The Fallacy of Cold Calling (and why it doesn’t work)
December 21, 2009 by Frank Rumbauskas
Filed under Latest News, Sales Prospecting
I just read a comment on one of my YouTube videos, stating that my explanation of why cold calling doesn’t work is wrong. In the video, I explain that since the result of making cold calls is usually zero, then basic grammar school math tells us that 50 x 0 = 0. Why do something that’s unproductive over and over again when you’ll still get the same result?
The commenter agreed that cold calling is a low probability activity, but argued that “probability theory” states that lots and lots of a low probability activity will eventually result in high probability.
What this moron left out is that his “theory” would require about 20 hours a day of cold calling – each and every day – to come true!
And that’s the biggest problem with the “cold calling works” crowd: Cold calling can never “work” because cold calling results are strictly limited by TIME!
We salespeople are required to do a whole lot more than simply prospecting for leads. We must devote time to writing proposals, conducting appointments, following up with prospects, attending sales meetings, completing waste-of-time forecasts & reports that most companies require, and so on. And then there are the inevitable customer service and billing issues that customers bring to us, and that we’re usually forced to get involved with if we expect to keep the customer happy and continuing to buy from us.
If you compare the time required for all of those activities, as well as cold calling, you’ll find that cold calling is, by far, the most time-consuming sales activity.
Do you want to become one of those star producers who routinely makes over six figures? $150,000? $200,000? Well I’ll tell you right now that those top sales pros absolutely do not cold call. If they did, they wouldn’t have enough time left every day to close all those sales that bring in the big incomes.
Think about it: In typical old-school sales training, we’re told to divide our quotas by the average dollar amount per sale to determine how many sales we need each month. Then we multiply that number by the number of proposals it takes to make a sale, times the number of first appointments it takes to get to a proposal, times the number of cold calls it takes to get a first appointment.
If you do the math, you’ll find that the numbers simply don’t add up!
Seriously, do the math using realistic numbers and then compute the time needed to make the necessary number of cold calls. You’ll find that you simply don’t have that much free time.
Relying on cold calling to generate leads consumes so much time, you simply won’t have enough left to make the big numbers. If you’re lucky, you’ll scrape by, make your quota, and keep your job for another month, but that’s about it. And every salesperson I know is in the profession for the unlimited income ceiling, not to scrape by and just pay the bills every month.
Here’s the big difference between cold calling for sales prospecting, and using more effective techniques:
Cold calling is non-leveraged. In other words, it’s only happening when you’re doing it. It cannot happen without you and your commitment of time.
Alternative methods of sales prospecting, however, are leveraged. When you set up systems and methods to generate leads automatically, those leads continue to come in whether you are actively prospecting or not. Your time is free to spend on the activities that actually make you money, like closing sales. When you eliminate cold calling from your schedule and simply spend your time closing those leads that are generated as a result of your lead-generation systems, you’ll find your income going up exponentially.
What are those alternative methods of prospecting? They run the gamut from advanced referral selling, to internet marketing for salespeople, to using free press coverage to bring in leads, to speaking at events to position yourself as an expert, and about a dozen other methods that I teach.
The bottom line is that cold calling doesn’t work – not if you want to make the big bucks. Cold calling is for salespeople who don’t mind being average. Like Robert Kiyosaki says when people ask what the average investor should do to make money, his reply is, simply, “Don’t be average.”
Frank
Love your article.
I wonder how many people get the subtle point that you are making here.
I can remember the stages I went through as I learned to market and sell. Actually, one of the first things I leanred, the hard way was that “cold calling didn’t work.”
Then I learned that it didn’t work “the way I was doing it.” Suddenly I was getting 40% to 75% calls to appointments ratio. That just “started” making it work. Most people would call that super level performance. However, as you said above, that still doesn’t LEVERAGE your time. But I did learn a skill of “connecting” from that technique that carried over into the “rest of the story.”
The reason most people’s cold calls don’t work is that they are “trying to sell something” rather than trying to connect with the person you are calling around what he wants. But that’s another story.
In any case, the point here was that even though I was succeeding at cold calling, by leveraging time through getting the internet to BRING thsoe leads to me it works SOOOO much better.
Alan Boyer
The $100K Coach
Putting up a wall against the dud salesman puts up a wall against the bloke with something you want today! Frank, you saw through those persistent efforts because they were not sincerely presented (another time I’ll reveal what is behind the latin word ‘cere’) We are all buyers. We are not always as discerning as we should be and hence we sometimes buy ‘bad’ and get buyer’s remorse over the deal in some respect. I’ve had my share.
