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July  2000


19 Years Of CallCenter/CRM Evolution 
And The Incredible Growth Continues!
What Next?


This summer marks the 19th anniversary of [email protected] CENTER CRM Solutions which debuted in 1982 as Telemarketing magazine. This anniversary gives me the unusual opportunity to look back at the past, consider the present and look forward to the future. Although the name of this magazine has evolved over the years, the spirit of the magazine remains the same. Beginning with the very first issue, this magazine has successfully brought its readers the latest, most valuable information on how to find, target, service and retain customers across all industries. We began this journey at a time when the call center, despite its vital importance to businesses, was largely ignored and underserved. Over the years, as others have begun recognizing the value of the call center, we have consistently served our readers with the latest information on the two most important elements of a successful call center: people and technology. But just for a moment, let's go back in time and look at the industry in its earliest days.

From Modest Beginnings To A Multibillion-Dollar Industry
Back in the early 1980s, an outbound teleservices representative would have had three tools on his or her desk: a rotary-dial telephone, a stack of 3x5" index cards and a pencil. Prospective leads' numbers were gathered from telephone books, and each agent would manually dial telephone numbers and cold-call a range of people who might or might not be qualified customers. Agent burnout and turnover were high and the system was very time-consuming and inefficient. Later, technology stepped in and made the TSR's job easier with predictive and preview dialers. This technology meant there was no longer a need for manual dialing, and TSRs could make far more calls per hour without having to read off a list or out of a telephone book. In fact, predictive and preview dialing increased a company's outbound productivity by 300 percent, an advantage that absolutely turbocharged the industry.

Inbound Or Outbound? Pick Only One!
In those early days, agents were dedicated to one type of teleservices: There were designated inbound agents and designated outbound agents. As this magazine pointed out even in the early days, this didn't make sense for a number of reasons. Agents dedicated to one type of work became bored and many agents were underusing their skills. From a time-management angle, it was a ridiculous prospect. Following a television commercial or a marketing brochure, inbound calls might spike by hundreds of percentage points. You had to hire enough agents to answer each of these calls, but days later when inbound calls dropped off, those formerly swamped agents would be busy playing solitaire at their workstations, while the outbound agents were extremely busy dialing out to offer a new special discount to customers. I can't think of a more inefficient use of a company's resources. Additionally, it started to become apparent that inbound calling could and should feed outbound calling. Agents making cold, unqualified calls were far less likely to make a sale than those using targeted lists of customers who had made inbound calls inquiring about purchasing a product, validating a warranty or getting information on the products they had already bought. For all these reasons, we began to see the advent of blended call centers, staffed by universal agents. Inbound and outbound duties were shifted according to need, helping spread the work among all agents and minimizing downtime. It worked like a charm, and fed the demand for even more call center automation. To demonstrate this demand, let me point out that today, workforce management software is a $120 million business according to research firm Datamonitor. By 2003, this figure is predicted to grow to $850 million.

Outbound May No Longer Rule
For the last 15 years, this magazine, through the research conducted for its Annual Top 50 Teleservices Agencies Roundup, has noted that the growth of outbound always led the growth of inbound. We are fascinated, but not surprised, to note that this year marks the first time this is not so. The percentage of growth for outbound has been steadily dropping off in recent years, and our latest research shows that the amount of outbound calling actually declined one percentage point this year. Growth in inbound, however, increased nearly 25 percent. Why is this? It's the Web, of course! Never before has it been so easy for consumers to ask for, and receive, the information they want and need. There are so many channels to choose from: the traditional telephone (although with the advent of Internet telephony, there may soon be nothing "traditional" about it!), e-mail, Web chat and collaborative browsing are just a few of the methods customers can pick. With so many companies striving to practice good customer relationship management, customers are finding that their every need can be met and are buying like never before. Do you want to see these data for yourself? You can view the results of our 15th Annual Top 50 Teleservices Agencies Roundup on our Web site.

