TELEMARKETING: THE FUTURE ON THE LINE - The telephone is what made direct response marketing possible. But the voice response channel is now being challenged by the internet and digital TV, Ken Gofton says
By KEN GOFTON, campaignlive.co.uk, Friday, 18 June 1999 12:00AM
Egg, the recently launched offshoot of the Prudential Bank, has noted the lessons of history. It’s out to emulate First Direct and Direct Line, and establish early and hopefully impregnable brand leadership in its field - electronic financial services.
Egg, the recently launched offshoot of the Prudential Bank, has
noted the lessons of history. It’s out to emulate First Direct and
Direct Line, and establish early and hopefully impregnable brand
leadership in its field - electronic financial services.
At the end of April, the company revealed that it had achieved its
five-year target of pounds 5 billion worth of savings in just six
Its bullish chief executive, Mike Harris, pointed out that the company
would continue to offer highly attractive rates. Financial services, he
said, could be provided over the internet for as little as a quarter of
the cost of doing business on the telephone, or a tenth of the cost of
doing it on the high street.
It’s difficult to imagine a statement from a leading company that could
summarise more succinctly the biggest issue facing telemarketing.
Call centres have been one of the fastest growing sectors of the economy
in recent years, expanding at an estimated 40 per cent a year. But now
there’s another communications tool to be reckoned with - the internet.
It, too, is growing very quickly, and it offers big cost savings. Yet,
as Egg acknowledges, even consumers with home PCs want the freedom to
communicate in other ways, when it suits them. Its customers will be
free to service their accounts online, by telephone or by post, as they
’Egg is now firmly established as a leader in the e-commerce market,’
Harris says. ’To aim for two million internet customers by 2004 (the
company’s new target) is ambitious, but in an e-commerce world, things
can happen faster than you expect.
’Of the 500,000 customers we have attracted so far, we estimate 30 per
cent already have internet access, and with internet growth in the UK
running at about 11,000 new users a day, this proportion will increase
Of course the internet hasn’t just suddenly appeared on the scene. Its
influence and importance has been steadily growing. For some time,
leading telemarketing bureaux have been actively repositioning
themselves as total communications centres, able to work with the
telephone, fax, e-mail or post.
With social e-mails now commonplace, supermarkets taking grocery orders
online and popular TV programmes boasting their own websites, the
internet has very definitely moved out of the geeks’ domain.
The whole thing will get an enormous extra push with the imminent
arrival of interactive television. British Interactive Broadcasting, a
consortium that includes Sky, BT, Panasonic and the Midland Bank, will
start preview screenings of its digital satellite service, named Open,
in the next few weeks, ahead of an autumn launch.
Because all this interactivity will be web-based, David Foster,
telebusiness director at Brann, foresees ’a huge explosion’ in the use
of the internet.
’A quantum change will take place,’ he predicts. ’That’s because even
though the use of PCs in the home is growing, it’s not as important in
people’s lives as TV. Most people don’t go home and automatically switch
on their computers, the way they do their TV sets.’
This melding of previously separate media will mean marketers will have
to cope with all kinds of channels. ’A customer who orders over the
internet and then phones the next day to change his mind, doesn’t want
to be told, sorry, that’s a different department,’ Ian Hughes, a
director of Mail Marketing, says.
But it may be hard to gauge which channel will need more effort. Hughes
comments: ’In 18 months, we took 20,000 orders for the Wallace and
Gromit internet shop, but only had two phone calls on the customer
support line. Yet we were probably getting ten e-mail queries a day.
Once people get into electronic communication, they seem to prefer
While e-commerce becomes more mundane, the link to the TV could be an
extra magic mile for other marketing operations. Interactive TV could
revolutionise charity fundraising in a way the internet has so far
failed to do. It’s easy to see how powerful a tool this will be when, in
the middle of a broadcast appeal, viewers are invited to click on an
icon and register their donations.
Leading charities are among the UK’s most advanced users of inbound and
outbound telemarketing, often in tandem with direct response TV and
Many of them now also have a presence on the internet. Donations
collected over two websites used by Comic Relief for this year’s Red
Nose Day totalled more than pounds 400,000. The NSPCC is also in the
midst of its biggest ever appeal. The integrated campaign, with ads by
Saatchi & Saatchi and direct mail through WWAV, also includes a new
website. This has a ’virtual collecting tin’, which also features on the
websites of companies sponsoring the campaign, including Microsoft.
’I think most charities recognise that the internet is a tremendous
communications channel,’ Jess Tyrrell, the NSPCC’s corporate fundraising
account manager, says. ’Everyone in the charity world needs to be on the
web. Even so, consumers still show a reluctance to make transactions on
the web. It is definitely growing, and will develop, but at the moment
the internet is not a proven, guaranteed way of raising funds.’
So, does the move towards electronic communication herald the start of a
slow decline in call centres, and in particular the telemarketing
David Stubley, managing partner at CIA’s sponsorship and new-media
consultancy MIV, and a former DRTV evangelist at Channel 4, believes it
’Most of the clients we talk to are getting to understand the medium and
don’t feel the need to outsource response handling,’ he says. ’If I was
one of the big bureaux, I’d be worried. Four or five years ago, the
thing holding DRTV back was bureau capacity. That whole argument is
redundant with digital media.
’The vital question is whether consumers are willing to click the big
red ’buy’ button and entrust their credit card details to cyberspace -
increasingly, the answer is yes. There will always be people who want to
talk to operators, but the number will reduce. And so will
telemarketing, but not overnight.’
