Banging the Phone

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Jul 9, 2006 3:26 pm

Does cold calling still work? Can you start a practice utilizing this prospecting technique?  It has been made clear to me that cold calling is not a good avenue anymore.   


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Banging the phone for 12 hours a day does not bother me.  There are a few other guys I work with that don’t cold call.  They solely rely on family contacts.  One guy pulls all his leads from his father.  That’s all good and well but I don’t have a resource like that.



The structure of my business plan consists of 30% family contacts, 40 % cold calling, and 30% networking, which will stem from different committees and social clubs I have joined.             



I know it’s the hard way, but I would like to rely more on cold calling.  Ideally, I would like to pull in my first 5 million by developing my own leads as opposed to using family contacts.



Thank You:



Shmer33 

Jul 9, 2006 4:41 pm

Cold calling still works, but pace yourself. If you plan to make 300 calls a day, then it probably won't work. If you only plan to make 100 calls per day, it might work. The difference?


One method is banging the phone, usually offering a single product idea. Example: Do you like this bond? No? Goodbye. (Next) Do you like this bond? No? Goodbye. (Next) ....


The other method plans to engage the prospect in conversation for 3-5 minutes. The quantity of calls goes down, but the quality of calls goes up. If you can qualify the prospect (QP), then that is considered a good call. Even if the prospect isn't ready to invest now, they should go into your prospect pipeline or "drip" list.


Let's say you qualify 25 prospects (QP's) per day. (Whether it be cold calling, cold walking, seminars, combination, etc.) Also, allow for uncovering 5 (QP's) on Saturday or Sunday. That's 130 (QP's) per week times 4.3 weeks per month equals 559 (QP's) per month. After 3 months, you'll have a pipeline of 1,677 (QP's). Figuring a conservative closing ratio of just 1%, that's opening 16 accounts in 3 months. In 12 months time, you should have approximately 64 accounts times your account minimum.


Can you continue qualifying 25 (QP's) per day everyday after a few months? No, unless you hire someone to help you. Why? You're servicing your new clients, so the time available for prospecting grows shorter with every new client you take on.


Is it easy getting 25 (QP's) per day? No. That's where preparation (on your part) comes in. Know what you're going to say, when the prospect responds a particular way. The better you become with your responses, the fewer number of calls you'll need to make to obtain the 25 (QP's).

Jul 9, 2006 4:44 pm

Sounds like you either cold call or find another line of work.


Of course cold calling still works. Always has, always will.  Done consistently with a strategic approach and a decent list.  Today, I would call business owners and pitch them a tax-free idea, as well as an investment for growth as a fallback.  I'd call corporate directories and pitch a mututal fund, and ask EVERYONE if they were looking to retire or change jobs in the near future (401k rollovers). The only thing I wouldn't do is call people at home, due to the DNC list (scrubbed or not) and the fact that I always had much better success calling businesses.


Don't listen to people who are not self-made.  They will almost always try to infect you with their negative feelings, often on topics (i.e. cold calling) that they simply don't have the cajones to do.  Other brokers used to come to our office and state that cold calling didn't work anymore (this was about 8 years ago). We'd just smile (as we continued dialing) and think how we were bringing in over 1 million/month in fee-based business doing this, while they were spinning accounts, and wearing out the printer with all of the  B share switch letters.

Jul 9, 2006 5:00 pm

Cold calling #'s that play out with almost any list:


100 new contacts= 10 leads; 10 leads = 1 new account


The 1 account you earn will take approx. 25 total callbacks to all 10 prospects; some you'll call back once, others 5 times before you open the new account or delete them from your pipeline. So.... 125 total contacts = 1 new account.  Average household should be 250k.  At 1% ROA that's $2500/year gross that took 125 total contacts. At 40% payout, that works out to $8/contact. For the first year. Look at year 2 and beyond: call the client quarterly and now you are earning approx. $250 net every time you talk to them. Not bad.


