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March 1996


A New Era Of Opportunity For The Industry's Growth... But...

We Must Protect Our Industry From Undisciplined Expansion

BY NADJI TEHRANI


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Incredible as it may sound, our industry's unprecedented growth will not only continue, it will almost certainly accelerate. The combustibles fueling this growth include corporate downsizing (and outsourcing); provisions of the new Telecommunications Law; government action; and the rise of the Internet. All together, these elements make for an explosive mix. As it threatens to ignite, we must keep our composure, and remember to concentrate on those things that have laid the foundation for our industry's success. Specifically, let us never forget that our success is built on our laboriously earned know-how, our unsurpassed performance, and our unstinting dedication to quality.

Our industry's history is a story of how we have developed these strengths, and how these strengths in turn have allowed us to take advantage of opportunities such as those presented by corporate America's growing preference for variable as opposed to fixed costs. Indeed, our industry has thrived even as other segments of the economy have stagnated. Our quality is what has made all our success possible.

And it is our quality that will guarantee the industry's future. Telemarketing will always thrive if we can demonstrate that it outperforms all other marketing techniques. The key is to accept only that business which we can handle with our customary professionalism. We have worked too hard to lose the good will our industry enjoys. For example, communities welcome telemarketing operations, and the government has grown to recognize our contributions to the economy. But all this could change if we forget to maintain quality. I, for one, reject the notion that telemarketing is a "flash in the pan" industry. Yet I am concerned that all our hard work could be swept away if we get distracted by "gold rush" mentality.

Can We Maintain Quality As Growth Accelerates?
It seems to me we have no choice: We must maintain quality at all costs! Consider, for example, what could happen if the current craze for downsizing were to end. Would outsourcing continue? It would, but only if corporations perceived a qualitative difference between what they could do for themselves and what service agencies could deliver.

At present, such a scenario seems a remote possibility. Downsizing continues apace, and Wall Street reflexively rewards those who announce layoffs with higher stock assessments. The downsizing trend, however, may yet reach a point where it becomes unsustainable. You will get a sense of this, I think, if you consider the euphemisms commonly used to make the distasteful truth more palatable. Layoffs are referred to as downsizing or reengineering or - even more ignominiously - as "rightsizing." Now, is anyone really fooled? I doubt it.

Even those who escape layoffs grow cynical. Insecurity is eroding morale in corporate America, and politicians across the spectrum are making hay by drawing parallels between corporate profits and socially destructive corporate practices. So how long will it be before business gurus make the startling discovery that corporations benefit from employee and community loyalty and - more to the point - that loyalty is a two-way street?

The main idea is that service agencies cannot grow complacent, notwithstanding how current trends seem to be favoring their portion of the industry.

And they shouldn't look to Wall Street for clues as to which way the wind is blowing. By the time Wall Street signals the change, it will be too late.

All the same, downsizing and outsourcing will continue -- at least in near term -- and will thus contribute to the growth of the telemarketing industry. As outsourcing is joined by other growth- promoting trends, we must make sure growth doesn't get out of control and undermine our ability to deliver high-quality service.

Impact Of The Telecommunications Law
Now that we have a new Telecommunications Law, demand for service agencies as well as in-house call centers will increase. In fact, current growth rates may be exceeded by more than 300 percent.

The new law has removed restrictions barring competition between cable entertainment networks, Bell Operating companies, and traditional long-distance providers (AT&T, MCI, Sprint, LCI, LDDS). All will be able to enter each other's markets. All will be after each other's business without restrictions.

Given the deep pockets of all these companies, competition will soon become fierce. Millions, if not billions, will be poured into the marketplace by these giant competitors to build new business and/or take someone else's marketshare. Given that the most effective way, by far, to gain marketshare in the long- distance market is through telemarketing, our industry stands to be, far and away, the number one beneficiary of all these changes.

We can expect some newcomers to spend lots of money on television advertising, even though they should know it's wasteful. The mass market has been saturated by pleas for marketshare over the last ten years, and it is already turning a deaf ear to such ads. To effectively communicate the benefits of particular product/service packages and price arrangements, companies will eventually have to turn to telemarketing. Thus, our industry will benefit like no other from the impending war between the telecommunications giants.

Government Turns To Telemarketing
Not long ago, critics of our industry seemed hopeful that the government would regulate our industry out of business. Fortunately, our government officials have demonstrated they are too wise to do any such thing (for more detail on this topic, see my editorials in the August 1995 and February 1996 issues). And now, the government is seriously considering taking advantage of telemarketing itself. Several government functions may soon be enhanced by telemarketing activities. The most prominent example? Tax collection. Since everyone pays taxes (or should), you can imagine the potential for the industry here. The staggering statistics on unpaid taxes, which are profoundly demoralizing to those of us who do pay, will soon signal a unique opportunity to those who can use telemarketing as an effective tool for telecollecting, and thus encourage people to perform their civic duty.

