From Betty Crocker to the Marines, 800 Numbers Are a Valuable Marketing Tool : Toll-Free Lines a Multibillion-Dollar Business
Instead of rising, as the package instructions promise, your Betty Crocker Supermoist Devil’s Food cake has remained stubbornly at the bottom of the pan.
The in-laws are arriving in an hour. You panic. What to do?
Reach for the telephone, of course, and call 1-800-328-6787, the General Mills Consumer Service line, where a dozen specially trained home economists are waiting, cookbooks and computers at the ready, to neutralize crises like yours.
More than 150,000 people did so last year, taking advantage of a service that with little fanfare has mushroomed into a $5-billion-a-year business: toll-free 800 lines.
Consumer advice, orders for bathroom fixtures and bygone crooners’ greatest hits, counseling for runaway teen-agers, beach reservations, donations for televangelists, credit verifications, queries about joining the Marines. These and about every other type of deal and encounter come to life in more than 17 million toll-free calls daily.
The service began as a novelty in 1967 under the old Bell Telephone monopoly system, as a sort of collect call that would spare you the fear of being rejected by the other party. It was expensive, but costs have come down markedly since then, making the service an affordable and sometimes essential marketing tool. American Telephone & Telegraph Co. reports that about 250,000 U.S. companies and agencies are now operating close to 500,000 lines.
The traffic will continue to grow by about 15% to 20% a year because companies believe that they--and their customers--need access to the service, according to Yankee Group, a Boston market research firm.
TV Helps
“It makes things easier for your customers,” said Blair Pleasant, a Yankee Group analyst who follows the 800 market. “It makes them more likely to call you than someone else.”
Growth has been particularly big in marketing, spurred by the past decade’s proliferation of credit cards.
Television helps to move enormous volumes of goods by flashing toll-free numbers across the screen as companies pitch greatest hits albums or special food containers.
And the mail-order business has been revolutionized.
Toll-free lines encourage impulse shopping. After all, it is much easier to pick up a telephone and call in an order than to find paper, stamp and pen, fill out a form, and remember to put it in the mail. It is also faster. Operators have computers tied into the inventory database.
“When a customer is ordering, we will be able to say, ‘Yes, the merchandise is in stock,’ ” said Len Brown, assistant vice president of Chicago-based Spiegel Inc., which calls itself the country’s largest catalogue direct marketer.
Affect on Relationships
Spiegel began experimenting with toll-free lines in 1971. Today, the company depends on the lines for up to 85% of its $1 billion in annual sales. About 750 operators operate the lines 24 hours a day.
Charles T. Ruppman, chief executive of Ruppman Marketing Services, a Peoria, Ill., firm that operates 800 phone banks for company clients, said 800 numbers have helped to change some basic economic relationships.
“Traditionally, the role was that the manufacturer never talked to the consumer,” he said. “That was left to the retailer or dealer.”
Foreign companies, eager to establish a name and credibility, helped lead the way in the 800 business, Ruppman said.
“The Japanese came along and said, ‘We’re willing to listen. Here’s an 800 number. Call us up.’ ” Today, few manufacturers are without the special phone numbers. Toll-free calling also has gone international. AT&T; offers service by which callers from 27 countries, including Canada, France, West Germany and Britain, can reach the United States. One of the users, the San Diego company All Sports Outfitter, said about 30% of its business comes from abroad.
“It gives you the opportunity to have a lot more contact with the customers when they have a problem or a question,” said Roy Gamse, marketing vice president for MCI Telecommunications Corp., which last year entered the 800 business.
Tailored Services
Phone companies that provide the service offer business customers a bewildering array of service packages tailored to traffic volume and type of information being offered. Rates have declined roughly in line with general long-distance costs in recent years.
AT&T; today controls nearly all of the 800 market, a vestige of the monopoly system that was abolished in 1984. But MCI, US Sprint Communications Co. and several other long-distance companies are trying to wrest away some of that share. MCI claims to have won 5%, with contracts that include the Social Security Administration and Home Shopping Network.