Jul 9, 2006 9:08 pm
Shmer33:

Does cold calling still work? Can you start a practice utilizing this prospecting technique?  It has been made clear to me that cold calling is not a good avenue anymore.   


 <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


Banging the phone for 12 hours a day does not bother me.  There are a few other guys I work with that don’t cold call.  They solely rely on family contacts.  One guy pulls all his leads from his father.  That’s all good and well but I don’t have a resource like that.



The structure of my business plan consists of 30% family contacts, 40 % cold calling, and 30% networking, which will stem from different committees and social clubs I have joined.             



I know it’s the hard way, but I would like to rely more on cold calling.  Ideally, I would like to pull in my first 5 million by developing my own leads as opposed to using family contacts.



Thank You:



Shmer33 




If it's CLEAR to you, why are you asking?

Jul 9, 2006 9:10 pm
The Judge:

Sounds like you either cold call or find another line of work.


Of course cold calling still works. Always has, always will.  Done consistently with a strategic approach and a decent list.  Today, I would call business owners and pitch them a tax-free idea, as well as an investment for growth as a fallback.  I'd call corporate directories and pitch a mututal fund, and ask EVERYONE if they were looking to retire or change jobs in the near future (401k rollovers). The only thing I wouldn't do is call people at home, due to the DNC list (scrubbed or not) and the fact that I always had much better success calling businesses.


Don't listen to people who are not self-made.  They will almost always try to infect you with their negative feelings, often on topics (i.e. cold calling) that they simply don't have the cajones to do.  Other brokers used to come to our office and state that cold calling didn't work anymore (this was about 8 years ago). We'd just smile (as we continued dialing) and think how we were bringing in over 1 million/month in fee-based business doing this, while they were spinning accounts, and wearing out the printer with all of the  B share switch letters.



Amen.

Jul 10, 2006 9:32 am

Top reasons why you should keep cold calling:


1 - Unemployed, welfare, trailerhome, satellite TV watching people who haven't yet figured out how to get themselves on the Do Not Call list - still need someone to talk to during the mid-day hours.


2 - With over 750,000 'financial advisors', or people who can transact business, in a nation of 50 million legitimate consumers of financial services - cold calling weeds out those who won't make it and help people (like myself) who are working for high asset/high revenue clients.


3 - Cold Callers who consistantly make 150+ calls per day, five days a week, 52 weeks a year - will eventually be consumers of prescription medication - who will run the price of my Pharmaceutical stocks up and up.


4 - Every now and then a cold caller may land a $10,000 accout that will motivate them to make another 15,000 calls in hope for another $25 in gross commission.


Keep it up cold callers - the big one is only a few more calls away!!!!!


Keep pulling the arm on that slot machine - the jackpot is sooooo close!!!!

Jul 10, 2006 10:47 am

So tell us, Apprentice. How did you earn your book? Was it family contacts? Marry a wealthy woman with the face of a mule? Be some FA's bendover buddy for a couple years until they retired? Or maybe you are the managers a$$ kissing buddy so you benefitted come account redistribution time?


I am eager to learn of how you have become so successful.....

Jul 10, 2006 11:22 am

Thanks Blarm - it took just over an hour for me to prove my point that people cold call because they believe it's a right of passage, or that someone told them to.  Again - keep up that line of thinking that defies all logic and all practicality.  Don't you believe (deep down in your heart) that if cold calling was the way and the truth - that there wouldn't be so many posts on the question, "does cold calling work?".  If all it took was to make 100 - 150 calls per day to be successful, then why to firms spend so much money training FA's?


Anyway - I know you're toungue and cheek.  Appreciate the challange and the pop shots - breaks up the day a bit.

Jul 10, 2006 1:05 pm

What about my post allowed you to claim that you had proven your point? I never stated that I personally cold call because I feel its the only legit way to grow your book, or that some senior FA told me it was the only viable means of gathering assets.


