Outlook 2005: Despite DNC, Teleservices Industry Is Poised for Growth

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Some would say that consumer cold calling is more or less dead, more than a year after the Federal Trade Commission's do-not-call registry was created. Many national marketers are shifting acquisition efforts to other media with less perceived regulation. Reinventing themselves, more call centers are becoming contact centers to handle e-mail and Web chats as well as telephone calls.


Mitchell Lieber, president of Chicago-based call center consultancy Lieber & Associates and former president of the Chicago Association of Direct Marketing, is bullish on teleservices' future in his discussion with DM News.



What is the outlook for teleservices this year?


The outlook is good. Teleservices continues to be one of the most important channels for marketing, sales, orders and services, especially when it's part of an integrated effort. A few of the many successful integrated efforts include toll-free numbers in catalogs, advertising, the Web and telephone follow-up to direct mail offers.


More call centers are becoming contact centers that handle e-mails and Web chats as well as calls, and the business continues its globalization. The positive economy also is positive for teleservices.


Has the national no-call registry severely affected outbound telemarketing? How has the industry reacted?


Outbound telemarketing includes business-to-business, business-to-consumer, prospecting, retention and cross-selling. While much of this continues, and all of it continues with smaller companies, the DNC registry has ended many national BTC cold-calling campaigns. Many national BTC marketers have shifted acquisition dollars to media with greater perceived penetration - i.e., less regulation - such as DRTV, the Web and mail.


The good news is that these other media generate inbound calls, though any lift in inbound is a small fraction of what was lost in BTC outbound prospecting. The other good news is that many telemarketing organizations are becoming more sensitive to consumers.


What are some of the highlights of 2004?


In regulation, the lawsuits contesting the DNC registry came to an end, and there was more enforcement against egregious violators. The fees for accessing the registry increased, and the frequency of scrubbing against the list became 31 days at the end of the year.


Later in 2004, there were more openings of new U.S. call centers announced after more than a year of closing after closing. In technology, VoIP [Voice over Internet Protocol] became ready for prime time, voice recognition became more widely deployed and more vendors provided multiple solutions - e.g., ACD, e-mail routing, Web chat and dialer - in a single "box."


Offshore call centers continued to be important, and companies finally began to understand their limitations and potential impact on lifetime value as Dell shifted BTB customer support to the United States and others began to integrate U.S. and offshore call centers.


What challenges will call centers continue to face in 2005? And what about companies that use their services, the marketers themselves?


One challenge will continue to be commodity versus quality. Call centers will continue to face client pressure to do work at a low price, followed by expectations to improve quality, which costs money. This can become very pronounced with offshore operations where reps are not allowed to deviate from scripts. Outbound consumer operations will continue to look for ways to grow in the DNC registry world. The challenge for marketers and their clients will be to use the telephone where it excels - as a tool to develop relationships in a customer-focused manner, thereby increasing sales and retention. This is more subtle and sophisticated than the old model of "dialing for dollars," but still generates sales.


There have to be some opportunities, right?


There are opportunities in 2005. BTB calling, though volumes are necessarily smaller than BTC. Other good opportunities are handling e-mail, Web chat, voice-recognition and inbound calls. So are more sophisticated integrated campaigns and niche markets.


So where does the teleservices industry stand today? What are its new sources of revenue?


Teleservices is no longer a kid; it's a relatively mature channel. Sources of revenue for outsourcers are frequently associated with new developments, particularly when tied to more calls for less money such as with voice recognition and also offshore call centers. Other revenue sources are handling e-mails and Web chats.


How big is the teleservices industry?


I read a stat that the phone channel is still the largest in dollars but that the Web is gaining just as one would expect. Ultimately, the Web will overtake the phone channel and the smart teleservices firms will ride the wave by being a partner of the Web.


What would you advise call centers to do for growth as well as users of telemarketing?


For growth, outsourcers should look in several different directions. One is to have offshore facilities or partners for price-conscious clients that are looking offshore and have programs appropriate for offshore. Also, be able to handle e-mails, Web chats and voice recognition. Another direction is to establish clear expertise in exploitable market niches. Users of telemarketing can make more sales in 2005 by using outbound calls for relationship development and retention of current customers. It costs five times as much to acquire as to retain a customer, so retention is an enterprise's most cost-efficient acquisition effort. More sales also can be made with well-designed win-back campaigns to lost customers.


Customer-focused upsell and cross-sell is another way to grow. Inbound toll-free numbers should be ubiquitous in advertising, collateral and on the Web and prominently displayed multiple times. Consider testing a Web site-generated online chat that starts with "Hi, this is Suzie. Can I help you with something?" Automatically trigger this chat the instant a shopping cart is abandoned.


Is the worst behind the industry?


Yes, for the short term. Much of the adjustment to the DNC registry in the United States is complete, though new Canadian telemarketing laws are in limbo. The largest advertising recession since World War II is over, and the economy is better.


Offshore outsourcing continues to be important for consumer calls, so U.S. firms involved in consumer calls that are not involved in this trend may eventually lose business to it. If you handle inbound calls, chances are you will need to handle e-mail and Web chat sooner or later or lose business to those that do.


Did the 2004 elections help the call center business?


Politicians are exempt from the DNC registry, so campaign-related calling was a shot in the arm to companies who did that work. In the larger view, Republicans are considered to be more pro-business, yet the DNC registry is the product of a Republican administration. Democrats voiced opposition to offshore outsourcing, but this is an issue that many thought would be difficult to affect.


Telemarketing regulation tends to be revisited every four [to] seven years, so at the federal level, the focus is now in other areas for a few years.


E-mail Mitchell Lieber at m_lieber@lieberandassociates.com.


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