What is cold calling?: A definitive guide (with advantages)

By Indeed Editorial Team

Published 26 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Before the advent of websites and e-commerce, telemarketers and businesses relied on telephone communications to generate interest in addition to other advertising. The term 'cold-calling' refers to the process of calling people from a list of names and phone numbers to promote your business to prospects who haven't previously used your service. If you want to learn how businesses promote themselves, understanding how cold-calling works can help you understand other approaches to advertising. In this article, we answer the question 'What is cold calling?' with a definitive guide to its fundamental ideas and modern strategies that use similar thinking.

What is cold calling?

Cold calling is communication between a business representative and a person who has never had any prior contact with the business. It can also more loosely refer to a business trying to persuade an individual to use their service for the first time or buy their product. Traditionally, cold-calling refers to telephone calls but can also refer to door-to-door sales. Businesses traditionally obtained people's contact information through local directories and phonebooks. Modern businesses obtain this information from a number of third-party data providers and information services. Businesses also use cold calls to contact industry professionals with opportunities and deals.

Related: What is telesales? (with job info, skills and tips)

Advantages of cold-calling

Cold calling has its uses even in the digital age for reaching new customers and expanding a business' customer base. Here are some advantages to using cold calling:

  • Wider audience: The older generation and generally less tech-dependent societal groups can benefit from cold calling to make them aware of available services in their area. Using cold calling allows businesses to contact people they cannot reach with internet marketing.

  • Direct communication: Cold-calling directly addresses potential customers and allows you to communicate with them personally. This also allows the customer to ask questions so that you can address issues and offer solutions in real-time.

  • Seamless customisation: Businesses that offer bespoke services or custom quotes for a job can calculate an offer for a customer over the phone after a brief discussion. This works especially well for local businesses that handle all their own distribution.

  • Grabs attention: A cold call grabs a person's full attention and gives the representative time to demonstrate their knowledge and the business' values. It also takes advantage of social code since the listener may not want to disconnect the call immediately at the risk of being rude.

  • Follows leads: Cold calls allow businesses to directly contact and focus on warm leads that show promise of taking up their service. This extra attention to promising prospects following up on recommendations and referrals can make them more likely to reach an agreement.

Common cold-calling strategies

There are several key principles behind the concept of cold-calling that businesses use to make their proposition more convincing. Here are some examples of common strategies that cold-callers use when making a proposal to someone:

Clear verbal communication

Cold callers typically refine their communication and verbal reasoning skills to be able to hold a person's attention and persuade them to buy something they normally wouldn't. Businesses train their representatives to be confident and have a friendly reliable tone of voice to make the customer feel at ease. They also pick up on cues from the listener such as pauses, noises and tone of voice so that they know if they are pushing too hard or not being persuasive enough.

Related: A guide to the communication process (written and verbal)

Empathy

Many cold-callers use empathy and appeal to their listener's morals or emotions. This is especially important for cold-callers working for charities, institutions and not-for-profit organisations that try to convince people to donate. Emphasising that a listener is a good person for buying the product or making a donation helps them feel good and positively reinforces the act of agreement. Cold callers pick up on verbal cues to check whether they are managing to sway the listener with this sort of strategy and may back off if they respond negatively.

Fear of missing out

A common tactic for cold-calling is to use the fear of missing out to motivate the listener to use their service. Whether it's true or not, businesses suggest that their offer over the phone is a limited-time special or something they are offering at a custom rate. The listener then interprets the call as an opportunity and may want to capitalise on it. The fear of missing out on this offer can therefore be an effective tool to make the listener decide on an agreement.

Related: 6 ways to sell products (with tips for your sales pitch)

Appeal to reason

When they encounter a more severe customer, some cold-callers may appeal to reason instead of emotions, walking the listener through a logical sequence. They may try to convince the listener that investing in a product is a logically sound idea and that it doesn't make sense to invest in other products. They may explain away the listener's reservations and try to sell the product by comparing it to their competitors using statistics and performance data.

Researching the prospect

Once the marketer has somebody's information, they can conduct some research to find out as much as they can about the prospect. Depending on the volume of their requests and how tailored their approach is, they may only find out basic information such as age, gender and occupation. Modern marketers can find entire social media profiles, customer information and Internet activity to tailor advertisements and offers to the listener.

Related: Research skills: definition and examples

Asking questions

To engage the prospect and maintain their attention, cold-callers repeatedly ask simple questions. These can be social questions such as 'How has your day been?' to establish a rapport or more technical questions about requirements and preferences. This not only keeps the customer in the conversation, giving them more time to sell their product but also gives them information to tailor their offer to the customer. Guiding them through the process and helping them identify their problems can improve the chances of convincing the customer to use their service.

Related: 17 common types of customer needs (with definitions)

Build loyalty

Cold-callers may try to convince callers that their business wants to help them. They can offer discounts for returning customers or may try to offer a reduced rate based on trust or a personal desire to help. Some offer warranties and promise to maintain and monitor the product long-term or offer free checkups. Building a sense of loyalty in a new prospect can make them want to return to using a service and make the exchange feel more personal than an online purchase.

Timing calls

The time a cold-caller contacts a prospect can greatly affect their chances of success. The mornings of workdays are typically successful when contacting industry leads since they may be on their way to the office and be getting into their work mindset. If it's a sales call, calling on weekends may be more successful because people tend to relax and are more susceptible to sales strategies.

Optimal timing

Another key tip for increasing your cold calling success is to call your leads at the right time. Typically, most cold calls can have the best chances of conversion when they occur in the mornings of workdays. For instance, if you're cold calling a list of leads in the marketing industry, you might consider Mondays, Tuesdays or Wednesdays during the beginning or morning hours of the workday.

Following up prospects

If a prospect is initially negative but seems like they may change their mind, a cold-caller may try to schedule another call. Scheduling a future call makes the prospect start subconsciously associating your service with a commitment so it can help persuade them to make a purchase. Follow-up calls may be short rejections or may lead to further interest and negotiations leading to a final deal. In this way, follow-up calls can be a powerful tool.

Modern versions of cold-calling

While cold-calling still happens in many industries, people spend more time online and are more accessible digitally so cold-calling strategies sometimes appear in other media. Here are some examples of marketing strategies that use similar principles to cold calling:

  • Newsletters: Email newsletters advertise products or services to previous customers or users who initially opted not to use a service but want to find out more. Opt-in email newsletters differ from cold calls because users approving newsletters establish contact first but the subsequent advertising follows similar strategies.

  • Cold-emailing: Businesses may send cold emails to email addresses they have received from data mining software or online databases to market products. Jobseekers also send cold emails to companies to introduce themselves for job opportunities using very similar strategies.

  • Social media requests: Rather than telephone conversations, some businesses may send social media requests to contact potential customers. This is especially common with young entrepreneurs and direct sales schemes.

  • Targeted ads: Targeted advertising based on user browsing history uses the same principles of cold calling but with more information available about the user. This also applies to recommendation algorithms for music, videos and shopping online.

Related:

  • How to create a successful cold call script, plus examples


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