BTB, Inbound Regulation on Horizon?

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This column was created to update you on the telephone channel. This first month, it goes a bit further to consider the channel's future as well.

At the American Teleservices Association's Washington Summit in April, ATA officials and lawyers suggested changing marketing practices as well as lobbying lawmakers to minimize further regulation. Let's connect some of the dots.

Learning from recent history. In 1991, marketing by telephone was unregulated. By 2003, there were multiple federal laws and a patchwork quilt of state regulations. In 1999, four years before the national do-not-call registry and associated regulations took effect, one didn't have to do much digging to discover that:

* A majority of the public perceived telemarketing as a nuisance.

* The number of states with no-call lists had grown annually for years.

* The Direct Marketing Association's Telephone Preference Service had quadrupled in size in two years.

* Consumers were annoyed or frightened by abandoned-dialer calls.

There were many other indicators, and some predicted that vast consumer dissatisfaction with telephone marketing would lead to more regulation. The Federal Trade Commission announced its measures in late 2002.

In 2006, one doesn't have to do much digging to discover:

* The FTC's Telemarketing Sales Rule already regulates certain aspects of inbound calls.

* Consumers view interactive voice response systems (particularly those without a 0 opt out) as a nuisance.

* The number of states proposing IVR laws, such as press 0 for a live agent, is rising.

* Many are annoyed by consumer telemarketing offers received at work.

* Some states are considering expanding their telemarketing regulation to business to business.

* The TSR already regulates BTB sales of non-durable office supplies.

* Some states are proposing laws requiring disclosure of the geographic location of call center agents.

Will history repeat itself? State activity has begun, and the FTC is required by law to revisit telemarketing regulation every five years, next in 2008.

Optimizing profits. As business people, our obligation to shareholders and owners is to maximize profits. That is why we might consider a few simple rules, such as:

* Optimize profits per sale. How? Make offers only to those who are likely to buy. Don't waste money with a shotgun approach.

* Optimize profits through retention. How? Deliver customer-friendly service that builds loyalty, because replacing a customer typically costs five times as much a retaining one.

* Use the golden rule. If you were on the other end of the telephone, would you like to speak with that rep? Receive that offer? Navigate that menu?

This high road can be more profitable, and it minimizes future regulations and the associated hassle and compliance expenses.

On the other hand, if a practice sells or saves money but will be perceived as a nuisance by many, it may be prudent to think twice. The revenue gained today is likely a fraction of that which would be gained in the months ahead with a more customer-focused approach. Also, the practice is likely to be curtailed by regulations and record-keeping requirements that slash margins.

The "good old days" of minimal regulation. Marketers are still on the honor system for the majority of calls. We mostly enjoy free discretion in inbound and BTB outbound, just as we once did in consumer outbound calling until laws responded to consumer sentiment. Regulators no longer are new to telemarketing, so as regulation begins in BTB and inbound it could escalate rapidly. The choice is yours and mine on BTB calls and on each inbound call. Can we prove to government that it need not regulate legitimate business to watch out for the interests of consumers because we already do so?

Perhaps we might consider singer Joni Mitchell's observation in her classic, "Big Yellow Taxi": "Don't it always seem to go, that you don't know what you've got 'til it's gone..."

What's happening: The DMA Teleservices Conference is June 4-6 in Newport Beach, CA. (www.the-dma.org).

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