Let Your 800 Number Do the Talking : Telephones: Toll-free dialing has mushroomed into a $7-billion-a-year industry, revolutionizing corporate communication.
Twenty people are gathered around your Thanksgiving table when you discover the turkey’s locked in the oven. Who are you going to call? Maybe your oven manufacturer has an 800 telephone number. It’s free.
It’s 10 p.m. on a Friday night in early December and you finally have time to do your holiday shopping. No problem. Virtually every catalogue operator has an 800 number, and many of them operate around the clock.
At a party one Saturday night, a friend passes along an investment tip and you want to act on it--now. Not to worry. Your stock broker probably has an 800 number that allows you to place your trade order every hour of the day, every day of the week.
Created 25 years ago to mask a shortage of operators to handle collect calls, toll-free 800 dialing has mushroomed into a $7-billion-a-year industry that has revolutionized how corporate America communicates with its customers.
If the telephone industry has its way, toll-free dialing soon could have the same revolutionary impact on the way Main Street does business, as well as how friends and family members stay in touch.
“It’s all part of using the phone to overcome barriers--both physical and economic,” says James Katz, chief sociologist for Bellcore, the research arm of the seven regional telephone companies. “If communication is expensive, people don’t do it; if it’s cheap, people do more of it. Offering an 800 number is the ultimate invitation to someone to get in touch with you.”
Already an estimated 600,000 businesses have deployed about 1.3 million 800 numbers, primarily to accept customer orders and respond to consumers’ questions and complaints. Another 100,000 or so individuals have an 800 number in their home offices or for their personal use.
Last year, Americans made more than 13 billion calls to 800 numbers lasting a total of nearly 47 billion minutes, about 13% of total long distance phone usage in the country, according to Strategic Telemedia, a New York telecommunications research group. At the peak of the airline price wars in June, about half the record 170 million calls crossing the AT&T; network every day went to 800 numbers. Within five years, experts predict, 800 number calling should generate about $10 billion in revenue and account for about one of every six long distance calls.
But the impact lies beyond the sheer numbers.
Some businesses like shop-at-home catalogues, which rely on 800 number calls for about 80% of all sales, and discount stock brokerages would not exist as we know them without toll-free marketing. Airlines, hotels and mutual funds got a huge boost when consumers discovered the ease and economy of 800 number dialing. Political fund-raising hasn’t been the same since former California Gov. Jerry Brown discovered the value of 800 numbers. And last month, trendy New York designer Donna Karan launched a new $325-an-ounce perfume that can be purchased only through her company’s special 800 number and at Bloomingdale stores in New York.
“The expectation has now been created in the minds of American consumers that they have the right to make a free call to a company to get customer assistance,” says Richard Goulet, director of Sprint’s 800 service. “As consumers, we just think that toll-free communication has become a given.”
Despite their growing acceptance, just 5% of U.S. businesses now offer 800 service to their customers. Analysts say some businesses are reluctant to abandon the traditional etiquette of “caller pays” communication. Moreover, there is the lingering effect of decades of high prices and awkward technology that for a long time put 800 calling out of reach of all but the largest corporations.
But with monthly rates now as low as $5 to $15 and usage charges ranging from 10 cents to 25 cents per minute (depending on the carrier and time of day), telecommunications analysts say the service is within the budgets of most small- and medium-size businesses.
Some say the service may also be a more effective and economical alternative for families now relying on calling cards and collect calls to keep track of traveling spouses, college-aged students and elderly parents. And planned advances in 800 service, including nationwide call-forwarding that will allow anyone with an 800 number and a pocket phone to be reached anywhere in the country at a single number, may prove popular.
The competition for 800 number subscribers will intensify early next year with the onset of new federal regulations giving subscribers--not the phone companies--ownership of their 800 numbers. The ruling frees subscribers to switch phone service carriers for the best prices and services without changing their 800 numbers, many of which, such as American Express’ 1-800-THE-CARD, are indelibly linked to the company.
“The basic power of 800 service has been that everyone knows that it’s free,” says Mark Heckendorn, managing director of Versus Strategy Group, a Washington, D.C., telecommunications consulting firm. “But in the future, its draw will be the unique services that it offers businesses and individuals--services that businesses and individuals will be willing to pay the price of the call to get.”
If history is any indication, it may take a while.
As with most new technology, Americans were wary of 800 numbers after their introduction in 1967. Businesses such as Whirlpool Appliances and TraveLodge were among the first subscribers, but it may have taken the late-night TV huckstering by Ginzu knives a few years later to demonstrate the huge marketing potential of a simple toll-free call.
