Sales are what drives the engine of commerce. Without sales, there is no revenue, and without revenue, a business will not survive. But the missing link in that statement is customers. Without customers, we have no one to sell to.
Businesses link with customers in several ways. The customer may go to a physical location or access your products via your online portals. Or a customer may choose to call the call centre an eCommerce business operates to get more information and then potentially make a purchase.
But there is another way in which many businesses seek to sell products or services to their existing customer base or new customers: cold calling. But what exactly is cold calling? How does it work, and how can it benefit your particular business model? And are there rules and tips that you should follow if using it as a strategy in your organisation?
What Is a Cold Call or Cold Calling?
Cold calling is when a company employee – most likely one of your sales reps – makes a phone call to a customer who has had no notable previous contact with your organisation.
There may have been some minimal contact or referrals where the customer’s name has appeared on an event list. But generally, a cold call is the first introduction of the customer to your business and the first instance of prospecting between a sales professional and the lead.
Many people mistakenly think that cold calling is a case of randomly dialling phone numbers to try and sell a product or service. The reality is that the customer’s number will already exist in some form in the organisation’s database.
That database entry may only contain fundamental info such as name and location or the company the customer works for and their job title for B2B sales calls.
While commonly used, cold calling is not something that has a high success rate. Even the best salespeople may only have a success rate of some 2%. Compare this to warm calling (where a customer has had previous contact with your brand), where the success rate can be around 30%.
How Does Cold Calling Work?
The first thing to be aware of is that many people do not like receiving cold calls, cold email outreach or other unsolicited contact. They may, then, hang up or ignore you.
That does not mean that cold calling can’t work if done properly and with a degree of empathy. Your prospective customer may have attended an industry event or, at some point, added their name to an email list, but it is often the case that this is a True Case of the First Contact.
Sadly, the COVID-19 pandemic saw an increase in the more nuisance and predatory forms of cold calling, such as that undertaken by short-term loan companies. There has also been an increase in scammers using cold calling to con people out of money.
This may have a further detrimental effect on genuine salespeople and marketers, at least in the short term. That makes it more important that your reps get cold calling right.
Your sales team will have a list of contacts they want to engage with. They may dial manually or use Predictive Diallers to reach them. Depending on the industry in which they work, they will likely have some script to follow to achieve a positive outcome. But for cold calling to work for you, you should have a checklist of things to include:
- A Goal. What do you want to happen from the call? A sale? An appointment? This should be clearly defined.
- Presentation. You should present yourself as friendly and wanting to engage with the customer. If it sounds like you are reading from a script for the Nth time that day, a customer will not want to engage with your sales pitch.
- Show Empathy. Don’t just sound like you are interested in the customer’s needs, BE interested in their feelings on the subject. Find out their pain points.
- Open-ended Questions. To build rapport and engage better, ask your customer open-ended questions that also give you more information about their needs.
- Solutions. Show your customer that you want to find solutions to their needs and problems and that they are more than just a prospective sale.
Examples of Cold Calling
There are several different types of cold calling depending on the industry you operate in. Cold calling scripts and approaches for these may vary, but the desired outcome is the same: obtaining a new customer.
- Product Sales. Cold calling telemarketing exists for the sole purpose of obtaining a sale. The salesperson calls the prospective customer, introduces themselves, then engages the customer in discussing a particular product.
- Real Estate. Cold calling is often used to gain new properties to market for a real estate agency. These cold calls may be based on a property already being advertised for sale, but also to enquire if a homeowner is interested in selling when a property matches an agency’s identifiable needs.
- Utilities. Electricity companies will often cold call to try and persuade a customer to switch providers. In these cases, they will usually offer to compare what the customer is paying now and what they would pay if they switched. This type of cold calling is also used by similar companies, such as mobile phone or cable TV providers.
- Lead/Appointment Generation. Sometimes the cold caller’s role is not to make a sale but to generate a lead for a salesperson to follow up. This will often be used in B2B services where the cold caller has to get past any gatekeeper and attempt to speak to a decision-maker.
Cold Calling Rules to Follow
The most important thing to note is that cold calling is perfectly legal in the UK. However, certain rules, laws, and regulations should be adhered to if you make cold calls to prospective customers.
Before Brexit (before 31/12/20), companies in the UK followed the EU’s GDPR on data. Although the UK has now left the EU, there is now a law known as the UK GDPR, which companies must follow when dealing with customers within the UK.
If you are a UK-based company contacting and dealing with customers in the EU, you must still follow the EU GDPR rules.
