Cold calling

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In personal selling, cold calling is the processing of approaching prospective clients, typically via telephone, who have not agreed to such an interaction. The word "cold" is used because the person receiving the call is not expecting the call or has not specifically asked to be contacted by the sales person. It is often very frustrating and difficult for those making cold calls because they are often rebuffed, hung-up on and rejected by those receiving the calls. It could be said that it is equally frustrating for the person receiving the cold call, since they expected something they care about, and instead get a marketing pitch. They may also have been doing something important, such as eating dinner, or waiting for another phone call.

Cold-calling is used in many venues outside sales. The term applies to any situation where one person calls another person or organization without a prior relationship. Headhunting firms, for instance, are notorious for this practice.

Some sales people have come to the conclusion that cold calling is ineffective, inefficient and a waste of their time. Others have tried to develop schemes to lower the rate of rejection. These approaches are based on the idea that the purpose of the call is not to make a sale, but to build trust and discover the truth about whether there is a good match between the potential client and product or services offered.

There are a number of ways in which cold calls can be effective. One is for the selling organization to start with a high quality, up-to-date database consisting of qualified prospects that have an interest in the product being sold. Another is to use cold calls as a "step in the door". Rather than using the call to try to close a sale, it is used as the initial contact in a long-term relationship. This has the effect of removing the sales pressure from calls and making the goal of the call to build trust. Cold calls can also be used to obtain quality sales leads, references, and testimonials.

Cold calls can also be done in person rather than over the phone, but this is less common because of the high cost of face-to-face sales calls. This can be done anywhere two people meet, including public buildings, businesses, or even residences. It is much harder to turn down someone to their face, so some organizations continue to use it. A number of advocacy group such as PIRGs and Greenpeace use this to spread information and sell memberships at the same time. Pyramid schemes also often use this, but then the cost is borne by lower members in the pyramid while the majority of the profits go to the leaders of the scheme.

Legal issues

Within the United Kingdom, the Privacy and Electronic Communications (EC Directive) Regulations 2003 make it unlawful to transmit an automated recorded message for direct marketing purposes via a telephone, without prior consent of the subscriber.

In the US, the Telephone Consumer Protection Act has a similar provision regarding automated cold calling where the message is delivered as a recording.

Many US states have enacted "Do Not Call Lists" in which a consumer adds their telephone number to the a list and telemarketers are not permitted to telephone any number on that list without prior permission of the recipient. It is similar to the US Do Not Call List which is managed and enforced by the FTC.

Within the European Union, the Data Privacy Directive 2002/58/EG forces the governments of its member states to issue laws until June 2007 that prohibit general cold calling. However, the directive allows both an opt-in or an opt-out model, i.e. requiring a national register for phone numbers which either to do (opt-in) or do not (opt-out) welcome cold calls.

Cold calling

Legal issues

See also