The Internet
Slowly but surely, people are beginning to make purchases via the Internet. Thus far, most of the activity involves small, low-cost items. It may be that Internet sales will be limited to such purchases for the time being. A customer isn't likely to demand human intervention when buying a bar of soap, for example. But when customers look at more costly products and services, and as transactions become more complex, customers usually ask for additional information before committing themselves. Consequently, the Internet may serve to guide customers to inbound call centers.

Customers like to talk to a human for sophisticated items such as computers or stereos. When considering such items, customers will always have more questions. Thus, at present, the Internet is shaping up as a kind of low-maintenance, low-cost electronic catalog. Its reason for being, despite all the hype about the "brave new world" of cyberspace, is something more prosaic: 800 calling. Will the Internet evolve into something more? Time will tell. Nonetheless, it seems clear that the Internet will, at the very least, serve to augment traditional telemarketing. Hence, the Internet represents another development spurring the growth of our industry.

The Perils Of Success: The Temptation To Forsake Quality
With so many factors pointing in one direction - unprecedented growth - I grow concerned about our ability to maintain quality. When annual growth reaches 80 to 90 percent, it seems only prudent to say that something has to give. But when annual growth reaches 300 percent, I hesitate to even think of the consequences.

It is vitally important for all responsible managers to ask themselves how they will respond when all the growth-promoting forces begin to act on our industry. The Telecommunications Law, for example, seems to inspire euphoria. However, I choose to council caution. I worry that the temptation to accept more and more business will lead some to neglect quality. This could be disastrous. Even a one percent drop could have a domino effect, and destroy everything for everyone.

Any one of the factors reviewed in this editorial - outsourcing, the Telecommunications Law, the government's growing appreciation of telemarketing, the Internet - would ordinarily be cause for celebration. But taken together, they may represent too much of a good thing. Growth can do more harm than good. What will our future be like if our outstanding reputation for quality service suffers? We are now known as job-creating, job-protecting, community-supporting business people. What will happen if we become known as money-chasing opportunists?

If telemarketing becomes a kind of gold rush, we risk becoming a has-been industry. Remember that the gold rush was brief, indeed. And what did it leave behind? A few dusty ghost towns, and a lesson in how greed can make people take leave of their senses. We have worked too hard to let that happen to our industry. I urge all in-house call center executives and all service agency executives to proceed with extreme caution. Put quality above everything else. If necessary, turn down business if you cannot deliver truly first-class, high-quality service. You never get a second chance to impress customers if you betray their confidence even once. Undisciplined growth can backfire and destroy your business.

Sincerely,

Nadji Tehrani
Publisher & Editor-in-Chief


Congratulations To The New Top 50 Outbound Service Agencies

Their Accomplishments Are Crucial To The Economic Contributions Of All Service Agencies: The Creation And/Or Protection Of Over A Half Million Jobs And The Generation Of Over $15 Billion Per Year In Sales!

We extend our heartiest congratulations to every member of the 1996 "Top 50 Outbound and Inbound Service Agencies." Every year, Telemarketing(R) & Call Center Solutions magazine ranks the leading service agencies based on figures provided by the phone companies. Next month, we will focus on the inbound service agencies.

Together, the "Top 50" outbound and the "Top 50" inbound service agencies have contributed 155,814 TSR jobs to the communities they serve. This figure is even more impressive when you consider that it does not even take into account the many related administrative, fulfillment, technical support, management and subcontracting jobs. If we were to take these into account, the total number of jobs would exceed 200,000.

What does the TSR total suggest about the contribution to the economy made by all service agencies? First, let's assume that companies beyond the award-winning service agencies account for at least as many TSRs (a very conservative estimate). That means the TSR total is up to 311,628 (and the overall job total - including administrative, technical and managerial support - is up to 400,000). Next, let's assume each TSR sells $50,000 worth of goods and services each year (another conservative estimate). This means that the total sales generated by service agencies is at least $15,581,400,000.

A common estimate used in the business world is that, on average, $100,000 worth of goods and services are produced annually (in the manufacturing and service sector) per employee. Thus, the total sales generated by all service agencies ($15,581,400,000) is responsible for creating an additional 155,814 jobs in the United States. The total estimated number of permanent jobs created and/or protected by service agencies in the United States is 555,814. In addition, these gainfully employed citizens are paying millions of dollars in taxes, thus helping local, state and federal governments.