If a customer has previously been contacted and has requested not to be contacted again, the company must – by law – respect those wishes and remove the customer’s details from their database or make a relevant note. Customers who have added their number to the telephone preference service (TPS) should not be contacted.
By law, organisations must screen their lists of potential numbers against the TPS once every 28 days. If a business does call a number that is already on the TPS list, the Information Commissioner’s Office has the power to fine that company for the breach. Your customer relationship management (CRM) system should account for any of these laws and requirements.
Cold Calling Tips
Cold calling has a meagre success rate. It will help if you are doing everything you can to try and increase your own rate. That means looking at what works and being prepared to adjust and develop your technique as you move forward. Consider:
- Your Goal. Always have a very clearly defined goal. It is not always about making a sale on that call. It may be about setting up future opportunities to close a sale.
- Know Your Targets. Look at market research on your product and your target demographics. This may be research carried out in-house or by a third-party specialist company. This applies to both B2C and B2B markets.
- Video Game Philosophy. In B2B calls, think about your approach as similar to a video game. In any company, there are only a few real decision-makers. It is unlikely you will get to speak to them on a first call. It would help if you got past a gatekeeper—or more than one—before reaching the ‘end-of-level boss’.
- Use Other Platforms for Initial Approaches. By establishing some connection before a call, you will have a better chance of success. For example, it is suggested that being in a common LinkedIn group gives you a 70% more chance of speaking on a cold call.
- Avoid Clichés. The first few sentences of a call may decide whether you will get any further. Try not to use cliched opening statements such as “how are you?” Closed questions are more likely to lead to a swiftly closed conversation.
- Make a Great Opening. By using statements and open-ended questions, you are more likely to create a dialogue. Use a greeting, introduce yourself, try and bring in some common reference point, introduce your product or service and its benefits, then hopefully segue to a more detailed conversation. A good example is this:
“Good morning, Mr Sherwood. My name is Graham Davies from RingCentral. In the LinkedIn communications group, I saw both members of your company opening a new call centre. As you may know, RingCentral is one of the world’s leading providers of communication solutions. We could offer you some optimum solutions to meet the needs of your new centre, and would like to ask you a few questions so I can see what solution best fits your requirements.”
- Have a Script. Unlike in a play, you don’t want to follow any script to the letter. Think of it more as a guideline to the conversation. It can tell you where to raise certain subjects and include answers to any objections you may expect. It can also act as a checklist of all the points you want to raise during the call.
- Appointments. If your goal is to set up an appointment, always ask for that appointment in as open-ended a way as possible. Never ask, “can we meet tomorrow?” Instead, ask, “would 3 pm tomorrow suit you?” Using the latter form is more likely to have your contact either agree or suggest an alternative time or day.
- Remain Friendly. Gatekeepers have a job to do, and part of their role is to shield decision-makers from pointless or nuisance calls. If you are abrupt or rude, you will never get past this stage. And if you don’t know the actual person you need to speak to, they can prove to be an ally. For example, “I wonder if you can help me, do you know which of your managers deals with stationery supplies?”
- Timing. Timing is everything, and this applies to cold calling, too. Research your target demographics and see what may work best with them. For example, early morning or late afternoon is best for B2B decision-makers. If you call a residential number, you may have to think about school runs and adjust your timing.
- Don’t Give up. Many cold callers give up too soon. It is reckoned that 80% of sales do not happen until the fifth call, but 92% of salespeople give up before that stage. Be one of that 8% every time, and follow up your first call while remembering that you must respect their wishes if the contact requests no further contact.
Remote Agent Playbook
Changes in the way we do business and enforced changes resulting from the COVID pandemic mean that many companies are changing to remote working. This also includes, of course, staff who are responsible for cold calling, whether for lead generation or sales.
Switching some or all of your contact centre model to include remote working brings with it several challenges. These can include ensuring you have adequate software solutions, maintaining data compliance and other regulatory requirements, and how to manage your call centre agents. Sales managers need to have a good overview of what remote workers are doing.
RingCentral recognise all of these challenges and more, and they have put together a free playbook.
While it is true that cold calling has a meagre success rate, it does have a success rate. If you implement the right sort of cold calling strategy, it can work for you and help to generate both leads and sales.
Awareness of any regulations that apply is essential when considering using a cold calling model. Once you meet any compliance requirements, look at how to build and structure your cold calling approach.
Also, consider what systems you use or that will integrate well. For example, RingCentral has a proven track record with HubSpot.