Is Cold Calling Dead?

Cold calling has long been a contentious topic among business owners, marketers, and sales professionals. While this popular technique has historically been a mainstay for outbound marketing, more recently marketers are wondering….is cold calling dead?
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Cold calling has long been a contentious topic among business owners, marketers, and sales professionals. While this popular technique has historically been a mainstay for outbound marketing, more recently marketers are wondering….is cold calling dead?

While some marketers insist that cold calling is an outdated practice, we believe that it still has a place in your outbound efforts. In this blog post, we’re going to look at some compelling reasons why cold calling is still effective along with strategies on how you can make the most of it.

The History of Cold Calling

Cold calling simply refers to a call made to an unknown contact in order to present an offer. This technique is also commonly known as telemarketing. In one form or another, people have been selling over the phone since the late 1800s, when Alexander Graham Bell invented the device.  However, when we talk about cold calling, we usually mean a systematic practice where sales agents make calls from an office, known as a call center.

The first call center, Life Circulation Company, began in 1957. This company is still operating, now under the name DialAmerica. This was a prosperous time in America as the post-war economy was growing in many sectors. Of course, in these early years, telemarketing was a novel practice and didn’t have the kind of competition it does today.

In the 1970s, advances in technology made telemarketing more efficient. Switchboards and Interactive Voice Response (IVR) eliminated the need for operators to transfer calls manually. The ability to make calls directly allowed for greater volumes of calls. Like all types of selling, cold calling is largely a numbers game. Thus, automating the calling process means reaching more prospects and making more sales.

The Peak of Cold Calling

The 1980s was, in many ways, the decade when cold calling reached its peak. Several factors contributed to this, such as further advances in automation technology and the widespread use of 800 numbers made it efficient for both B2C and B2B companies to use telemarketing to reach more customers. However, as the practice proliferated, there was also a certain backlash.

In 1987, caller ID was introduced, making it possible for people to identify callers before answering the phone. This technology made cold calling more difficult, as it meant fewer calls were answered. Answering machines and then voicemail, meanwhile, made it easy for people to screen calls by letting the caller leave a message.

The Telephone Consumer Protection Act, passed in 1991, created restrictions on telemarketing and eventually gave consumers the ability to be removed from caller lists. Companies that violate this act are subject to penalties.

Cold Calling in the Cell Phone Era

By the early 2000s, the mobile phone and smartphone revolution completely transformed communications. These changes had an impact on the telemarketing industry as well. The Do Not Call registry has accepted cell phone numbers since its beginning in 2003. Perhaps more significantly, cell phones provide call recipients with more freedom. Many users, for example, don’t answer calls from unknown recipients (though this was also true for landlines since the invention of caller ID).

Smartphone users also communicate largely via text message. Regulations on unsolicited texts are even stricter than those regulating phone calls, making “cold texting” a non-starter.

Today, the SEC places a variety of restrictions on cold calling. In addition to not calling people on the Do Not Call registry, companies are only permitted to make cold calls between 8 AM and 9 PM. They must clearly identify themselves and their company. Additionally, they must get written approval from customers before accepting payments from bank accounts.

Why People Think Cold Calling is Dead

Let’s look at some key reasons that could lead someone to believe cold calling is dead.

The Best Arguments of Why Cold Calling is Dead

  • More and more people communicate with email, text messaging, and via social media.
  • It’s easy to block and ignore calls from a smartphone.
  • People are too busy and distracted to accept cold calls.

These are all valid arguments. However, they don’t actually prove that cold calling is no longer effective, much less dead. Now let’s look at some reasons cold calling is very much alive and well.

Understanding the Psychology and Practice of Cold Calling

People who say cold calling is dead don’t really understand the nature of the practice and why it works.

Cold Calling has Always Been Controversial

The idea that telemarketing is annoying and intrusive is hardly new. As we’ve seen, restrictions have been imposed on telemarketers since the early 90s. The fact is, there have always been substantial objections to all types of advertising and marketing. This is why restrictions on email spam came into being. It’s also why people use ad blockers online. This brings us to the next point: cold callers don’t expect fantastic close rates.

Reaching the Minority

A cold call, almost by definition, has a lower chance of success than a warm call (i.e. where the recipient knows the caller and/or has already expressed interest in the offer). Even during the peak of telemarketing, the best cold callers could only hope to close a small fraction of prospects.

While closing rates vary by industry, sales professionals often expect a success rate of 1% or a little higher. This sounds very low compared to success rates using other methods. However, this is simply the nature of cold calling, where the idea is to reach out to large numbers of prospects as quickly as possible and to focus as much time as possible talking to interested parties.

According to the Rain Group, 69% of buyers have accepted at least one cold call over the last 12 months. A good telemarketer may only close one out of 100 prospects. However, he or she only spends seconds on unsuccessful calls. Automation technology can dial numbers, meaning sales reps only spend time on people who actually answer the phone.

Cold Calling Has Multiple Uses

Not all cold calls are for selling a product or service. There are other purposes as well, some of which can produce a higher response rate.

  • Prospecting. A cold call can be used to qualify leads and gauge interest on products or services. This call isn’t to make a sale, but to schedule more time to discuss the prospect’s needs and address pain points.
  • Market research. Many people who might not buy something over the phone might be willing to answer a survey.
  • Pre-selling. Cold calling can be used to offer prospects free trials, product samples, white papers, or other gifts. This is similar to the email marketing strategy of getting signups with opt-in offers.
  • Warming up leads. If a prospect isn’t ready to buy but doesn’t reject the offer outright, he or she can become a warmer lead who can be contacted later.  