We salute all service agencies for their significant contributions to the U.S. economy.

Where Do You Meet The Top Service Agency Executives For Outsourcing?
The "Top 50" awards will be held at TCCS™ SPRING '96, which will take place May 20-23 in Long Beach, CA. TCCS™ (Telemarketing & Call Center Solutions, formerly TBT�, or Telemarketing & Business Telecommunications) is the conference and expo series sponsored by Telemarketing(R) & Call Center Solutions(TM) magazine.

Both the "Top 50" inbound and the "Top 50" outbound service agencies will be honored. All the top executives of these companies will be present to receive their awards, and many of the "Top 50" companies will be represented in the Exhibit Hall. We invite you to network and exchange views with the industry's elite, whatever your outsourcing needs may be.

Focus On Keynoters
TCCS™ SPRING'96, as seen between pages 48 & 49, offers the most comprehensive conference program we have ever presented. We are especially proud of the three dynamic keynote speakers. Thomas O. Jones, formerly a senior lecturer at Harvard Business School, and now president of Elm Square Technologies, will speak on Creating Customer Loyalty: Your Most Critical Challenge. Eileen Harrington, associate director of the Division of Marketing Practices at the Federal Trade Commission, will discuss The New FTC Partnership Initiative: How We Can Protect Our Industry by Permanently Preventing Fraud. Scott B. Ross, president of Business Operations and chief financial officer for MCI Telecommuni-cations, will speak on Unlocking the Power of the Virtual Call Center and the Internet: The New Forum for Business.

This TCCS™ event is a must for every call center executive. The benefits of attending include:

  1. A multifaceted conference program;
  2. All-star speakers;
  3. Noncommercial content;
  4. One-stop shopping;
  5. An inbound/outbound focus;
  6. Vital networking opportunities.

The conference program has been completely updated. Seminar tracks cover human resource development, effective call center management, customer service/retention/loyalty, direct/database marketing, selling savvy, business-to- business marketing, 800 service in action, and call center technology/CTI. Exclusive new tracks - Executive Solutions and MIS/Telecom Integration - have been added to target the educational needs of key call center performers.

We urge all of you to be sure to attend.


Forging The Link Between Inbound And Outbound Operations

Most of us are familiar with the great success of service agencies in industries such as finance, insurance and consumer credit. But service agencies now have an opportunity to shine in yet another arena: outsourced customer service operations. Here, the emphasis is on customer care, retention, loyalty. The potential is enormous: Once inbound work is farmed out to service agencies, related outbound applications are bound to follow.

Coordinating Collection Of And Access To Vital Sales Information
Service agencies understand better than anyone else how inbound and outbound can support each other. For example, information collected on inbound calls is extremely valuable in subsequent outbound campaigns. Telephone sales representatives (TSRs), with the benefit of inbound information, do not have to waste time cold calling or qualifying leads. Instead, they can concentrate on selling products to established, loyal customers. And imagine the incentive to practice customer care, when the people responsible for instilling customer loyalty are given the opportunity to share in the benefits of that loyalty!

An Eye-Opening Example
An inbound call center decided to implement a universal agent system, and in so doing acquired various lists that included phone numbers, which were distributed to (previously) inbound agents, who were to start cold calling. The agents also had access to phone numbers of inbound callers.

The project encountered several problems, largely attributable to 1) the call center's lack of outbound experience and training and 2) the absence of an adequate, qualified database. Still, the company persevered through a long and costly learning process, and finally got things working satisfactorily.

While monitoring the progress of the agents, call center management found one TSR who outperformed all the others. To the managers' surprise, this TSR beat the call center's average by more than 5:1 on a regular basis. The managers, of course, were curious about what accounted for the TSR's performance. They interviewed the TSR in question, and asked him what it was that made him so successful.

The TSR's response was just what you would expect from a confident salesperson. Evidencing his strong ego drive, the TSR simply attributed his success to his unequaled sales prowess. While this would seem to make sense, at least on the surface, the TSR's supervisors were dissatisfied. They were, of course, familiar with this TSR, and they knew he lacked any unique gifts as a salesperson. So, they proceeded to closely monitor his activities. When they looked at the types of customers he was calling, they discovered that he was calling previously inbound callers in the slack periods set aside for outbound calling. This TSR excelled because he concentrated on parallel selling, cross-selling and upselling.

Inbound And Outbound: Two Sides Of The Same Coin
This true story gives considerable credibility to the assertion that inbound and outbound should not be considered as separate entities. Inbound callers should be pursued more aggressively. After all, an existing customer is much more likely to buy from you, as service agencies well know. Indeed, many service agencies are already exercising this wonderful option to increase sales for their clients.


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