January 2000

Teleservices Creates Multifaceted Relationships With Banking Customers

BY RUSSELL A. MARTOCCI, DIALAMERICA MARKETING, INC.

Expanding banking operations and technological innovations have increased the utility of telemarketing as an ideal solution to cross-sell services such as checking accounts, CDs, credit cards and mortgages. Outsourcing teleservices has not been traditional for banks, but it can be a valuable resource for broadening business on an individual-by-individual basis as well as serving customers and promoting specific offers.

Teleservices Expansion
According to industry estimates, telephone marketing expenditures will increase at a compound annual growth rate of 7.9 percent, to $84.4 billion by the year 2001.
DGY Associates, a consulting and research firm for the financial industry, published “Trends, Issues and Opportunities Driving the Teleservices Market,” a 154-page study with contributions by nearly 25 percent of Fortune 1000 companies and teleservices providers. Companies that fully outsourced their teleservices achieved a greater 10-year average return to investors, a higher average 10-year growth rate and a larger average percentage change in annual earnings per share.

With marketing efforts becoming increasingly aggressive, a bank must be sure to meet the three elements in any consumer decision: price, need and convenience. By using teleservices representatives (TSRs), a bank can offer customers convenience, which has become of greater importance in the banking industry.

A well-trained TSR with professional expertise in sales that cannot be matched by an internal employee of the bank can discuss a broad range of options and help or direct the customer to a Web site or another 800 phone number, if necessary.

The proliferation of electronic banking provides an example of how important convenience has become to the banking industry. The competitive environment has made speed an essential component of success. Special CD interest and low credit card rates must be quickly marketed before rival banks offer a response.

While direct mail generates customer responses over time, teleservices achieves immediate reaction. Banks can benefit from detailed daily reports or measures of call volume every 15 minutes. This feedback makes possible timely modifications to the telemarketing script or even the specific sales offer. Teleservices also speeds profits by keeping targeted lists more accurate than other marketing methods. Furthermore, changes to customers’ accounts, the processing of credit cards and the merging and purging of customer databases are all handled in an efficient manner.

In-House Versus Outsourcing
Recently, Penton Research Services noted that 44 percent of executives surveyed outsource more than they did five years ago, and 47 percent feel they will outsource even more during the year 2000.

Outsourcing teleservices has several immediate benefits:

• Professional telemarketing firms have the latest equipment and can obtain the highest contact and success rates,
• The core staff of the bank is freed for other tasks that only they can do,
• Brainstorming between the bank and the teleservices firm will provide new ideas and fresh approaches and,
• As internal payroll taxes and employee benefits become the responsibility of the teleservices firm, labor costs may be reduced by as much as 40 percent.

Outsourcing teleservices frees the bank from even the most mundane task of finding the extra space to run the operation.

The Philosophy Of A Multifaceted Approach
Banks can supplement direct mail with an inbound response team and an outbound teleservices campaign. The key to this diversified approach is the application of an outbound mentality in inbound call centers.

Inbound TSRs converse with the caller and are able to answer detailed questions on both the service being discussed and related bank programs. They also listen to complaints, attempt to upsell (such as gold or platinum credit cards) and complete transactions.

By applying an outbound approach in inbound environments, quality TSRs are able to achieve longer talk time per customer, which translates into more profits.

Multifaceted Operations
To achieve optimal results, banks can combine specific inbound and outbound efforts. For example, customers calling to activate a credit card can be offered a checking account or a six-month CD with a special rate and given an 800 number to call. A teleservices agent can handle these inbound calls, and those who don’t opt for additional services can be contacted later in an outbound campaign.

Cross-selling can be used to diversify a customer’s banking services into mortgages, CDs and auto loans. Customers calling for assistance in online banking can also be approached in these areas. A skilled TSR develops new banking relationships with callers, thus prolonging their use of the bank and increasing its profits.

Credit Card Marketing
With programs across the full range of the financial services industry, teleservices agencies offer banks every service needed for a successful card campaign — credit card activation, invitation to apply (take one), customer service, cancel/save services, enhancements and other areas.

They can help a bank acquire more card holders and transfer balances from competing cards to the new one; they can also attempt to upgrade customers to gold and platinum cards. Low introductory rates can be offered for a specified period of time on all balance transfers and new purchases.

Teleservices agencies can also sell a variety of products and services to credit card holders, including discounted travel, entertainment, financial services, health and dental programs. The bank’s customers can be offered a 30-day trial period designed to evolve into an annual membership.

The same staff that handles acquisitions should also handle credit card activation and customer service, providing continuity of service and increased customer satisfaction. Both preapproved and invitation to apply (take-one) lists should be pursued, and several balance transfers per call allowed, to provide customers with maximum savings.

Other Banking Applications
Bank mortgage and loan departments can increase efficiency by outsourcing teleservices. With current low interest rates and the increasing volume of home construction and sales, loan officers do not have time to take inbound calls.

Candidates can be prescreened through teleservices phone systems where credit-authorizing information can be entered by TSRs. Calls that meet the proper parameters can then be forwarded to a specially designated loan officer. Initial financing and discounted rates for mortgage insurance can be offered as well.

Outbound campaigns can be executed to contact people who have existing mortgage rates above the market level and want to refinance, and, at the same time, individuals with a mortgage but no checking account or CD can be approached.

A lead-generation program can be pursued to offer home equity lines of credit with a low introductory rate for six months and then prime plus one with no closing costs or annual fee.

Sometimes, homeowners upgrading their housing or refinancing their home need advice on what could be cumbersome legalities. This advice, too, can be provided in an automated and/or interactive teleservices environment.