From High-pressure Selling To Consultative Selling To Relationship Selling To E-Sales
Some of the practices common in the early days of telemarketing gave our industry a bad name. Stories of companies that practiced high-pressure, untargeted selling at inconvenient hours ran through the newspapers. Even worse, stories abounded of unscrupulous criminals who used telemarketing as a way of stealing from unsuspecting people. (Although I should point out that the same newspapers that ran these stories were rather hypocritically using the practice themselves, behind closed doors, to sell subscriptions and advertising space.) I liken it to a criminal who picks up a scalpel, a surgeon's instrument, to stab someone. Afterwards, no one would say that criminal was a surgeon, they'd say it was a criminal with a scalpel. But when a criminal picks up a telephone, everyone calls him a telemarketer. Just as with the example of a felon with a scalpel who is not a surgeon, a con-artist with a telephone is not a telemarketer.

As the industry became more sophisticated, this type of cold calling shifted to more targeted communications with prospects, based on better information gathered about the prospects' preferences. This quickly gave way to the concept that companies shouldn't focus as heavily on a single customer interaction, but the customer lifecycle as a whole. With the expansion of Internet usage in the last few years, the customer lifecycle view was the seed that blossomed into today's concept of customer relationship management (CRM).

Cross-selling And Upselling Gave Birth To CRM
When the first enterprising companies discovered they could increase sales by practicing cross-selling and upselling, they struck a spark that eventually exploded into the modern concept of CRM. If you could sell x amount of product by using customers' previous buying habits to provide you with valuable targeting, what could you do if you had a single, universal view of your customer's habits, preferences, history, demographics and needs? In the old days, this information, if it existed at all, was stored in dozens of different systems: billing, fulfillment, abstract research, order history and call records. Have you ever called a company to ask a few questions and discovered that the TSR on the end of the line could only address one part of your query? You had to call or be transferred to a different department to get an answer to your next question. Today, good CRM dictates that all of these disparate systems be united and able to communicate with one another. As technology progresses in the next few years, we will hear more and more about companies that are able to integrate all these systems onto a single platform. This completely united view of the customer will be the strongest and most powerful asset your company has ever possessed.

Customer-centric, Not Product-centric
In the days of old, the spotlight shone on the product...how many can we sell, to whom can we sell and how much money can we make selling it? We pointed out to the industry that this principle doesn't work. The questions you should be asking yourself are, "Who are my customers? What do my customers need and want, and how can I best meet those needs?" Many companies who embrace this idea have found themselves surprised by their successes. Customers love to know you have their needs in mind! But don't commit the same error so many companies do by telling customers they come first and not mean it. Say it, do it and make sure you follow through!

Customer Service Is The Only Differentiator
The thought that your product is different from all others and you have no competitors is a fairy tale...a nice thought, but it's just not true. Chances are, there are dozens, even hundreds, of companies selling the same product as you. So how do you rise above the rest? Exceptional customer service is the only way. In the early days, companies conducted price wars that never seemed to end. Little by little, they began to offer value-added products and services to help give them a boost. This was nice, but they needed to find a way to build customers so loyal, they never went elsewhere to buy their products. How? By meeting the customers' needs even before the customers KNOW what they need. This can only be accomplished by knowing exactly who your customers are and what they want. They'll thank you (and reward you) for it!

From No Technology To Too Much Technology
In just 19 years, we have seen and wrote about this industry as it evolved from index cards and rotary-dial phones all the way to computer-telephony integration, IVR menus with voice recognition capabilities, and collaborative Web browsing. Are these technologies a magic bullet for success? No...not until you learn how to use them, when to use them and when NOT to use them. What do I mean by too much technology? When you believe that a list of Frequently Asked Questions on your company's Web site will eliminate the need for knowledgeable teleservices representatives, you are in trouble. Never forget the importance of the human factor. Nothing works without it. Getting personal with your customers not only means providing them with various automated channels, but making sure you meet their very real need to speak with an informed human when they require it. E-mail is convenient, but often means the customer must wait hours (at best) or days (in the worst-case scenario) for an answer. If the customer needs an immediate response to a question, you will not convince him or her that a self-service Web site or IVR menu is just as good as a live agent. Even the most Web-based companies in existence today, such as America Online or Amazon.com, have extensive, active call centers staffed by agents who take thousands of calls per day. Fighting against human nature is a fast-track to a "Going Out of Business" sign.

