Does DNC Really Spell E-N-D for Telemarketing?

The American Teleservices Association is touting this year's annual legislative conference in Washington as a “Teleservices Survival Conference,” keying on fears that federal regulation could doom the outbound industry.

Many outbound telemarketing veterans and experts say the ATA isn't stretching the situation.

In a letter to ATA members and past conference attendees, the association warned that the “industry faces serious survival challenges at both the federal and state levels.” The letter urges industry members to attend to “learn, lobby and push our agenda.”

The regulatory change filling telemarketers with the most dread is the national no-call registry. The registry, which the Federal Trade Commission expects to launch in the summer, will be free to all consumers. States with free DNC lists have had high rates of registration, such as in New York, where an estimated 2 million households are registered.

Even faced with those numbers, companies that use outbound telemarketing are not fully aware of the danger, said Jon Hamilton of JHA Telemanagement, a teleservices consultancy. Many in finance and telecommunications think that because they are outside FTC jurisdiction, they will be exempt from the DNC list.

“They're missing the whole point,” Hamilton said. “The FTC has created no exemptions, except for political calls. It's just that they can't enforce [it] on these people.”

But the Federal Communications Commission can enforce rules on anyone who uses the phone for marketing. In January, the FCC said it expected to issue its final rules concerning telemarketing in late spring and that it was working closely with the FTC.

Not everyone views the national no-call list in an apocalyptic light. Telemarketing will be viable so long as relationship marketing remains protected, said Jeff Nevins, analyst with First Analysis Securities Corp., Chicago.

It's questionable whether cold calling is effective anymore, he said. Most of the teleservices companies Nevins covers derive the bulk of their income from calling to pre-existing business relationships.

The FTC's rules let telemarketers call consumers with whom they have a business relationship up to 18 months after the consumer's last purchase, delivery or payment. How that is enforced will be a big factor in determining the registry's effect on telemarketing, Nevins said.

“The positive spin on it is that the DNC list will make telemarketing more effective,” he said. “They'll be scrubbing their calling lists so that the people they are calling will be more interested.”

In the insurance industry, the no-call registry will make outbound telemarketing less cost-effective and lead providers to try other channels such as direct mail, said Don Jackson, an insurance DM consultant. The registry could cost insurance providers $17 billion in annual revenue and the jobs of thousands of teleservices representatives connected to the industry, he said.

Jackson, an associate with Odessa, DE-based consulting group JCG Ltd., recently worked with Hamilton on an informal survey of insurance firms and the outbound providers who work for them.

“My impression is that very few users on the insurance side and very few services providers have really put pen to paper and forecast what might happen,” Jackson said.

Jackson estimates there are 6,000 licensed insurance agents engaged in outbound telemarketing. Given their valuable qualifications, these positions likely will be retained and moved into inbound jobs when possible, he said.

At risk are the 12,000 unlicensed agents conducting appointment setting, screening and lead generation for insurance marketers, he said. He predicted that as many as 4,000 to 5,000 stand to be eliminated.

Jackson used statistics from the Direct Marketing Association-sponsored report on economic conditions in the DM industry conducted last year by Wharton Economic Forecasting Associates in addition to his own research.

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