Selling Over the Telephone Isn't a Hang-up for Marketers


On the surface, it looks as if the telemarketer might go the way of the door-to-door salesman or the Avon lady.

Growing consumer opposition to cold calling has caused a growing number of states to start compiling "do-not-call" lists, through which people can banish telemarketers from their lives.

Improved technology, such as caller ID and phone screening, is also thwarting the phone sales rep from reaching his quarry.

Though traditional cold callers are facing bigger hurdles, the industry is not surrendering. Instead, it is quickly adjusting to take consumers' calls in response to direct mail, television ads and Internet links.

This may be just as well for telemarketers, since the calls have been irritating their clients' star demographic--middle- and upper-middle-class professionals, industry experts said.

"They wall themselves off in gated developments and in tank-like SUVs. They see telemarketers as an unwanted intrusion," said Brendan Read, an editor for the industry trade publication Call Center Magazine.

"If you bother a consumer that wants to be left alone, then not only will they never buy from you, they'll bad-mouth you to their family, friends and colleagues," he said. "It is my impression that the smart companies know this."

But selling over the phone, despite all the complaints, is actually very effective.

According to a study by the Direct Marketing Assn., sales generated through telephone calling jumped to $611.7 billion in 2000 from $367 billion in 1995. The DMA expects that number to climb to $668.8 billion in 2001 and $939.5 billion in 2005.

Sales generated through the telephone outpace any other marketing method. In 2000, newspapers generated $239 billion, magazines $91.3 billion and television $117.6 billion.

Eighteen states have do-not-call lists with penalties for violations running from $500 to $5,000 per unwanted call.

Companies are required to purchase the lists, which vary in price. For example, Oregon charges $10, Connecticut charges $415 and Louisiana, whose call list goes into effect in January, will require companies to put up a $20,000 bond in case the list is violated.

Telemarketing companies say they will never abandon cold calling completely. They even say they support do-not-call lists for screening out unlikely buyers.

But the potential logistical nightmare of keeping track of the lists has spawned a sub-industry.

"A lot of companies were saying 'Oh no, this is going to destroy telemarketing; you've got to protect us from our own sales force,' " said Keith Fotta, founder and chief executive of Gryphon Networks, which makes software that keeps track of state do-not-call lists and allows telemarketers to add a number instantly to a company's own do-not-call list once a consumer asks to be put on it.

The Web site PossibleNOW provides a similar Internet-based do-not-call tracking service in addition to $10,000 worth of insurance per customer should the company make a mistake.

"The industry has accepted us with open arms," said President Scott Frey.

Meanwhile, telemarketing companies are shifting their focus, taking calls from customers who have complaints, need help or are responding to an Internet link, a direct-mail piece or a TV infomercial.

This new approach is called "inbound" teleservice, as opposed to "outbound" telemarketing.

"Many inbound customer service calls are now becoming inbound sales calls," said Read of Call Center Magazine. "Increasingly, companies are encouraging their call-center agents--after resolving the issue or answering the questions--to [sell the callers] on products and services."

Aegis Communications Group, one of the largest telemarketing companies in the U.S., has made a shift toward inbound operations in the last few years.

"Inbound can be more of a growth industry," said Aegis Chief Financial Officer Michael Graham, "The turnover of customers isn't necessarily as high, and it can be more profitable."

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