I truly feel that cold calling works. You need to have a disciplined and targeted way of doing it. Most people fail because they do not follow up and be persistent. Most brokers are too chicken s$it to make the first call, let alone the 7th and 8th callbacks that are often necessary to land that million dollar account.


Firms train FA's on product knowledge, practice management, niche marketing etc so that they may be better equipped to grow their business. Whether thats cold calling or another means is up to the FA.


In my opinion, cold calling is still a very effective way to grow a book.

Jul 10, 2006 3:28 pm

Sorry Blamy - I took your personal shots at my business as meaning that, 'in your opinion', the only way one can be successful without cold calling is by butt-kissing, marrying money, or slave-labor for a top producer.  The fact that you'll assault, belittle, or name call anyone who chooses not to take a painful dose of 'beating their head' against wall points out to me that either you're ticked off that you wasted time cold calling - or you've taking my route of encouraging people to cold call in order to keep them out of our way in this challenging business.


Either way - my point (that you made for me) is that the general attitude in this business is that one MUST cold call at some point in their career or their success will be disregarded as being lucky or working in a capacity of lazy concubine. 


Rule number 1 - Hope is not a valid strategy:-)

Jul 10, 2006 5:06 pm

Aaaah yes- Is this where we get into the "target marketing", "deep & narrow approach", "natural affinities" etc etc approaches?


There is a reason that 80-90% of people don't survive this business within 2-3 years.  It's called a lack of worth ethic and the inability/unwillingness to do what needs to be done.  Unless you are connected, inherit a book, are extraordinarily lucky, or rich enough to mail out 100,000 mailers a month....you have to cold call to survive.


Whether you are trying to create alliances (CPA's, attorneys), get buts in seats for seminars, or just produce business- it all comes down to calling individuals and asking them for the business. 

Jul 10, 2006 5:46 pm

The most successful people I know and know of in this business all cold call. IW, RD, HP, NB,all share two things in common. Each produces in excess of two million dollars a year and each cold calls. AD, EP, RZ, each produce in excess of 1 million dollars and each cold calls. Then there's the next level down, MM, ES, TC, each produce in excess of $500k a year and each cold calls. Apparently there's a lot of money to be made in those trailer parks.


Does cold calling still work? Yes, if you do it consistantly. Yes, if you refuse to listen to the nahsayers. Yes, if you track your results. Yes, if through your tracking you can figure out what's getting the best results and sticking to that, day in and day out.


Cold calling is a very effective way to meet new people, and start new networks. Many brokers who use seminars as their primary marketing channel integrate cold calling to fill the seats. So, are they seminar presenters or are they cold callers?


Dob gives good advise to call business owners. These people have money and are risk takers. They are likely to listen to a new idea, or take a chance on a new person.


As for approach, I differ from Dob's advise in that I'm a numbers guy. I call with a product and try to make as many contacts as possible. Specifically I call with tax free bonds, using a 30 second presentation. If the prospect says no I move on. My approach dictates believing someone when they say they're not interested. The time I spend trying to coax them into agreement is time I could be using to find someone who is interested. Years of doing this has made me keenly aware of the difference between absolutely no and no maybe. The no maybes get more probing.  This sense of when to stay with a prospect is something every caller developes over time.


Dob's approach actually comes from the days before the phone when sales people had to travel long distances between sales calls. They had to make every call count.Thus, don't get put off by knee jerk objections. The difference in our philosophy is as old as the business and neither is wrong. It's a matter of what you're comfortable with and what works for you. In fact, my number one trainee of all time, and business partner, my wife, uses Doberman's approach. I trained her at SB to use my approach. The BM at that office had risen through the ranks using the same approach I was teaching the rookie. So we agreed it was the best way to go. She hated it and much like Dob can give chapter and verse as to why it's not the way to go. Bottom line, she did it her way and rose to 60th in the firm in new accounts opened. That's 60th out of about 10,000 brokers.  Still, the BM and I like our way better. But it's hard to argue with success. Get out there and try it. What ever way works for you. Go for it!

