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

months.



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

prefer.



’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

rapidly.’



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

it.’



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

radio.



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

bureaux?



David Stubley, managing partner at CIA’s sponsorship and new-media

consultancy MIV, and a former DRTV evangelist at Channel 4, believes it

does.



’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

telemarketing.



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,’

he says.



’It’s inevitable that there will be some reduction in call centre

activity.



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

decline.’



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

marketing, says.



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

the industry.



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

more accurately.



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

Source: Marketing.



This article was first published on campaignlive.co.uk

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