Even Little Firms Can Get Big Phone Savings
If you are fresh out of saffron threads and tiger lily buds, or your lobster splitter is on the fritz, don’t despair. You can dial La Cuisine’s toll-free number and order some serious kitchenware and gourmet ingredients by phone.
“Our 800 number has been wonderful,” said owner Nancy Pollard, who lives with her family above the bright pink and turquoise shop in Alexandria, Va. “About 25% of our sales are made over the phone.”
Pollard is one of thousands of small-business owners who offer customers toll-free 800 service and seek discounts on outbound calls.
“The beauty of having an 800 number is that when someone calls, you are talking to a hot prospect who is looking to buy your products,” said Ralph Subbiondo, a partner in Ernst & Young’s Manhattan office. “Even if the call costs you a dollar, it’s not a lot to spend.”
Small-business owners can now take advantage of the hefty long-distance discounts once available only to major corporations. Since AT&T; introduced toll-free long distance service in 1967, the use of 800 numbers has exploded. In 1967, 7 million calls were made to 650 businesses with 800 numbers. In 1988, 7 billion calls were logged to more than 250,000 numbers. And these figures don’t include all the competing companies offering 800-number service.
Every day, AT&T;’s 800 directory assistance number (800) 555-1212 handles 400,000 requests, AT&T; spokesman Jim Sullivan said.
In June, MCI Communications Corp. introduced its MCI Vision program aimed at helping small- and mid-size-business owners spending $500 to $50,000 a month to better manage their telecommunications. MCI spokeswoman Pam Small said the company is very interested in serving fast-growing businesses in this market.
U.S. Sprint has a package of eight products aimed at small-business owners, including phone conferencing, a FAX service and calling cards. None of the services require any new equipment to be added, according to a company spokesman.
With these new programs, even the smallest business can afford to hook up to an 800 line and sign up for a variety of new discount services.
Another avenue opened up about 18 months ago, when a change in tariffs set by the Federal Communications Commission made it attractive for entrepreneurial telecommunications companies to contract with AT&T; to use millions of long-distance minutes per year. The companies then sell the time to groups of smaller customers.
These resellers, known as aggregators, offer bulk discounts on long-distance phone rates, similar to the way the Independent Grocers Assn. buys detergent in huge quantities to save its members money.
Telecommunications consultants suggest that any company spending $100 or more a month on long-distance telephone service consider signing up with a discount WATS (wide area telephone service) company.
AT&T; spokesman Gary Morgenstern said the company has marketing agreements to sell service to 21 aggregators. AT&T; also offers group discounts directly to customers who qualify.
“Our biggest competitors today are AT&T; resellers,” said Morgenstern, adding that FCC regulations permit AT&T; services to be resold by others.
“Small companies can now join forces to get better long-distance rates,” said Michael Miroslaw, marketing director for United WATS in Torrance. “Once they find out about this, they can’t believe it’s something they can take advantage of.”
Aggregators collect a monthly membership fee based on each customer’s long-distance bill. Fees start at about $25 a month. Once you join, you are entitled to discounts ranging from 6% to 29% on domestic outbound calls, depending on the volume of calls made. Most aggregators do not require you to sign a contract, so you can drop or change the service at any time.
The best thing is that you don’t need new equipment to take advantage of the discounts. Billing, in many cases, is provided by AT&T.;
Larry Walsh, founder and president of Databoy in Patterson, N.Y., said industry research revealed that customers who receive discounts on long-distance rates often end up using the phone more and spend more overall, which pleases the phone companies.
After about 18 months in business, Databoy has signed up 1,500 clients.
“We make commitments to do so much volume with AT&T;, and we, not our customers, pay the charges if there is a shortfall,” said Walsh.
Some businesses, like 800-FLOWERS in Bayside, N.Y., are totally dependent on the telephone for sales. In fact, the company was actually created around an 800 number.
The company, which projects $20 million in revenue this year, accepts telephone orders for flowers 24 hours a day, 365 days a year. The orders are transmitted to a network of local florists, who pay nothing to participate in the service.
McCann, who also owns Flora Plenty, a 12-store chain of New York City-area flower shops, said 800-FLOWERS’ prices are competitive, with an average order of $41.
Depending entirely on the telephone for sales has drawbacks.
“One Valentine’s Day, a backhoe ripped up a telephone cable near our Dallas office and cut off service,” recalls McCann. “Then, last Mother’s Day, 85,000 calls were ringing to nowhere because of a switching problem in Texas.”
TELEPHONE TIPS * Ask your customers and employees if they think an 800 number would help boost sales. * Review your local and long-distance bills to figure out exactly how much you are spending each month. * Shop around for the best discounts and services offered to small-business owners. * Sign up for services on a month-to-month basis to retain flexibility. * Consider your telephone a prime selling tool.