Jul 11, 2006 11:03 am
tjc45:

The most successful people I know and know of in this business all cold call. IW, RD, HP, NB,all share two things in common. Each produces in excess of two million dollars a year and each cold calls. AD, EP, RZ, each produce in excess of 1 million dollars and each cold calls. Then there's the next level down, MM, ES, TC, each produce in excess of $500k a year and each cold calls. Apparently there's a lot of money to be made in those trailer parks.


Does cold calling still work? Yes, if you do it consistantly. Yes, if you refuse to listen to the nahsayers. Yes, if you track your results. Yes, if through your tracking you can figure out what's getting the best results and sticking to that, day in and day out.


Cold calling is a very effective way to meet new people, and start new networks. Many brokers who use seminars as their primary marketing channel integrate cold calling to fill the seats. So, are they seminar presenters or are they cold callers?


Dob gives good advise to call business owners. These people have money and are risk takers. They are likely to listen to a new idea, or take a chance on a new person.


As for approach, I differ from Dob's advise in that I'm a numbers guy. I call with a product and try to make as many contacts as possible. Specifically I call with tax free bonds, using a 30 second presentation. If the prospect says no I move on. My approach dictates believing someone when they say they're not interested. The time I spend trying to coax them into agreement is time I could be using to find someone who is interested. Years of doing this has made me keenly aware of the difference between absolutely no and no maybe. The no maybes get more probing.  This sense of when to stay with a prospect is something every caller developes over time.


Dob's approach actually comes from the days before the phone when sales people had to travel long distances between sales calls. They had to make every call count.Thus, don't get put off by knee jerk objections. The difference in our philosophy is as old as the business and neither is wrong. It's a matter of what you're comfortable with and what works for you. In fact, my number one trainee of all time, and business partner, my wife, uses Doberman's approach. I trained her at SB to use my approach. The BM at that office had risen through the ranks using the same approach I was teaching the rookie. So we agreed it was the best way to go. She hated it and much like Dob can give chapter and verse as to why it's not the way to go. Bottom line, she did it her way and rose to 60th in the firm in new accounts opened. That's 60th out of about 10,000 brokers.  Still, the BM and I like our way better. But it's hard to argue with success. Get out there and try it. What ever way works for you. Go for it!



Would you care to share how you open your product call? Thanks.

Jul 11, 2006 12:24 pm

[/quote]


Would you care to share how you open your product call? Thanks.


[/quote]


Sure, here are a couple of scripts I use:


Good morning, Mr. Jones this is tjc at Big Deal investments and I'm calling you today with a fantastic PA tax free bond yielding 5% tax free. In your tax bracket that's the same as a CD yielding almost 8%. Does this sound like something you could have an interest in? 


or


Good morning Mr Jones this is tjc at Big Deal investments And I'm calling you today with information on what's called at tax free unit trust are you familiar with these?


Yes/no


(As you are aware) It's a portfolio of high quality municipal bonds that pay a monthly income. We have a trust coming to market that will pay over 4% tax free. Could I send you some information on it?


or


Mr Jones this tjc over at Big Deal investments and my reason for calling you is to let you you know that we've been seeing some very attractive preferred stocks coming to market with yields close to 7%. I have nothing for you today but the next time one is coming to market would you like to hear about it?


or


Mr Jones this is tjc at Big deal investments and I'm calling you today with information on a tax free mutual fund that's five star rated and yieding over 5% tax free. In your tax bracket that's the same as a CD yielding almost 8%. Do you currently own any CDs yielding 8%? Could I send you some information on this fund?