However, I welcome flyers, and catalogs in the mailbox any day because everyday I am considering buying something and some days even desperately seeking some product or other, rare, but it happens to us all which is why junk mail works if handled properly in the proper marketplace at the right time and with the appropriate followup, it is a useful service and helps the world go around in harmless fashion. These offers stuffed in the mailbox that work can be defined as successful if only one, no matter the dollars, works the next day from every drop. That means every day staples, once a year windfall offers, big tickets like cars, homes and investments to twice a lifetime opportunities, whatever they might be for every Joe, but we all have these moments and many of them are big ticket moments, too. Someone has just got to offer the products at the right time. Its the followup that counts. More in another post, another day.
I have done some some cold calling and must tell you guys it has worked for me quite nicely , I have written some good business from cold calling, it all depends how you go about it , professionalism is the key!!!, look him straight in the eye and ask to see him/her or ask for an appointment , it has worked for me – Cold Calling , not all bad.
Mandy-Lee Anderson
Thanks Mandy-Lee, my sentiments entirely.
While the scattergun approach to anything (dropmailers, door knocks, phone canvassing) is unwieldy and costly and time-consuming, it is scarcely professional against an approach that can be campaigned following research, recording and follow-up.To be selective, you don’t slip the siding offer in the brick home letterbox but how do you train your campaign contractor unless you do it yourself? So that is where Frank is right. It is OK for the consumer like me, to sit back and see (and hear) these offers flood in and be selective on what I take up, so long as they don’t abuse my time and space, because I will end up with some value from the process and regularly, too. The poor marketers will have to settle for their 3% of sales from the expenditure and hope that the intro gains them repeat business, a pretty hollow and uncontrollable aim. Really, these sloppy efforts costs both the advertiser and the consumer.
So far as phone canvassers are allowed to go with me, it is limited to 17 seconds. I advise the callers to “approach with benefits” for me and if they don’t do that within 17 seconds it is ‘thanks and goodbye’. Yet, unlike Frank, I don’t go so far as to lock myself in a cupboard and hide with a gun at my side, because one day there will arise an undeniable benefit I will regret missing out on. Next post I’ll propose the few sales canvassers who instinctively follow that approach and succeed.
Talking about my calls out is a little different. Same rules about approaching with benefits, yet those salespeople who follow the guide implicitly can spoil their good work by assuming people are in their market when they are not and making ridiculous offers without qualifying the needs of the prospect, thus wasting more time and money. So naturally, identifying the genuine prospect has to be high on the list of the prudent prospector. Now is not the time to talk about ‘who signs the orders’ yet it is critical, although we are only considering how to get in the door with this discussion on Frank’s pages.
The only thing a salesperson wants to know of a prospect they deliberately confront is “Are you in the market?” Meaning of course, their own market, their own product and range. From which positive acclamation they can launch their spiel.
Certainly, this is a killer question that should never be asked directly because it is a challenging question. It is rude and it gets nowhere, and it has a mile of dead-ends so we have to find another way to get to the same situation as quickly as can be done.
I have some favorites. “Is this the year you’ll upgrade your environmental savings?”
and “Will you take advantage of the government rebate on sunflowers before it runs out?”
or “are you ready to benefit from the water levy?”
“Where will you be when the next tsunami strikes? More importantly, where will you want to be?”
“Tractor engines are being assessed by the CWA for Heritage listing. Is this for you, or not for you?”
Even, “Will whatever happens in Taiwan over the next 12 years have an effect on you and your business?”
Don’t laugh at that one, it gets attention. Just read up and research it before you use it.
Whatever, they are all 17 seconds or less and get appointments when used appropriately, in line with your business principles.
Today I want to talk about “Rapport”. It is best used at your delicattessen in getting the best cheese they have out the back. People who want things, don’t want to waste time with people who keep smiling at them and don’t
readily want to get on with the business of giving them value, yet expect repeat business. Grin and grin and bear it. It is a wank. Time and time again, the product has no value like today’s demand. Today’s demand asks:
“What works and how does it and what is the model that makes it do so again and again?”
It sure aint rapport. Rapport holds up every transaction until someone gets someone to blink appreciatively at them, for no apparent reason to cry they now ‘like each other’. Just so long as the cash register chings. Rapport lasts so long as value does. Rapport lasts so long as satisfaction stays with the purchaser. Rapport can never be part of the warranty/guarantee process and it really is the basis for dissatisfaction to brew, for a partner in the process to grow less enchanted. Rapport is a myth, that should be overtaken by sensible, well-directed canvass phone calls to get a month’s work for any Joe, done right.
Kev M
Boy. I knew you wanted the answer to that. I am only a poor retired Australian salesman, but I’ll give it a go over the next little while, so long as Frank doesn’t mind.