Once other companies and consumers caught on, 800 numbers made a huge difference.
Lands’ End, a sportswear catalogue, began using 800 lines in the early 1980s, when the U.S. Postal Service brought in all its orders. Today, nearly 85% of the company’s orders come in over its 840 telephone lines, all of them fed by its 24-hour 800 line.
Charles Schwab, the nation’s largest discount stock brokerage, says its 800 number, which has been packaged with a sophisticated automated trading and stock quote service, received 14 million calls last year and handled about 20% of the company’s total stock trades. New 800 network features on the drawing board include voice response and voice recognition programs to route calls automatically, and telephone video service, a development phone companies say could prove popular with gift and clothing catalogues and hotel and resort operators.
Perhaps the most promising new services on the horizon is a so-called “follow me” feature that will allow an 800 number literally to roam throughout the nation to find the location where it should ring--the ultimate in call-forwarding.
Expected to be deployed on a trial basis within the next two years by American Telephone & Telegraph, the service combines pager and cellular phone technology to allow a specially equipped pocket phone to accept a beeper signal and complete the call. Using the service, AT&T; executives say, a person would never have to be in any particular place to get a call; his pocket phone would only have to be programmed to accept incoming calls.
Pacific Bell, California’s largest phone company, is also planning a similar service that would allow 800 number subscribers to pre-program up to four different numbers on which their 800 number could ring. The network would search those locations until the call’s recipient answered the phone. No more passing out your home, office and car phone numbers; you hand out only your 800 number to clients, business associates or friends.
“If it encourages clients to call, something like this could do more for a mobile worker than all the cellular phones on the continent,” notes Paul Saffo, a consultant with the Institute for the Future, a Menlo Park research group.
The potential of such customization has led the phone companies to target home office workers and families for the service many believed was beyond their needs.
Small business owners are being told that because 800 numbers no longer need a special phone line, at-home business can create an “electronic storefront” to their clients that hides, if necessary, the actual location of the enterprise. The same principle also allows businesses to reach well beyond their physical communities to sell their wares by phone.
Small-business owners also report that an 800 number can give an illusion of corporate size and might to even the tiniest firm. “It really makes a difference,” says Lenore Rabinowitz, who runs a six-client bookkeeping business from her home in Orange. “It means that I can work at home and accept clients out of my immediate area without a lot of extra hassle.”
Despite the growing popularity of 800 numbers in business--hairdressers even have a local referral service called 1-800-SHAMPOO--many analysts say it will be a tough sell to persuade consumers to subscribe at home.
“Why should you have to pay to have someone call you?” asks Jerry Lewis, president of TeleStrategies Inc., a Reston, Va., research firm. “That’s the crucial issue.”
Telephone executives acknowledge that the service flies in the face of conventional phone etiquette and is likely to face considerable consumer opposition at the outset.
However, they believe that as workers become more familiar with advanced 800 features on the job, they will want to have some of those same features at home.
“We know it’s going to take a while to get the message out and that we face a huge education process with our customers,” says Kerry Benthall, director of Pacific Bell’s 800 service. “But eventually we think 800 numbers should be as popular as automated teller machines.”
For businesses, the special 800 subscriber services already include automatic call routing to phone answering centers and automated credit card charge authorization.
Another potent 800 feature is automatic number identification, which allows businesses to instantaneously know the originating phone number of the incoming call and build a data base of its customers based on those numbers. Businesses say such information lets them serve their customers better and keep track of consumer habits, but some consumer groups are concerned with the privacy implications.
Many families find 800 service less expensive than either calling cards or collect calls and are using it to encourage their college-aged children and elderly parents to stay in touch.
According to some estimates, an 800 number is more economical than paying for four collect calls or six credit calls every month. Other estimates say 800 numbers are also more economical than repeated calling to a relative or friend more than 20 miles away.
Jack Laswell, a retired Defense Department worker in San Bernardino, says his phone bill dropped by as much as $15 per month when he and his aunt in Hollywood each became 800 subscribers. But in an unusual twist, Laswell and his aunt accepted the phone company’s offer to exchange their bills, thus allowing them to pay for the calls that they make--not, as is customary, receive.
“Before we started doing this, it was cheaper to call my son in Texas than it was to call Hollywood,” says Laswell, who talks to his aunt at least twice every day.
Ringing Off the Hook
Number of calls placed to 800 numbers. In millions.
1967: 7
1970: 61
1975: 380
1980: 1,340
1985: 4,570
1990: 9,300
1991: 10.100
Source: American Telephone & Telegraph Co.