The internet’s own call centres
Needless to say, others see it differently. Neil Perring, joint managing
director of BPS Teleperformance, the UK arm of the international
telemarketing network, Teleperformance, points out that there are ways
in which the internet is even helping the expansion of
As a rule of thumb, he says, every 1,000 new customers for an internet
service provider create one job for an operator in customer service -
and those customers, as already noted, are signing up at the rate of
11,000 a day in the UK alone.
Brann’s Foster is slightly more cautious. His bureau already has a lot
of experience of dealing with customer contacts via the internet for
clients such as Sainsbury’s and Fiat.
’We’re going through a period where every seat lost to phone work
because of the internet is being replaced by one in internet support,’
’It’s inevitable that there will be some reduction in call centre
But call centres are still growing at such a rate that it’s a question
of whether they will merely grow more slowly, or actually go into
New roles for call centres
Accurately assessing the impact of the internet on telemarketing is
going to be difficult. All those e-mail responses coming in over the
internet will still have to be handled, which raises the questions of
who is going to do it, and how. Will companies want to handle e-mail
themselves, or farm the work out to bureaux?
There’s already evidence that companies are struggling to handle
internet queries. Research recently conducted for the Direct Marketing
Association found that 40 per cent of companies failed to respond at all
to information requests made via their websites.
’These were lessons learned years ago in telemarketing,’ Stephen Jacobs,
head of teleservices consultancy at OgilvyOne, says. ’Are we going to
have to go through that whole loop again?’
It’s also argued that there are areas of activity where the human touch
can’t be replaced, or the availability of a live operator actually
enhances the sales and marketing process.
It is possible for internet sites to carry a ’call-me’ button, enabling
customers to request a call from a live operator to provide guidance or
additional information. One snag is that many home users have only one
phone line so, at least for now, they have to stop surfing in order to
take the phone call. This technology is expected to improve. Under test
in the US is a system that will alert a call centre to the fact that
someone is seriously browsing a website, allowing an operator to
intervene and offer help. ’This is exciting. Early results indicate that
people are three to four times more likely to buy with this additional
support, and three-quarters of those who have experienced it think it is
a great idea,’ Robert Scott Moncrieff, Sitel’s senior vice-president for
With all this change going on it’s important to be clear what is meant
by telemarketing. Call centres have mushroomed everywhere. At a very
conservative estimate, there are more than 10,500 in the UK, employing
more than 500,000 people. The vast majority of these are in-house call
centres run by companies in financial services, IT and telecoms,
motoring services, mail order and the like.
Bureaux make up less than 5 per cent of the market. However, as
freelance telemarketing agencies, they bring much-needed flexibility to
Within the bureaux world itself, there’s a split between the companies
relying primarily on live operators, and those based on interactive
voice response (IVR) automated lines. Prominent among the former are
SSL, BT, Sitel, the Merchants Group, Brann and BPS. Top IVR agencies
include Broadsystem, Interactive Media Services (IMS), Greenland
Interactive, and Telecom Express.
This traditional distinction is blurring, however. In particular, the
automated specialists are rushing to establish themselves in the live
sector. Broadsystem has bought the Manchester- and Bristol-based ADS
bureau, while IMS and Telecom Express are setting up their own call
centres from scratch. Smaller automated bureaux are doing the same.
The internet has a lot to do with this development. In handling direct
response campaigns, its big selling point has been its ability to
capture thousands of responses in minutes, and to do it much more
cheaply than the live call centres.
Live call centres have been particularly successful on relatively
straightforward work, such as brochure requests. Now they face a
challenge from a medium that can handle more calls, more cheaply and
The move to total communications
Whether their roots are in live operation or automated lines, though,
the industry’s major players are moving towards being ’web-enabled’
total communications centres, able to handle and respond to messages
arriving by telephone, fax, e-mail or post. There’s also the widely held
view that bureau operators will become more skilled, and that the
emphasis will switch to higher value-added services.
Benjamin Parr, an account planner at the direct marketing agency, Craik
Jones, is among the many who see an important and continuing role for
the live operator. ’Dell is a company that has been hugely successful,
selling over the internet,’ he says. ’But it is one of the few that
makes it clear on its website that you can buy online, or you can buy by
telephone. Consumers are very comfortable with the telephone, but the
internet remains unknown territory to many.’
Meanwhile, it’s important to remember that these changes will be
evolutionary, not revolutionary. There is plenty of evidence that many
clients are being relatively slow in getting their acts together.
David Stubley at MIV and Martin Hill-Wilson at the Merchants Group both
say that one of the brakes on development is the fact that, too
frequently, the internet is the responsibility of one client department,
and telemarketing the responsibility of another.
And, according to OgilvyOne’s Jacobs, the last thing a direct marketing
or advertising agency should be doing is driving a client’s customers to
a substandard, boring website. Unfortunately, for the time being, too
many of them are.
TOP 10 AGENCIES
1 SSL 75.201
2 BT CiB 67.000
3 Sitel Corporation 64.343
4 Scottish Telecom 50.000
5 Broadsystem (incl. ADS) 32.223
6 The Merchants Group 31.524
7 IMS Group 22.638
8 Brann Contact 20.465
9 InTelMark 13.177
10 7C (prev. part of AT&T) 11.000
This article was first published on campaignlive.co.uk
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