Teleservices Pioneer APAC Hangs Up on Outbound

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A company that built its business on outbound telemarketing is getting ready to shut down those dialers for good.


Word that old-guard telemarketing firm APAC Customer Service would cease business-to-consumer outbound operations by the end of the year saddened teleservices veterans last week, but the news didn't surprise them.


APAC, Deerfield, IL, said late last month that it would exit virtually all of its unprofitable outbound business, worth $60 million in annual revenue, and close its outbound call centers, representing more than half of its call center facilities.


Rumors of the move were circulating the industry for at least a year, said Sandy Pernick, a Chicago-based teleservices consultant.


"It's definitely sad," Pernick said. "They were pioneers in the industry."


APAC founder Ted Schwartz began the company in the mid-1970s, selling radio advertising air time via direct mail. When telemarketing emerged as an industry in the early '80s, Schwartz switched APAC's focus, and the company became one of the first major teleservices agencies.


In the early 1990s, APAC was among the first teleservices agencies to hold an IPO and become publicly owned. Many teleservices veterans view that period as a turning point in the industry's history, marking a shift from mainly entrepreneurial business to more corporate-oriented management.


Schwartz once was worth more than $1 billion and was on Forbes' list of wealthiest Americans, though APAC's value has declined significantly since its high point in the late 1990s. He stepped down as CEO in March 2004 but remains chairman. The company's annual revenue peaked in 2000 with $464.3 million, but at the end of 2004 it reported only $273.2 million in revenue.


APAC said it would cut 400 salaried positions, but the number of laid-off call center agents -- who typically earn hourly wages -- is likely higher. In a conference call, chief financial officer Marc Tanenberg, who departed APAC after the announcement, said the company would cut 30 percent of its 7,000 workstations by the end of the year.


Tanenberg declined to reveal how many call centers APAC would have left. But he said that the remaining inbound centers typically are larger facilities whereas the closing outbound centers generally are smaller.


Teleservices veterans found it difficult to avoid seeing a connection between APAC's abandonment of outbound and the national no-call registry. During the conference call, APAC executives said clients were demanding offshore outbound capacity that the company lacked and had no plans to get. However, Pernick noted that other domestic outbound providers are surviving.


No-call lists are shrinking the universe of consumers to call, said Larry Kaplan, CEO of Tele Business USA, Northbrook, IL, who does only business-to-business calling now. Furthermore, company-specific opt outs by consumers, which trump existing business relationship exemptions, are draining the pool of existing customers.


"Opt out is even more serious," Kaplan said. "You're losing people you're allowed to call."


An APAC representative did not return calls last week. However, during the conference call, executives painted the shift from outbound to inbound as inevitable and said they were just increasing the pace of the transition.


"We had a choice of letting it happen to us or trying to manage it," CEO Robert Keller said during the call. "When we let it happen to us, our ability to react as well as we would like financially is compromised."


APAC executives promised investors that the new business model would return the company to profitability. Others in teleservices remain hopeful about the future viability of outbound, with or without APAC.


"It doesn't signal the end of outbound telemarketing whatsoever," Pernick said. "People are compliant and making money."


Scott Hovanyetz covers telemarketing, production and printing and direct response TV marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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