Cold calling is the sales prospecting technique of calling random people on the telephone, or visiting them in person (also known as canvassing) with the hope of making a sale to someone, or of setting a sales appointment in the future. Although critics of cold calling are growing and laws are being passed against it, it still remains the most common method of sales prospecting, particularly among new salespeople.
Cold calling was long accepted as a permissible sales prospecting method until recently. For centuries, sales were found and made as the result of going from one person to the next, whether that was in an ancient marketplace, or door-to-door in a neighborhood.
Well into the 20th Century, as the Industrial Age boomed, cold calling continued and was the number one choice of business development. It was especially common in products such as life insurance (and in fact the insurance industry continues to promote it today).
As technology has improved and privacy and security concerns have grown in recent years, the effectiveness of cold calling as a reliable sales prospecting method has been in a steady decline.
The two primary methods of cold calling are on the telephone, also known as telemarketing, and in person, also known as canvassing. Telephone cold calling is considered more efficient, because you can contact more people in a shorter period of time, but it has the downside of being less effective - it is much easier to say "no" to someone on the phone, or simply hang up the phone, versus a salesperson who is face-to-face with you. Frequently, cold calling scripts are used in order to make the calls more consistent and more effective.
Going door-to-door is less efficient but tends to get better results. It has the added bonus of being able to leave behind a business card or marketing collateral. However, in a business-to-business setting, particularly in smaller cities that lack high-rise office buildings, it can be a very slow and tedious process and will limit the number of prospects who can be contacted. On the other hand, in large cities like New York City, cold calling has been virtually eradicated from large buildings due to heightened security which has left the telephone as the only cold calling option for such areas.
In recent years there has been an ongoing debate in the sales training industry about whether or not cold calling has become ineffective today, with some even stating that it's detrimental to sales results.
On one hand are those claiming that cold calling is still the best way to generate sales leads quickly, especially for a new salesperson with little or no connections or network. On the other end of the spectrum, some authors claim that cold calling is not only a total waste of time, but will even hurt your sales results by offending prospects who might have bought from you otherwise.
Somewhere in the middle, are those who agree that social media, the Internet, and other technologies are making cold calling largely obsolete, but that it still has its place, especially for new and inexperienced salespeople, and especially when it is backed up by thorough research on your prospects through information readily available online and in social media (some call this pre-researched method warm calling).
Part of the growing trend against cold calling is due to its declining legal status around the world.
In the United States, many states including Arizona require a telemarketing license before one may make cold calls on the phone. While these laws are largely unknown, they are periodically enforced to the detriment of salespeople and sales organizations. This is especially true in states facing budget crises, since these fines generate needed revenue.
"No Soliciting" signs are practically ubiquitous nowadays, and while they are posted at the discretion of building owners and not by any legal authority, they are legally enforceable and in most areas a salesperson who ignores one and canvasses anyway is subject to arrest for criminal trespass. While previously infrequent, these types of arrests are becoming more common in an effort to stop cold calling and give building owners and lessees more rights to their own property and privacy, and because the resulting fines are a revenue source for municipalities and police departments.
"Do Not Call" laws are common, both on a Federal level in the US, as well as in many states. One who is on a "Do Not Call" list and still receives cold calls may report the cold caller on the "Do Not Call" website, and after enough complaints have been received, the caller will be prosecuted for violating the law.
Cold Calling Scams
Particularly in the UK, the news headlines are full of talk about cold calling scams, particularly as they apply to financial schemes. As credible businesses continue to grow their Internet marketing and social media presence, and build practical marketing departments that generate leads for salespeople, organizations that continue to make their sales reps cold call will suffer from an image problem and there will be increased sales resistance from prospects. This is because the increasing talk of "cold calling scams" in news headlines is causing prospects to assume that any cold caller is probably a scammer, especially in the financial services industry following the Bernie Madoff scandal and other Ponzi schemes.