There are 100 variations on all of the above. All are designed to get a conversation going. I'm a firm believer in the sell them a product, then work with them to go from product salesman to trusted advisor. Having a piece of their money invested gives you access to them. They will accept your calls and listen. Over time you'll prove to them who you are. As you do you'll get more and more of their assets to invest. One day you'll call and say You know we've been doing business for some time on these tax free bonds and I want you to know that over here at Big Deal we specialize in comprehensive financial planning helping folks like you reach their financial goals. What I'd like to do is to set up a time for us to meet and see if there's something we can do to add value to your situation and help you accomplish your goals. If they turn you down you've still got a bond buyer.


Calling is a process. The goal of each call is to move the prospect along or eliminate them. Many of the people called have money in the bank or coming due from other sources. A large part of the job is uncovering that money and developing a future funds due call back file. Bill Good does a great job of explaining this process in detail. Build a pipeline of prospects going in one end and coming out as clients on the other. If get prospects that are fence sitters go through and blow them out with a hard close presentation. They buy or they're gone. Don't waste your time on people who aren't going to open.


This is a hard way to build a book. And it may seem old and tired. Let me tell you, old and tired works. Times have changed. Calling regs have changed. Products have changed. But people? The people we call today haven't changed. Hit them at the right time with the right idea and they'll respond positively. One of the brokers in my office opened a million dollar mutual fund account last week from a cold call prospect. That's the exception, still, it's a million dollar account from a cold call.



Jul 11, 2006 1:51 pm

"This is a hard way to build a book. And it may seem old and tired. Let me tell you, old and tired works. Times have changed. Calling regs have changed. Products have changed. But people? The people we call today haven't changed. Hit them at the right time with the right idea and they'll respond positively. One of the brokers in my office opened a million dollar mutual fund account last week from a cold call prospect. That's the exception, still, it's a million dollar account from a cold call."


Aren't people different than they were 20 years ago.  My parents use to pick up the phone for telemarketers in the 80s.  They also use to let door to door salesman into their living room back in the day.  They would never do it now because they have been conditioned to put their defenses up since there have been so many over the decades.

Jul 11, 2006 2:34 pm
JimmytheRocker:

"This is a hard way to build a book. And it may seem old and tired. Let me tell you, old and tired works. Times have changed. Calling regs have changed. Products have changed. But people? The people we call today haven't changed. Hit them at the right time with the right idea and they'll respond positively. One of the brokers in my office opened a million dollar mutual fund account last week from a cold call prospect. That's the exception, still, it's a million dollar account from a cold call."


Aren't people different than they were 20 years ago.  My parents use to pick up the phone for telemarketers in the 80s.  They also use to let door to door salesman into their living room back in the day.  They would never do it now because they have been conditioned to put their defenses up since there have been so many over the decades.



From my experience people are the same. 20 years ago wasn't exactly the age of innocence. Then, as today people were hard to reach, hung up on me in a New York minute and were as untrusting as they are today. Nothing has changed. That's what makes cold calling as hard as it is. What's gotten tougher are the regs and the screening technology. Because of this calling people at home has gotten harder. Luckily for me I stopped calling people at home in 1990. I call businesses. I hire callers to call homes to fill seminars.


 Cold calling is not easy. It's hard, really hard. Which is why most brokers won't or don't do it. The brokers who won't or don't are the biggest naysayers. I have yet to hear a successful cold caller, one who built their book on cold calling and is still building, say that cold calling no longer works. And as I said last week one of my peers, a $500k producer, 8 years in production, opened a million dollar account from a cold call. One of our trainees, second year, is opening 8 to 12 accounts a month. The accounts range in size from 10K to 100K. She does this every month from cold calling. And personally, I think her approach is horrible, the list she is calling sucks, and she wastes too much time between calls running for mayor. Yet, coming up on her second anniversary she has over 150 accounts to work with to penetrate. She's doing it her way and it's working. So who's to argue with her work habits?


