Posted: 03/2000

Lampooned Telemarketing Still Effective
By Liz Montelbano

Just the word "telemarketing" is enough to make anyone who’s ever been
disturbed by a phone solicitor on a Saturday morning or over his dinner plate recoil in
horror.

For telecom companies, however, the fact remains: Telemarketing is a viable sales
channel. It’s happening. It works. And, much to an average consumer’s chagrin, it’s here
to stay.

Though telemarketing in the communications industry isn’t exactly increasing at the
speed of light, it is climbing steadily and shows no signs of gasping its last breath
anytime soon.

According to recent The Direct Marketing Association (DMA) (www.the-dma.org) research, telephone marketing in the
communications industry is expected to increase 4.39 percent between 1994 and 2003. DMA
tracks trends in direct-marketing tactics in various industries.

According to its survey, this year’s telemarketing expenditures are expected to total
about $4.1 million (see chart, "Growth in Direct Marketing Advert-ising Expenditures
in the Communica-ions Industry."

Chart: Growth in Direct Marketing Advert-ising
Expenditures in the Communica-ions Industry

If The DMA’s predictions are right, that’s money well spent–revenue from those
telemarketing expenditures is expected to top out at about $12.3 million this year (see
chart, "Growth in Direct Marketing Advertising Revenue in the Communications
Industry," page 127).

"Carriers in both the local and long-distance industry continue to use
telemarketing heavily as a channel," says Rudy DuBay, senior vice president of sales
for ICT Group (www.ictgroup.com), which maintains
inbound and outbound call centers in four industries, including telecommunications.

"There’s still a great deal of long-distance acquisition work that goes on with
telemarketing and true telemarketing channels."

Dealing with the Annoyance Factor

The initial challenge a company faces when using telemarketing is the annoyance factor.
Telemarketers bother people, period. Even DuBay concedes he is as put off by telemarketing
calls as the next person.

By using what he calls "affinity relationships" instead of just calling
customers cold, however, a company can eliminate some of that problem and leverage the
channel’s high potential for success.

"If it’s seven at night and I’m sitting at home and get a call from somebody that
wants to switch me to AT&T [Corp., www.att.com], I
hang up," DuBay explains. "But if somebody calls and says, ‘Hey, listen, we’re
calling from Prudential Life Insurance Company,’ you know, right away, if I’ve got
Prudential insurance, I’m going to pay attention … at least I give them enough time to
make their pitch."

Larger companies, such as the Big Three IXCs–soon to be two if regulators approve the
merger between MCI WorldCom Inc. (www.wcom.com) and
Sprint Corp. (www.sprint.com)–potentially have more
revenue to develop these affinity relationships. "The tough part is coming up with a
list of people or an affinity organization that’s big enough, [that reaches] a large
enough audience, to make it worthwhile," DuBay says.

It’s true the major IXCs–AT&T, MCI WorldCom and Sprint–do use telemarketing
widely as a sales channel. In fact, a spokesperson from MCI WorldCom says the channel is
so successful for the company that as policy, no one at MCI is at liberty to discuss it to
protect the company from competitors that may try to steal its telemarketing tactics.

However, the Big Three may have some stiff telemarketing competition on the horizon–at
least in New York. A company with an even larger chance of leveraging affinity
relationships in that state–ILEC Bell Atlantic Corp. (www.bell-atl.com)–soon will add
long distance to its list of telemarketable products, now that it’s entered the New York
market, says Cliff Lee, staff director, media relations for Bell Atlantic New York (BANY).

According to DuBay, this is a major boon for the company, especially since the ILEC has
the majority of the local market in the state and has superior brand recognition. That
gives it "the best of all" affinity relationships.

"When the RBOCs get into long distance and they can call their own subscriber base
with their own LD [long distance]–that coupled with a good offer gives them a major jump
[on the competition]," DuBay says.

Proceeding with Caution

Just because telecom companies use telemarketing heavily doesn’t mean everyone in the
industry sings its praises. Susan Gosselin, communications manager for UniDial
Communications Inc. (www.unidial.com), says that as a
general rule, UniDial does not use telemarketing to reach customers, although some of its
agents do.

However, according to Gosselin, UniDial strictly monitors those agents to ensure
compliance with company and regulatory policy.

"Telemarketing in general at UniDial is not encouraged, but we do allow it under
controlled circumstances," Gosselin says. "Our agents sometimes put together a
telemarketing campaign and the ones that do–and there aren’t very many–have to submit
their telemarketing plan to us [so] we review it and make sure it meets our marketing
guidelines in addition to all of the state and federal regulations for
telemarketing."

Since there haven’t been many laws governing telemarketing at the federal level since
the FCC (www.fcc.gov) adopted the Telephone Consumer
Protection Act of 1991, telemarketing guidelines tend to be the jurisdiction of the
states, says Jim Veilleux, president of VoiceLog LLC (www.voicelog.com),
a provider of third-party verification (TPV) services, which employs telemarketing to
verify sales.

Veilleux says the rules often vary on a state-by-state basis, which means a service
provider that plans to telemarket first should be aware of the rules in its specific
state.

Playing by the Rules

Despite disparity in state legislation governing telemarketing, Veilleux says most
follow some basic rules, such as when telemarketers can call–generally between 8:00 a.m.
and 9:00 p.m., with some exceptions on the weekends. There also is an exception to that
rule if a company already has an "established relationship" with a customer,
Veilleux adds.

"For example, if you are AT&T, and you believe everybody’s your customer and
you can make a good claim for that–because even people who don’t use AT&T as their
long-distance company have probably used AT&T for a collect call–those rules might
not apply," Veilleux explains.

He adds another general rule many states have adopted is to prohibit companies from
using an automated system to call customers with whom they have no established
relationship. Again an exception exists for third-party verifiers such as VoiceLog.

"We do automated calls for third-party verification," Veilleux says.
"But at that point, we’re doing it for somebody who presumably the customer has a
relationship with."

Enforcing the various laws is a different story. Even if a telco oversteps its
regulatory bounds with its telemarketing strategy, it may not come under fire, according
to Veilleux.

"The only way you can enforce it is if you find out who the company is," he
says. "Obviously, the company at some point has to reveal who they are but if you’re
like me and you don’t have the patience to put up with it, you just hang up. There’s
really not a lot you can do, which is how they get away with it."

This should not be a green light for service providers to start practicing unscrupulous
telemarketing, however. Veilleux says it’s just not "smart business" to
manipulate or deceive consumers, and offers suggestions for what he thinks does reflect
sound business practices.

"A lot of smart companies will use ‘Do not call’ lists–and there are a variety of
lists out there," Veilleux says. "For example, in Washington state you can
register your name in the phone book or with telephone companies for someone who doesn’t
want to receive telemarketing calls. And telemarketers are theoretically prohibited from
calling those people in that state."

Another option for telemarketing companies that don’t want to hassle consumers who
really don’t want to hear from them is to obtain what Veilleux calls "telephone
preference service." This is a list of people who don’t want to receive unsolicited
telephone calls, from DMA, which Veilleux says he used to do while at a previous position
with MCI.

Veilleux says a company can match up people’s names on DMA lists with names of
potential customers and take them off their telemarketing lists so the company does not
solicit them over the phone.

"This is a smart business practice because those people are likely to a) not buy
it from you, and b) complain if you do anything wrong," Veilleux adds. "It’s
just a good practice not only to stay inside the law, but also to the extent that you
might have erred, to avoid those people who are most likely to point out your error."

Liz Montalbano is news editor for PHONE+ magazine.