At least three times in my career, I have been asked to make “cold calls”. I did them once and that was more than enough for me! The other times I just simply refused. I have some very strong feelings about this subject but I will try my best to be objective as I write this article. I know there will be some people who disagree with my point of view. It is not my intention to offend anyone. Rather, I am presenting my thoughts such as they are. It’s up to you to draw your own conclusions.
Let’s start off by defining what a cold call is.
Cold calling is a method used to approach prospective customers. It can be done over the phone or it can be done “door to door”. Cold calling scripts can be designed to deliver a marketing message or can have the intent of closing a sale right there and then. It’s called a cold call because the person or organization being called did not ask to be called, is not expecting a call, and usually does not have the time or inclination to take that call. Consequently, a cold shoulder is often all one gets for their efforts.
So why use cold calls? It’s all about numbers. If you make 100 calls, SOMEONE will bite. The more calls you make, the more bites you have. The more bites you have, the more sales you make.
I have many philosophical issues with this methodology. Here’s a few of them:
The math is weird.
Companies that use cold calling as their main selling strategy have interesting metrics to measure your activity level, calculate your success or close ratio and how much you will earn. At one job in my early twenties, it was described to me this way.
Gil, we expect you to call 10 prospects a day. This should generate 3 suspects which should lead to 1 closed sale. They explained to me that the success ratio was 33% (3 suspects = 1 closed sale). I saw it as a 10% success ratio (10 calls = 1 sale). So that meant that I should make 50 calls a week and close 5 sales. I asked them this question. “If I make 5 calls a week and close 5 sales, is that ok for you?” They said no because that means my activity level is far too low and that 20% of my compensation is based on my activity level. This is a strange way of thinking I thought to myself. Same amount of sales, but I will get paid 20% less. I translated this to mean that I was going to be penalized for working smart. Also, I just have a hard time thinking of a potential client as a suspect!
It’s a shotgun approach that is anything but efficient.
Suppose you moved to a new location in the country next to a huge lake. You decide to go fishing so off you go in your canoe with your trusty rod and bait. You pick a spot and drop your line. No bites. You move to another spot. No bites. You try different bait. Still no bites! Would it not have been smarter to speak with some locals and ask: Where are the fish? What bait do you suggest? How deep should my bait or lure be and what time of day is best to fish in this lake? Of course, you could go back out with your canoe and drop 100 lines because the laws of probability dictate that with that many hooks out there, you are bound to catch something!
I contend that if you leverage your contacts by networking with people who already know and trust you and do some local market research preferably in the form of a needs analysis, you will be well positioned to provide solutions to potential customers to whom you can make “warm calls”. By the way, most life insurance companies totally get this. That’s why if you ever apply for a sales job with a life insurance company, a huge criteria is, how many people do you know? It’s all about networking. It’s been years since a life insurance sales person has cold called me.
It’s annoying.
Having owned 5 businesses, I have had many a cold caller knock on my door. At one business, an endless stream of copier sales folks would come uninvited. When they walked in, sitting right there in plain view was a brand new, high end copier. Still, they would come in and ask me if I had a copier. Or they would tell me I need a better one. I always tried to be polite as I sent them on their way but it was very annoying, interrupted my day and the day of our receptionist / office administrator.
As all of us know, cold calls are very popular with non-profit organizations, charities, telcos and credit card companies these days. We all get those annoying calls far too often and at inappropriate times. I will go so far as to say it’s rude. These companies have to know by now that we don’t appreciate the calls. They need to find better ways of getting our attention. I have lots of ideas on how they could do this and am happy to provide them with consulting services if they care to engage me 😉
Poor balance between proactive and reactive activity.
While I am a firm believer that to succeed in anything, one needs to be proactive, I also believe that a good salesperson leaves sufficient time to be reactive to their clients needs. If you close 10 sales, you have 10 new customers. You need to promptly and professionally follow up and address any and all issues or additional needs they may have. If you do these things and build strong relationships, your clients will gladly refer you. Making a ton of unnecessary calls leaves very little time to be reactive which in turn leads to unhappy customers and missed opportunities. I understand that many companies have post sales support staff but I believe that the salesperson is ultimately responsible for the overall relationship with the client.
Is there a place for cold calling? Perhaps in an emerging market that is not already saturated with competition where there is a well defined value proposition and a need for the product or service. The problem is, as stated above, this methodology has annoyed a great many people. I suspect that even if you were promoting the next great thing, it would be, as they say, tough sledding. There are many other far more efficient strategies to choose from. Having said all of that, I would totally welcome the cold caller who comes offering to demonstrate the new teleporter!
Be sure to read “Sowing Seeds and Planting Flags” in which I describe a very effective alternative strategy.
Photo Credits
Photo From Microsoft Office Collection
© Gil Namur, 2009
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