Many hate it because you have to get out of your comfort zone and have to deal with many rejections. But for many, it can also work.
So does cold calling work in real estate?
With cold calling, you can get a conversion rate for meetings or appointments of 2%.
Compared to other online marketing methods, this is not a bad number. But if it works or not depends a lot on your sales skills and how good you are in making calls.
This article will discuss the reasons why so many hate cold calling, show you different statistics about it, analyze how it compares to other conversion rates, and whether you should script the calls or not.
What Is Cold Calling and Why Do Many Hate It So Much?
Cold calling is one of the oldest marketing methods in sales.
It means calling a potential customer who had no prior interaction with you or shown no interest in a product or service you offer.
It is also a form of interruption marketing, since no call appointment is made with the person receiving the call.
There lays also the reason why many have a love-hate relationship with it.
On the receiving side, it can come at the right moment and just when the person has a need for the product or service, and very often it can come at a bad time, when the person is otherwise occupied and doesn’t have any need for that product or service.
On the salespersons’ side, it is uncomfortable, since they will have to deal with many rejections before getting successful results.
Being able to handle rejection in the majority of cases and thus having a large amount of resilience is part of the cold calling game and is necessary to be successful at it.
The cold caller basically takes the role of being a website generating traffic that in the majority of the cases doesn’t come back to the website or converts into being a lead or customer.
Since websites don’t have emotions, you usually only realize how many people don’t convert into leads (rejecting it) by checking the website analytics.
If websites would be humans, they would have also a love-hate relationship with attracting traffic and complaining that it’s not working.
Stats about Cold Calling
Let’s first check for a second some interesting stats about cold calling in general.
In this article, I already mentioned some interesting and surprising facts about using the phone as a tool to follow up.
And the following stats I found are again a bit surprising in a world where you would suspect that most people hide behind texting, chatting, and emailing.
So, let’s jump into some important cold calling statistics:
1) About two thirds of buyers accept cold calls (source).
2) 27% of sellers say that making phone calls to new contacts is very or extremely effective (source)
However, another statistic claims that it’s ineffective in 90.9% of the time (source).
3) More than 50% of senior-level buyers want a phone call (source).
4) You need to prove your value to prospects in 5 to 10 minutes (source).
5) Less than 2% of cold calls result in a meeting or appointment (source).
This number sounds bad at first glance, but when you compare it to the conversion rate from website visitors to an actual appointment, which is between 1-3%, it’s not bad at all.
6) In less than 1% of the cases, a cold call results in a sale (source).
In another statistic, it’s 5% (souce).
7) Wednesdays seem to be the best days to make cold calls.
On these days, 46% more conversions are made in comparison to Mondays (source).
9) Since a typical business person receives about 115 emails per day, a phone call stands out (source).
What Can We Derive from The Above Statistics and How Do They Compare With Other Conversion Rates?
From the statistics above, you can’t categorically say that cold calling isn’t working.
From the digital marketing perspective, it gives you a conversion rate for meetings or appointments of 2%.
This is not bad if you compare it to website conversion rates, where you first need to convert the traffic into a lead and then the lead into an appointment by doing warm calling and other types of follow ups.
In this article, I discussed already real estate marketing plans and used an example of Facebook Ads.
From Facebook Ads, you can get a conversion rate for generating leads of 10.68%.
Keep in mind these are not yet appointments.
Depending on how good you are with calling warm leads, you may convert 10% of them to appointments, which leaves us with total traffic to appointment conversion rate of 1.068% (10.68% x 10%) which is even lower than the above mentioned cold calling conversion rate for meetings or appointments.
Even if you are better at converting the warm leads, you might not get much higher than the 2% mentioned above.
So, by using just this example, a clear or significant advantage can’t be found here.
Then, there is the 1% conversion rate of cold calls resulting in a sale, which is also not bad compared to website sales conversion rates (in real estate, this would be difficult to achieve with just a website though).
But even for e-commerce websites, the average conversion rate is 2.63% in the U.S. (source).
Keep in mind that these are usually low to mid-priced items, and not properties.
If it were common to sell properties like e-commerce products, this conversion rate would be probably lower because higher priced products usually have lower conversion rates.
So, I assume that the 1% of cold callings isn’t a bad one either.
And finally, it seems to work for sales representatives in 9.1% to 27% of the time.
Is Prospecting Really Cold Calling? The Special Case with Real Estate
From the definition right at the start, cold calling in real estate would be, if you took out a phone book and just blindly called any number your finger lands on and then tried to sell your services, a deal or a property.
But in real estate it’s a bit different and, many times, I would call it a special case. Prospecting with “cold leads” is rather a grey area.
No matter if you are a real estate investor, a realtor or another real estate professional, most of the time you will find leads for prospecting by some kind of property listing websites.
There, you can find potential sellers (properties for sale), and also potential buyers (investors) when looking for example for fixer-upper properties or rental properties.
Is it really cold calling when you as a real estate professional see, for example, a Craigslist for sale ad from the owner with a phone number, and call that number?
Are persons that are offering their properties for sale or for rent really not interested in a product or service helping them solve their need?
They basically say: “Hey, I have the need to sell or rent my property. Here is my number, call me.”
Well, they are not necessarily interested in your services, but they are interested in selling or renting their property.
So, it’s kind of a grey area between cold calling and warm calling there.
Therefore, I see cold calling in real estate as a rather special case.
To Script or Not to Script – That Is the Question
I want to share with you one of my favorite videos from an inspiring teacher of mine, who really knows how to make good calls.
I’ve already mentioned him a few times on my website. His name is Claude Diamond and he hates scripts.
And I think there is a good reason for that.
So here comes the video where you can see how he does a cold call to someone with whom he never had contact using his system:
And unfortunately, many “Gurus” are recommending using one.
I don’t know about you, but when I use a script and for some reason the conversation goes in a surprising direction and the person on the other side comes up with something unaccounted for, or starts being a bit of a prick, it can get slippery fast.
Besides, when I am on the other side and get called by someone using a script, I immediately know that they are using one and I pay less or no attention at all.
It just doesn’t feel authentic and thus the sales message doesn’t even reach my ears and therefore, the conversion rate probably goes down.
Claude Diamond prefers to use no scripts at all, but that doesn’t mean that he isn’t in favor of a system.
He has developed a clever system called G.U.T.S. that you can learn and that you should role play with others to be able to react spontaneously in different situations, without losing your pride as a salesperson.
Because, according to him, the 11th commandment is that you can always lie to a salesman.