌Sounding too pushy or “salesy”
  • ‌Not establishing the next steps in the sales process

Here's what to do instead: build confidence by having extensive knowledge about your products or services. When combined with knowing your script and connecting with the person you're calling, you'll be able to cold call and sell confidently.

How do you make cold calls more effective?

When you’re making cold calls, it’s easy to rush through them or read from a script. However, it’s important to avoid becoming robotic. Approach sales scripts more like an actor, who takes the lines written on paper and provides an interpretation rather than reading.

You should always remember that your cold call is an interruption in someone else’s workday. While you should be friendly and upbeat, don’t waste a prospect’s time. Get to the point quickly and efficiently.

Two strategies are especially effective: warm calling and call tracking.

With warm calling, you’re doing a little bit of basic research before placing the call. Checking a prospect’s website or doing a Google search on their company can give you an insight you can use to create a connection with your customer.

Call tracking is also an essential part of making your cold calls more effective. Sales data can be used to improve lead scoring to deliver higher-quality leads and improve performance for sales reps.

Call tracking software can help you collect data for your sales team, provide insights into a reps’ performance, and help identify which sales scripts are most effective.

Looking for more sales tips? We’ve assembled a list of best practices for closing more phone leads from some of the industry's top salespeople.

The legal regulations of cold calling

A sales rep will need to follow the Telemarketing Sales Rule issued by the Federal Trade Commission (FTC) when conducting sales calls. You should have your cold calling script reviewed by your legal counsel to ensure compliance.

You also need to be aware of the requirements that are part of the Do Not Call Registry and how it impacts your sales process and practices. If you are selling financial services, such as stocks or investments, you also need to follow US Securities and Exchange Commission (SEC) regulations on cold calling.

Can you record cold calls?

If you want to record your cold calls — or any phone conversations with prospects or customers — you need to be aware of the laws.

The federal government has laws that restrict monitoring and recording phone conversations. Failing to follow these rules could be a violation of wiretapping laws. If you’re doing business with the federal government, you’ll need to know these rules.

Every state in the country except Vermont also has laws regarding the recording of phone calls.

Many states have a one-party consent law, which means you can legally record a conversation as long as one party is aware of the recording. Other states have two-party consent rules for calls that require the consent of all parties involved in a call.

How can you find out the legal regulations for cold calling in your area?

We’ve put together a handy guide for you that details the laws. Here’s how you can check on the call recording laws in your state.

Making cold calls work for you

If you hear people say cold calling is dead, ignore them. 82% of buyers say they have taken meetings with salespeople after conversations that started with cold calls. Overall, cold calling remains an effective sales tool that should be part of your marketing strategy.