Does Telemarketing Still Work?
For some in the telemarketing industry, the Federal Trade Commission's creation of the National Do-Not-Call Registry was a call to arms. For telemarketing consultant Jon Hamilton, president and principal of JHA Telemanagement, it was a wake-up call.
"The number of unduplicated households on the do-not-call list today is 42 million to 44 million, according to sources I know who've analyzed the file," says Hamilton. "We're heading to 60 percent to 70 percent of all U.S. households being on the list. Without permission marketing, consumer telemarketing will cease to be an effective marketing tool."
At the time this interview with Hamilton was conducted in late September, two lower courts had ruled against the implementation of the Do-Not-Call Registry. The latter of the rulings, from Federal District Court Judge Edward W. Nottingham, found the registry unconstitutional on the grounds that it applied a different set of standards for free speech to politicians and fundraisers than for commercial entities. Many suspect this case to continue to the Supreme Court, putting the do-not-call list on hold until it is resolved.
While marketers might perceive this delay as borrowed time in which to keep on calling, Hamilton cautions marketers not to miss the underlying message.
"The future is clearly up in the air right now, but if the industry thinks it won some type of long-term victory, we should take a better look. Fifty million [registered phone numbers] have to be a strong message that it is time to clean up our act," says Hamilton.
In the following interview, we asked Hamilton to assess the current state of telemarketing and to offer some suggestions for how marketers can conduct telemarketing programs that respect the consumer and still produce results.
Inside Direct Mail: How has the creation of the National Do-Not-Call Registry affected companies' ability to use the telephone as a marketing/ sales channel?
Hamilton: It will obviously have a great effect on the numbers of available names for calling. More importantly, it will put an end to the attitude that consumer calling is a commodity business you purchase by the hour. It will now be extremely important, as it once was, that you evaluate your opportunity to sell on each call and tailor your message to the needs of that consumer.
IDM: With millions of Americans not yet signed up for the national registry, do marketers still have a viable source of prospects and customers for their marketing efforts?
Hamilton: Only temporarily, if we continue with business as usual. The prevailing belief at the moment is that these are the people who buy anywhere, so let's just call them more to make up the volume.
And there it is again, the commodity mentality. These people will quickly get the idea that they are the only suckers left, and they will join what will very quickly become a list of Americans more complete than the census.
IDM: What is the effect of a reduced volume in names on call centers?
Hamilton: Presumably, what's going to happen is a loss of 1 million to 2 million jobs in the telemarketing industry. And, if telemarketers continue to do business as usual, by making up for volume lost with more calls to phone numbers not on the the do-not-call list, then those people will get on the list fast. The companies that will survive are the ones who put marketing back in the word telemarketing.
IDM: What measures are companies legally required to take to ensure their compliance with state and national do-not-call legislation?
Hamilton: Simply put, acquire all of those [suppression] lists, plus the Direct Marketing Association's Telephone Preference Service list, and remove those names before calling. This is obviously simpler to say than do, but there are companies who will handle this for you if a company does not have the internal resources.
Beyond that, companies need to think about getting permission to call. This sounds like an impossibility given the current attitude of consumers, but practically, it is not. It all depends on your name recognition, and whether consumers and current customers consider your calls annoying.
IDM: How can direct marketers effectively obtain permission to call their prospects and customers?
Hamilton: If you talk to the average person on the do-not-call list and ask why they signed up, you'll find that it wasn't because of all the [telemarketing] calls [they received]. Only the ones from companies that abused their right to call them.
If companies sent mail that, in effect, said, "We know you're on the do-not-call list, but would it be OK if we called you no more than two times a year to tell you about our new products," they would find that people would say OK. Even better, we could ask people when they prefer to be calledor not called. We have the technology to [program call times]. I would recommend direct mail for this [communication], but you can collect the signatures electronically.
IDM: What new approaches might companies consider taking to help their telemarketing efforts be considered of value to prospects and customers?
Hamilton: As an example, years ago, the largest banks limited the number of times their customers could be called for any offer to four to six times per year. This has given way to a philosophy that the more our customers are called, the more money we will make. It's a business strategy that will send your customers to your competitors. The only reason this hasn't happened yet is that most of the competitors have had the same strategy.
The ones who become more concerned with what their customers think will be cleaning up in this "brave, new world." In the short run, however, they will give up some profitability, so many will not take this high road to future success.
Beyond that, the whole concept of "permission marketing" will begin to permeate the entire telemarketing channel, as more companies discover it as a way toward greater profitability.
IDM: Does more emphasis need to be placed on the hiring and training of call center representatives?
Hamilton: That has been the case for the last 10 or more years. Poor telephone sales representative quality and training, combined with a dependence on verbatim scripts, has been one of the primary drivers of consumers' negativity toward telemarketing. The other driver, of course, is sheer volume.
IDM: What changes in the hiring of telephone sales representatives need to take place?
Hamilton: In years past, companies used to test to find the best person for the job, but some of that has
disappeared in the need to fill 100 chairs by next week. Some large telemarketing companies do four hours of testing before they even put candidates in training classand these companies have been the most successful in telemarketing.
IDM: What role will training play in permission telemarketing?
Hamilton: Companies that want to succeed have to get away from the idea that they can call everyone in the U.S., read a script and get a percentage to [make a purchase]. Instead, you have to decide who is right for this offer, what's the right price, the right message and then target to that audience. Look at the people who have bought the product, and compare them to your listsbasic direct marketing. Had we been doing this all along, we might not be in this situation.
We got away from targeting because what used to be a marketing process became a commodity; the price of a call dropped, and telemarketing suddenly became a volume business. As soon as you say you'll call [the names in your database] as many times as you please, you cross the line of abusing your customer base. You have to try
to find out what the line is for each customer.
IDM: Will an integration of telemarketing with other media vehicles, like direct mail, help the overall effectiveness of direct marketers?
Hamilton: The greatest thing that could come out of the do-not-call list is to return telemarketing to its rightful place in the media mix. Over the years it has become a stand-alone operation at odds with a company's other channels.
Now the timing might be right for marketers to increase their budgets to drive calls to their 800 numbers. It's also the perfect time to evaluate your offers to see what your customers want and to support your marketing efforts with the appropriate mix of media.
IDM: What do the recent court rulings mean for the future of telemarketing?
Hamilton: The real thing that's happening here is [Judge Edward W. Nottingham's] ruling is going to throw a monkey wrench into the whole concept of the do-not-call list. I agree with the Direct Marketing Association that this is the time for the [telemarketing] industry to help [consumers] get off the list in a way that helps them control who they want to hear from and when. Now is the opportunity for the industry to get the do-not-call list done the right way.
IDM: What can marketers who continue to use telemarketing expect in the coming months?
Hamilton: I don't like to make predictions, because you never know what will happen. But I
believe that when the dust settles, people will get fewer calls. That's a good thing, because people will be less inclined to immediately assume that every call is telemarketing. It will almost become an event, rather than a drudge. If all you call is your existing customer base, and you never abuse them, you will get better response because all other telemarketing to them will go down.
You can take this [outcome] to the next level. If you have a file of people with whom you have an existing business relationship but struggle to get business from them, and if you're able to get their permission to call them, they're likely to buy from you when you do call. By giving you permission to call, they've signaled that they are probably interested in your offers.
You can't guess who's going to buy, but you can target your efforts to those who don't mind your calls and are likely to buy from you.