 Who Can Benefit From Cold Calling?

You may be wondering if cold calling is a viable strategy for your business. There are a few points to help you answer this question.

Do Customers in Your Industry Appreciate Calls?

Everyone is different, of course. However, people in certain industries more warmly welcome calls that offer valuable information. This is especially true for B2B sales. For example, a Discoverorg survey found that 60% of buyers in IT wanted cold calls to help them learn about new vendors.

Do Your Competitors Use Cold Calling?

If other businesses in your industry often make cold calls, this is a good indication that they are getting results. Some industries where the practice is common include:

  • Insurance
  • Home Improvement and Repairs
  • Telecommunications
  • IT and Technology
  • Security

These are only a few examples, of course, as businesses in many sectors use cold calling. If you’re offering a product or service that’s not often marketed by phone, there’s no reason you can’t test it for yourself.

Do You Have a Nurture Campaign In Place?

While customers may buy a product from a single phone call, this isn’t common. Most effective marketing strategies today, whether they use ads, email, or phone calls, implement a series of touchpoints in their sales funnel. For example:

  • Email prospect and offer them a trial offer, sample, or white paper.
  • Call prospect once they’ve had time to go over your material or information.
  • Follow up, either by phone or using another method preferred by the prospect.

You’ll have to tailor the process to your needs, of course. In all cases, you need to identify key stages in the customer journey and not try to rush things.

What Results Should You Expect?

It’s important to have realistic expectations from cold calling. It helps if you have a well-planned strategy in place.

Closing Takes Many Touchpoints

It usually takes multiple contacts to close a sale. The exact number depends on many factors, such as the skill of sales reps, the receptivity of the prospect, and the particulars of your industry and product/service. HubSpot shares a calendar with 8 touchpoints. The goal of a cold call will usually be to warm up the prospect and open them up for further communication. If sales reps try too hard to close a sale right away, they’re more likely to push away the prospect.

Cold vs Warm Leads

Even the most successful cold callers understand that warm leads are more valuable than cold ones. A hot lead, a prospect who has been nurtured and has a demonstrated interest in a product or service, is more valuable still. The goal of cold calling is to warm up leads, which can be a daunting process. While the average success rate of cold calls is usually estimated at around 2%, this number shoots to over 25% for warm calls.

We’ll look at some strategies to maximize cold calling results. Even a slight increase in your success rate translates to more leads and sales. However, you do need to understand that cold prospects, on average, are less responsive than warm ones.

Should You Outsource Cold Calling?

When you plan a calling campaign, you need to decide whether to handle the process in-house or to outsource. Should you have your own sales reps or SDRs make the calls or find an agency that specializes in cold calling? There are pros and cons to each.

Pros of Outsourcing

  • Efficiency. Cold calling, perhaps more than any other sales tactic, is about numbers. A professional call center or agency has the experience and technology to reach many prospects quickly.
  • Saves time for your sales team. Your reps can focus on talking to leads that have already been warmed up rather than spending countless hours hoping for a bite.
  • Flexible hours. Depending on your business model, you may need to reach out to prospects in different time zones. When you outsource calling, you can arrange to have calls made at the ideal times. On the other hand, it can be difficult for your own local team to make calls at all hours.

Cons of Outsourcing

  • Less control. While you can provide scripts and guidelines to your partners, you’re still giving up a certain degree of control. When you handle calls in-house, you can more closely supervise the process and ensure your message and branding are on track.
  • Lack of expertise. While call center agents may be skilled at sales, they usually lack specific knowledge about products and industries. If they need to go off-script, they may not be able to answer every question.
  • Cost. There are costs associated with handling calls yourself and outsourcing. However, hiring a quality agency can be a substantial expense. At the same time, you have to weigh this against the leads and sales that they generate.

Outsourcing Guidelines

If you decide to outsource, do your research and make sure you choose a quality company. Here are some tips to consider:

  • Check reviews and references. Use a company or individuals with a proven track record.
  • Choose a local company. If the call center is located in another country, make sure the callers can speak fluent English.
  • Make sure you’re clear about the terms, such as how many hours/calls will be made for the price.
  • Communicate your needs clearly and monitor performance at every stage. You may need to try several companies before you find the right match.

Why Cold Calling Works

So – does cold calling work anymore?

Despite what you may have heard, cold calling is still an effective way to connect with your B2B audience. To make it work for you, it’s important to map out a clear strategy, test your results, and make changes as needed. For example, you may be able to improve your results by making changes in the script, calling at different hours, or tweaking your initial offer.

Even if they have a certain resistance to cold calling (and all types of marketing, really), both consumers and B2B buyers are always seeking new products and services that can solve their problems and improve their lives. Of course, to find success you need a solid offer and a skilled sales rep, ready to engage with prospects.

Cold calling is not dead and will continue to be a viable selling strategy as long as people have phones. If you’re interested in adding cold calling into your marketing strategy, contact us to learn more about Sapper’s Bionic SDR, your outsourced, full-stack, multichannel sales development representative.

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About Sapper Consulting

Sapper's sales prospecting team becomes a natural extension of your existing sales efforts, helping you find new leads that are a great fit for your business.

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