Performance-Based Pricing
A new development has revolutionized the pricing structure of teleservices, making it accessible to even the most cost-conscious banker. Known as performance-based pricing, this system minimizes the monetary risks of teleservices.

Rather than charging by the hour, some teleservices agencies use a performance-based method to bill clients a pre-determined amount for each successful transaction. This pricing strategy guarantees a consistent cost throughout the campaign.

While hourly programs have a varying cost per successful transaction, performance-based pricing provides fixed costs and thus assures bankers a more accurate profit projection.

Teleservices agencies that use performance-based pricing are motivated to provide the best people with intensive training, use the latest technical equipment and consult closely with their clients to maximize productivity.

Teleservices Technology
Another reason for banking companies to hire teleservices firms involves the service agency’s more sophisticated equipment, which results in greater productivity. For example, an interactive voice response (IVR) unit can answer, screen and route incoming calls.

IVR technology can be used exclusively or in conjunction with staff by filtering calls that can be resolved electronically. Many IVRs possess caller message-recording capabilities that electronically capture information that is not easily entered by pushing buttons on a telephone.

“Screen pops” can now be simultaneously sent to the TSR’s computer screen when answering a call. These screen pops provide the TSR with both DNIS (dialed number identification service) and ANI (automatic number identification), if required.

DNIS informs the TSR of the 800 number the customer called, immediately identifying the banker’s advertisement or mailing. Similar to caller I.D., ANI lets the TSR know the number the customer is calling from, which could be used to project the caller’s banking history on the agent’s screen.

New digital and taped verification are also extremely important innovations for the banking industry to confirm financial transactions. The most up-to-date inbound centers have installed PC-based, customized computer programs. The TSRs operate in a Windows environment that uses a graphical user interface (GUI) to replace the bank’s character-based (mainframe) legacy operating systems with a “point and click” environment.

The computer screens feature drop-down boxes and radio buttons that enable TSRs to be as efficient as possible by minimizing their entries and thus potential errors. These structures are significant in the adaptation of telemarketing for the banking industry where accuracy is paramount.

TSRs can now benefit from online scripting by accessing hyperlinks on HTML files. These hyperlinks can help TSRs respond to customer requests by clicking buttons to visit other information or instruction locations. HTML files make it possible to update and change the selling script without having to rewrite an entire program.

Some teleservices agencies are able to link Web servers with IVR systems. This technology allows customers to look up account information on their own, saving the bank time and money.

Outbound campaigns can increase efficiency by using proprietary, predictive dialing systems. Some teleservices firms have invented their own dialers specially tailored to each industry or field served. These machines serve functions as simple as ensuring there is no busy signal and a customer is on the line before transferring to the TSR.

Quality Control
Current teleservices standards in-clude conformity with federal mandates such as The Telephone Consumer Protection Act (1991), The Telemarketing and Consumer Fraud and Abuse Prevention Act (1994), The Federal Trade Commission Telemarketing Sales Rule (1995), “Do Not Call” list requirements and adherence to The American Telemarketing Association’s Code of Ethics. Teleservices agencies must also be aware of the patchwork of regulations that vary from state to state and locality to locality.

Teleservices firms should have a separate quality assurance department and use a three-step program of quality control, assurance and enhancement. Quality control may handle verification that the TSR is using the script correctly; quality assurance examines ways to make the TSR more effective and reinforce positive habits (i.e., “catch the TSR doing something right”); quality enhancement will listen to the customer’s recommendations to the bank.

Intensive training and monitoring of the TSR on a daily basis can be reinforced by giving the bank its own 800 phone number and password for random monitoring.
TSRs should be rated on salesmanship, customer relationships, compliance and technical skills. They should be at least 18 years old and be motivated to improve through incentive programs provided by their employers.

Training should never cease, and a manual laying out the ground rules of customer interaction should be readily available. All policies should be consistent on a companywide basis, and an emphasis on quality and professionalism should always be number one.

Quality is also determined by TSR obligations. TSRs can work in a dedicated, semi-dedicated or shared environment. Dedicated TSRs are responsible for only one client program at a time; semi-dedicated TSRs for at most three to five programs; and shared TSRs for as many as 100 programs. For effective long-term customer satisfaction, a TSR should be semi-dedicated or dedicated in order to answer a customer’s specific concerns with customized responses.

Choosing The Right Agency
With more than 1,000 teleservices agencies to choose from, a bank must take several steps to ensure finding the one that works best for it. A bank thinking about entering and profiting from teleservices expansion can take a few initial steps.

First, evaluate specific needs. Then consult associates, do some research on the Internet and outline how a teleservices organization could fit. Select five possible organizations.

Contact each organization, explore its Web site and request client references. Make sure that the references have goals similar to yours.

Determine if TSRs will be dedicated to one client or serving other companies simultaneously. It is essential to visit a calling location and converse with TSRs to evaluate politeness, phone manners and quality of service. These people will be the bank’s representatives, and customers will evaluate the bank based on their contact with TSRs.

Brainstorm with the executives at the teleservices firm. What are some of their suggestions? How well do they train TSRs? Trade magazines, references and industry watchdog agencies can help a company find reputable firms.

The teleservices site should be visited while in operation. The existence of back-up generators, phones and computers, fault-tolerant systems and uninterrupted power supplies should be verified.

Russell A. Martocci has created marketing programs for more than 100 consumer and business-to-business companies. Established in 1957 as Life Circulation Co., a wholly owned subsidiary of Time, Inc., DialAmerica’s divisions include Books & Entertainment, Cable & Interactive Services, Financial Services, Magazines, Software & Video and Inbound Services. Collectively, DialAmerica employees place more than 250 million phone calls annually from approximately 6,000 workstations. On average, the company employs more than 10,000 telephone sales representatives.