Make Sure Your People Are The Best Of The Best
In terms of productivity, the differences between an average TSR and a motivated, enthusiastic TSR are astounding. A bored, ill-informed and unhappy agent can do more damage to your company than good. On the other hand, an agent who is confident, knowledgeable about your company and its products, challenged to learn new ways to serve customers and able to recognize that he or she will grow as the company grows is one of your single best assets. With the advent of blended call centers and e-sales and e-service, the agent's job has become far more interesting and challenging. He or she might take inbound calls in the morning, answer e-mail in the early afternoon and finish the day either making targeted outbound calls or even initiating chat sessions with customers browsing your Web site. In some companies, the agent might even do a mix of all these things throughout the day! But just having the right people is only the beginning. You need to make sure you train them properly and motivate them to do the best job possible. These people represent your company's first impression to your customers and prospects -- make sure they are trained to keep the customer, not lose him! Many companies are beginning to recognize the importance of using logging and monitoring software to identify both the best performers and those in need of extra training. Datamonitor predicts this segment of the software market will grow from its current $150 million to $400 million over the next three years.

Last, But Not Least, The Incredible Growth Continues!
From this magazine's current vantage point, we have two bright spots on which to focus. First is the pride we feel at consistently maintaining the truly superior editorial integrity of this magazine for 19 great years. To make sure we provide you with a full spectrum of information, we are also proud to offer this magazine's sister publications, Communications Solutions and INTERNET TELEPHONY, as well as our Web publication, TMCnet.com. We also sponsor two industry-leading trade shows, Communications Solutions EXPO and INTERNET TELEPHONY EXPO, where we bring you the best of the brightest companies offering the most exciting and advanced products side-by-side with conferences, roundtables, hands-on demonstrations and learning opportunities. Second, we look forward with enthusiasm to the exciting future of this industry and make a promise that we will continue to provide you with the most relevant and unbiased information in the industry.

So now that I've told you where this industry has been, you might ask me where it's going. This is the most exciting part of all. We write a great deal about the importance of CRM, and although many companies talk of it, it seems that many are still not following through. Talk is not action...until you accept that CRM is a business concept that must be integrated throughout your entire enterprise, not something you can buy in a box, your company will lag behind. We are looking forward to the days in the near future when companies of all sizes across all industries realize that in order to succeed, they must avoid repeating mistakes of the past and begin making sure that customer-centric thought and action are flowing from the roots to the branches of their companies. There are many knowledgeable people available to assist you, beginning with those of us here at [email protected] CENTER CRM Solutions. Start doing your homework!

In terms of hard numbers, let me outline just a few of the highlights.

  • According to the research firm Datamonitor, the call center software market will be worth $8.5 billion in 2003. The market, estimated at $2.9 billion in 1999, is predicted to make a 293 percent jump in growth.
  • Customer care software makes up the largest segment of the call center software market, with sales in excess of $690 million in 1999. (Datamonitor)
  • Ninety percent of all mergers and acquisitions aimed at call center software vendors has been carried out by companies with no previous history in the call center marketplace. (Datamonitor)
  • IDC predicts that the worldwide Internet economy will pass the $1 trillion mark next year; by 2003, it will be on its way to an astounding $3 trillion.
  • The customer relationship management (CRM) market will be worth $8.7 billion worldwide by 2003. (IDC)
  • In 2004, marketers will send more than 200 billion e-mail messages. To maintain visibility, companies will outsource the elements of their e-mail marketing initiatives, creating a $4.8 billion e-mail marketing industry. (Forrester Research)

Why do most CRM statistics revolve around the call center? Because every company is a call center...or it should be. Companies hoping to survive in the Web-enabled world of business today must recognize this fact for survival in the new millennium. We are proud of our industry's growth and know it will continue in leaps and bounds. (If Alan Greenspan knew the way our industry was growing, we might be in for another hike in interest rates!) The rise of the Internet guarantees this growth...who is answering your company's e-mail, initiating chat sessions, manning your help desks and fostering your customers' loyalty? Where does CRM begin? The call center, of course!

My view of the future of our industry can be summed up in one sentence: "The sky's the limit!"

As always, I would love to hear your thoughts and experiences.


Nadji Tehrani
Executive Group Publisher

[ return to July 2000 table of contents ]

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