What is cold calling?
Cold calling means when a broker, salesperson, or marketer calls someone they don’t know to sell them something or get their business. They get the person’s name and number from phone books or lists of people they buy. The person they call isn’t expecting the call and hasn’t shown interest in what the caller is offering.
Brokers use cold calling to find new customers to invest money with them. They aim to get the person to become a client and start investing. Cold calls can also be used to sell other financial products and services.
How cold calling works
The broker or salesperson finds people’s phone numbers, often from directories, mailing lists, or databases they purchase. They call many people daily, giving a sales pitch to whoever answers.
On the call, the broker introduces themself and their company. They try to get the person interested in investing by discussing potential profits. The person didn’t ask to be called and may have never heard of the broker or their firm.
The broker wants to build a relationship with the potential client. They ask questions to learn about the person’s financial situation and goals. Then, they recommend investments that might appeal to them.
If the person seems interested, the broker tries to get them to agree to a follow-up meeting or to open an account. They want to turn the cold call into a warm lead. The goal is to gain a new client to invest money through the broker.
Challenges with cold calling
Many people dislike getting unsolicited sales calls. They see them as annoying interruptions. People often hang up on cold callers or yell at them. Some even put their numbers on “Do Not Call” lists.
This makes cold calling challenging for brokers. They face a lot of rejection. They may have to make dozens of calls to get one potential client.
Some laws restrict cold calling. In some places, brokers can only call at certain times of day. They may need people’s permission to contact them. There can be fines for brokers who break these rules.
The cold-calling process
Cold-calling campaigns have several key steps:
Finding leads
The broker needs people to call. They get names and numbers from:
- Databases of potential investors
- Directory listings like phone books
- Mailing lists they buy or rent
- Online directories
- Public records and filings
Leads might be grouped into categories. For example, doctors, small business owners, or people with a certain net worth.
Preparing a script
Cold calls follow a script to guide the conversation. Key parts include:
- Introduction: Broker says who they are and what firm they represent
- Rapport building: Friendly comments to warm up the lead
- Qualification: Questions to learn the lead’s ability and interest in investing
- Pitch: Explains potential investment opportunities and their benefits
- Close: Tries to get agreement to meet or open an account
Scripts help the caller stay on track and cover key points. But most brokers customize it for each call based on the lead.
Making the calls
Brokers usually have a list of leads to call for the day. They just go down the list, calling one after another. If they have to leave a voicemail, they note it and try again later.
Brokers expect a lot of people to say no. They just move on to the next call. Some use auto-dialers so they can make calls faster.
Logging results
After each call, brokers record what happened. Common outcomes include:
- No answer
- Left voicemail
- Wasn’t interested
- Requested information
- Agreed to meet
- Hung up or got angry
The goal is to identify leads worth pursuing again. Notes about each call guide future follow-up.
Following up
Leads who showed interest get follow-up communications, usually starting with an email. It thanks them for their time and provides more info.
The broker tries to set up an in-person meeting. They prepare a customized pitch and materials for promising leads.
For very interested leads, the broker helps them open an account and make their first investments.
Cold calling regulations and restrictions
Cold calling is regulated to protect consumers from fraud and abuse. In the US, key rules include:
- No calls before 8am or after 9pm
- No calls to numbers on the National Do Not Call Registry
- Brokers must say who they are and what firm they represent
- Brokers can’t mislead people about investment risks and potential returns
The Securities and Exchange Commission (SEC) watches for brokers who use cold calling to commit fraud, like in pump-and-dump schemes. Victims can file complaints with the SEC.
Some states have additional restrictions on cold calling. For example, brokers may need to register in the state before making cold calls to its residents.
Many other countries also regulate cold calling. The rules vary but often restrict calling times and require ways for people to opt out of calls.
Alternatives to cold calling
Cold calling has drawbacks, so many brokers use other methods to find clients:
Warm calling
The broker contacts a lead who previously expressed interest. Perhaps they filled out a form online requesting information. The lead is “warm” to being contacted.
Warm calls tend to be more successful than cold calls. The broker already knows something about the lead and their interests.
Referrals
Brokers ask current clients to recommend them to colleagues, friends, and family. A referral is more likely to become a client since there’s an existing connection.
Many brokers offer bonuses to clients who provide referrals. They still have to convince the referral to invest, but the process is easier.
Inbound marketing
This means using content to attract potential clients to the broker. Instead of the broker reaching out, leads come to them.
Common tactics include:
- Blog posts and articles
- Videos
- Social media posts
- Webinars and events
The content educates people about investing and establishes the broker as an expert. Interested leads reach out to the broker to learn more.
Email and online ads may support the content and encourage people to contact the broker. But the broker doesn’t initiate individual outreach to leads.
Networking
Brokers meet potential clients through organizations and events for wealthy individuals. For example, a conference for doctors or a charity event.
The focus is on building relationships, not giving a hard sell. Brokers share their expertise and look for opportunities to discuss their services.
Over time, some of the people they meet may become clients. The broker follows up after events to continue the conversation.