Jul 11, 2006 3:20 pm

Tjc45, great info, as usual. I built my book on cold-call before DNC lists and I had a manager who would encourage me by telling me it was the lowest time/reward sort of prospecting, but since I had nothing else, I should pound it until I had some sort of network established. I sure can see that it’s still true that someone new to the business should be at that unless they have a more profitable method of prospecting available to them. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


Having said that, I’m a little surprised to hear that there are larger producers who feel that’s an efficient use of their time. Most that I know say they feel they need to hit a certain dollar return per hour, you know “My time is worth $X/hour, if my current activity isn’t producing that, I should either hire someone to do it cheaper or consider dropping the task from my practice”. Do you find that’s true with people you know, and if so, what do they estimate their $/hr is cold calling?


 


Also, it was my experience that cold calling starts a lot of low dollar accounts. They can be worked, to be sure, and some become large, but most of the time they don’t meet the $/hr criteria I mentioned above, so they’re either ignored or handed off to juniors. Over the past few years there’s been a great push for advisors to have few households with higher minimum assets per household. How does cold calling fit into that construct, again, for the experienced producer?


Jul 11, 2006 4:57 pm
mikebutler222:

Tjc45, great info, as usual. I built my book on cold-call before DNC lists and I had a manager who would encourage me by telling me it was the lowest time/reward sort of prospecting, but since I had nothing else, I should pound it until I had some sort of network established. I sure can see that it’s still true that someone new to the business should be at that unless they have a more profitable method of prospecting available to them. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />



Having said that, I’m a little surprised to hear that there are larger producers who feel that’s an efficient use of their time. Most that I know say they feel they need to hit a certain dollar return per hour, you know “My time is worth $X/hour, if my current activity isn’t producing that, I should either hire someone to do it cheaper or consider dropping the task from my practice”. Do you find that’s true with people you know, and if so, what do they estimate their $/hr is cold calling?



Also, it was my experience that cold calling starts a lot of low dollar accounts. They can be worked, to be sure, and some become large, but most of the time they don’t meet the $/hr criteria I mentioned above, so they’re either ignored or handed off to juniors. Over the past few years there’s been a great push for advisors to have few households with higher minimum assets per household. How does cold calling fit into that construct, again, for the experienced producer?




Mike, it's all still a numbers game. I still need to open new accounts. The easiest way for me to do that is to continue to do what I do best and that's cold calling. I do less of it now than I use to do. Actually, considerably less. But I still do it. And it still pays off. I open accounts and work them. I also employ direct mail and I hire callers to fill seminars. Right now we have no seminars planned for the summer. I just don't want to work that hard until the weather changes. Too many toys (Boat/Motorcycles) to play with during the warm months.


As for opening small accounts, that's true. Within my practice I work them and try to develope them. That's the deal, the way it is. Still, many accounts opened are large. Last week I opened two accounts for about 250k each. The week before I opened four new accounts for a total of about 1.3 mil. None of these accounts came from cold calling, all were referrals. Yet the referrers were all clients opened from cold calls.


When I calculate my time value I get depressed because it shows me I shouldn't be screwing off riding "Gertruda The Bug Slayer" my BMW K1200LT, I should be working. This is why I have a partner, my wife, who is an advisor, and I also have a full time assistant who makes my business turn key.


Our firm wants the higher household amts also. So far they haven't set a minimum. Again, for me the route to a large account is by starting with whatever I can get to start the relationship but, with one caveat. That is, I'm not interesting starting a relationship for say $10,000 if I believe it's the prospect's last 10k. I need to see serious size to continue the propecting process. Usually this leads to larger first trades, as I call them, of 25 to 50k. But I'll go with a 10k trade if the prospect has serious assets I can compete for.


Lastly, the half million dollar guy I spoke of in the previous post doesn't calculate his time value. he's on the phone all day.


Jul 11, 2006 6:17 pm

Mr. Apprentice:


 <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


I am going to keep it short and simple:


You are full of pure unadulterated bull$hit…..