Cold Calling: Relic From A Previous Age or Simply a Lost Art?
SuperUser Account posted on June 16, 2014
Does cold calling still work? You bet your favorite stock it does – and it works better than ever, despite views to the contrary.
Many industry professionals argue that cold calling doesn’t cut it anymore, blaming the “do not call” list. What they fail to realize is the “do not call” list does not apply to businesses.
During the 1970s, 1980s and 1990s, cold calling in the brokerage industry was different. Most brokers during that period were “cold pitching,” meaning they’d call a prospect and in the first call try to suggest they buy a certain product.
It worked back then, but over the years became less effective as clients became more educated and investing became more accessible with discount firms on every corner, not to mention the Internet.
While I never thought cold pitching was the way to build a business, it did in fact make many brokers rich.
HAVING THE RIGHT GOAL IN MIND
Most advisors enter into a cold call with the wrong goal in mind. The purpose of a cold call is to set a face-to-face meeting with the prospect. If you enter into the call thinking you will close the prospect, you might come across as desperate or too pushy.
I don’t believe you look any more desperate than if you go palm pressing at a networking event or ask clients for referrals. But the stigma is there; some believe cold calling is the act of a desperate advisor.
Cold calling is one of about 10 ways to prospect as an advisor. The advantage of cold calling is that you can cover the most territory in the shortest period of time. If you are a good salesperson, it is the best prospecting method.
There are many cold calling techniques that work. The ones that work best are those that give you some commonality to the prospect.
Let’s say you want to prospect business owners in your area. Many advisors are unaware that the local chamber of commerce will provide them with a free cold-calling list online. It’s rife with accurate and abundant information on the business owners or executives in your area.
If you join the chamber, you and the prospect now have something in common. When you call a chamber member, you can inform them you too are a chamber member. This will significantly increase your odds they will engage you in a conversation. Most don’t want to be rude in case they bump into you at the next meeting.
Another technique that works is collecting business cards when you are on an appointment. Next time you go on an appointment to meet a prospect or client, stop by a few businesses in the area and collect cards. When you get back to the office you can call them.
Explain you were just meeting a client across the street from their office. Out of respect for their time you didn’t want to drop in without an appointment. Instead, you thought it would be better to call and make an appointment.
Business owners are salespeople too. Most of them are risk takers and quick decision makers. When you get them on the line, you had better have a good reason why they should listen to you.
I used to lead with something very conservative like a money market or short-term bond. After securing the account, I would then get into full financial planning.
ASK GOOD QUESTIONS
Knowing the mind-set of your prospect is very important. Most business owners, who are making a profit, keep more cash on hand than they need. Most of them are getting no interest and paying a lot of bank fees.
If you can be the one to come up with solutions to these problems, they will respect you (and wonder why their current advisor didn’t suggest such a strategy.) Your main goal is to get a meeting. Do what’s needed to demonstrate you can help them solve a problem.
Always find out what a prospect needs, wants, has and knows. Then provide them with a solution. Cold calling is the art of asking good questions and providing good solutions.
A NUMBERS GAME
Here at the Rummage Group, we speak with thousands of advisors every year and only a small percentage (less than 2%) cold call. Very few firms encourage cold calling anymore.
Edward Jones still has its advisors cold walking in some areas instead of cold calling. I’m not a fan of this because I feel that cold walking really does make advisors look a little desperate, but it still works for thousands of their advisors.
Although it’s hard to find advisors who cold call, every year I speak with a few who are having huge success. They often remark that their prospects never get called by other advisors. It used to be that a common objection was, “You’re the 10th broker who has called me today.”
The prospects no longer use this objection because they never get calls from advisors. One advisor I spoke with recently in Tampa is bringing in $5 million in new assets a year from two hours of cold calling every day.
He also said he brings in an additional $2 million to $3 million from referrals. He told me, “When I grew up in the business, cold calling was a way of life and now it isn’t even mentioned to new advisors.”
That parlays into less competition, which is good for him, of course. When it comes to prospecting, nothing is easy. Cold calling is a numbers game. Success is a function of quantity and quality – both can be controlled. You should be able to reach about 25% of the prospects you call. Out of the ones you reach, you should be able to close about 5% on an appointment.
Remember the old saying: Every “no” brings you closer to a “yes.”
Don’t allow yourself to get too frustrated and don’t take anything personal. Take regular breaks and walk around. A headset is a must. Just remember, being a numbers game, cold calling is kind of like playing the lottery: “You have to play to win.”