I’ve frequently quoted the study done several years ago by the Kenan-Flagler Business School at the University of North Carolina. It concluded that 4 out of 5 B2B decision makers in the United States – that’s 80% – absoutely, positively will not buy as the result of cold calling.
However, I’ve just learned of a more recent study done by the Keller Research Center at Baylor University, right here in Texas. This report is much more recent, and the numbers are far more astounding.
The study was based on a group of 50 experienced and qualified salespeople, who made a total of a whopping 6,264 phone-based cold calls over a two week period. And the results are far worse than even I would have expected. “Dismal” would be a compliment!
Here’s how it turned out:
– 72% of the calls were outright rejections. People saying “no way,” hang-ups, and so on.
– 28% of the calls were labeled as “productive.” These were people who didn’t hang up right away, showed some interest, gave a referral, asked to be called at a later time and so on. But what’s most interesting is that the majority of the two week study period was spent working on and following up with this 28% of the list. The time that went into it was extraordinary, and very eye-opening when you see the final results.
– That 28%, totalling 1,774 calls, resulted in 19 – yes, that’s NINETEEN – appointments. Out of a total of 6,264 cold calls made!
– The success rate of cold calls to appointments is 0.3% (based on the average closing rate of 20%, that would equate to just under 4 sales, from 6,264 cold calls).
Now that you’ve heard the horrific numbers experienced during the study, here is the conclusion drawn from it:
Experienced salespeople can expect to spend 7.5 hours of cold calling to get ONE qualified appointment!
ARE YOU KIDDING ME?
With numbers like this, coming from a controlled, scientific study done by a leading research university, why on earth would ANYONE continue to waste their valuable time cold calling?
I’ve always stated numbers that are several years old in my arguments against cold calling: That it averages a 1% success rate, and possibly up to 3% for someone who is very, very good at making cold calls.
But now we see that just the appointment rate – not the sales success rate – is a dismal, embarrassing 0.3%. Multiply that by the overall average closing rate of 20% in sales, and you’re down to 0.06%. What a joke.
Is it any wonder, then, that virtually zero successful salespeople cold call anymore?
Cold calling became ineffective a long, long time ago. The uselessness of cold calling has been shouted from the rooftops by authors like myself, Jeffrey Gitomer, and many others.
Then came the Univerity of North Carolina study done several years ago, showing that only 4 out of 5 decision makers absolutely will not buy as the result of a cold call.
And now we have a recent study, done in late 2011 by a leading business school, showing that in today’s modern, Information Age economy, a salesperson who is foolish enough to cold call will have to spend 7.5 hours cold calling to get just one qualified appointment!
This proves my long-argued theory that cold calling makes sales success impossible for one simple reason: TIME.
If you have to spend THAT much time cold calling just to get one qualified appointment (the key word here being “qualified”), then there’s no way you can possibly make your numbers, consistently, month after month.
So do yourself a favor: Stop cold calling, and begin doing something productive instead. Go to as many networking groups as time allows. Get active on LinkedIn and learn how to use it. Offer to speak for free at Chamber meetings, Rotary and Kiwanis clubs, and other service organizations. Do ANYTHING other than cold calling – it’s a huge waste of your time, and the numbers prove it!
Thank you for doing this. Please extend your influence to real estate so all my co-workers stop cold calling. I will split my profits with you. (from cold calling) I close one out of every 37 contacts or 1.5 out of ten clean contacts. I invite you to set beside me and keep track. Respectively disagree….Dan
Well that’s just silly……let’s use your very low assumption of 4 sales from this cold calling. This was a study of real estate sales people so they suggested an average commission of $4,500 per sale (which is probably low for most areas), so that’s $18,000 in commission generated from 6,000 cold calls. Assume 30 calls per hour and you’ve spent 200 hours calling to generate $18,000 in commission, or $90 per hour. Let’s also say you called 4 hours per day for 50 business days, so that’s 10 weeks to earn $18,000, or $1,800 per week, or $100k a year WORKING HALF DAYS AND WEEKENDS OFF. Yea, you’re right, someone would be stupid to cold call.
I agree with Mike’s comments above. One of my telemarketers sets an average of 12 appointments in a 40-hour week. He makes about 80 calls a day. That generates about $100K in annual revenue. Thanks for “proving” cold-calling doesn’t work. I’ll let my boss know right away. I’m sure he won’t miss that $100K.
Last week one of the listings I took from cold calling closed. This week those same people are closing on the house they’re buying. Where did I get these clients? I originally cold called them back in October of last year. We’re talking TRUE cold calls too….not Expired/FSBO calls.
In April I sold a listing I took in January. Met those people through cold calling in August of last year. They were thinking about doing the FSBO thing. Instead they listed with me. Last December I closed out another listing that I took in October. Met that seller in August of last year as well – off of a cold call.
Then there’s the people I cold called in February. When I went out for the listing appointment, it became clear that BUYING their new house was a higher priority than selling the current house. So we went house shopping. They had enough cash to buy a $400,000 house without needing a mortgage. And that’s exactly what they did. The old house? Listed it and it’s under contract now, just passed inspection with flying colors, and is due to close mid-June.
Oh yeah…and then there’s the nice old lady who I contacted back in August and met face-to-face a few times. She wasn’t ready last year because she was still researching which assisted living facility she wanted to move to. In fact she wasn’t ready until just now in May. She signed up with me, signed up for a term of 1 year, and was willing to agree to reducing the price of her home by $5,000 ever two week until it sold.
The stats you use twist the truth. Who the heck is only selling 20% of of their listings? I have not had an expired in years with the exception of a pre-foreclosure that I took on for a friend. And THAT one expired because the bank wouldn’t short it enough to account for the mold in the basement. It wasn’t even a normal listing. These days I wouldn’t even take that listing.
It wasn’t until this year that I upped my game and got spun up with a rock star listing presentation and pricing presentation. Even before that though I was still listing 50% of all the appointments I went on that were sourced through cold calls. This year, with my faster/stronger/better listing presentation, I’ve taken 75% of all the listing appointments I’ve gone on. And 100% of them sell. Only one took 90 days to go under contract.
Cold calling is one of the most profitable uses of an agent’s time – as long as they know how to do it right and have a locked-on follow up system. The biggest benefit to cold call leads? You don’t have hardly any competition like FSBOs and Expireds. The downside? They are almost ALL leads that are far, far out. You have to follow up with them for at least 6 months before they’re signing up to stick a sign in the ground and 12 months is normal too.
The only regrets that I have today is that I did not call FSBOs and Exprieds side-by-side with straight cold calls right out of the gate when first starting my phone prospecting routine in the summer of 2014. That and the fact that I should have been cold calling years ago when I first got into this business in 2006.