It's actually a little more complicated than that.

The person having the reading does the work. To start with, they are obviously going to one of these people for a reason, and they will generally want that reason to be revealed.

When the cold reading is being done, the reader will throw out blanket statements and narrow them down.

Does Steve mean anything to you?

No

Well there is someone with the letter s. Susan, Sarah?

No

What about a street name or a workplace?

No.

Well there is definitely something to do with a letter s. Keep that in mind as it may mean something to you when you leave.

That's not classed as a miss, so they get a pass on that, then eventually they'll strike something that makes sense, and the person getting the reading will fill in all the blanks, but the reader will get the credit.