February  2004

By Tim Searcy, American Teleservices Association

Don't think for a minute that I believe the national do-not-call list is here to stay. There is no doubt in my mind that the United States judicial system will strike this regulation down as unconstitutional. As monumental as that day will be, the reality still exists that the future of the teleservices industry is not faced with 'business as usual.' Throughout the past year, numerous internal pundits, as well as the mainstream media, have been prognosticating on the future of our industry.

Repeatedly, ideas have been pushed around as to where the industry will turn. As we get serious for a minute, it is important to debunk some of the nonsense that is being posited as forecasting by alleged 'experts.' Let us focus on seven myths circulating through the teleservices industry that need some honest light shed upon them.

The Myth Of Shifting Media Dollars
Nearly every reporter to whom I have spoken has espoused the belief that marketers will simply shift their promotional and marketing dollars from outbound telesales to some other form of media. This is foolish on many levels. First, the assumption is that folks are not already using a variety of marketing messages. It also assumes that the performance is similar regardless of marketing channel. Additionally, outbound teleservices is people-intensive and most other kinds of marketing are media-intensive. We don't replace jobs by simply shifting the dollars to more expensive vehicles, or turning an outbound predictive dialer into an inbound ACD. From experience, we know that other forms of marketing are more expensive and less effective than outbound sales. All channels require integration of message, offer, audience and delivery vehicle. Removing a component such as outbound is similar to removing limbs from a live human being. In a marketer's decision on the allocation of media dollars, outbound teleservices is often his or her most successful choice, when the government allows the choice to be made.

The Myth Of Permission Marketing
Seth Godin paved an important road through his documentation of the concept of permission marketing. Unfortunately, like CRM, MBO, re-engineering and a host of other popular management concepts, a good idea has turned into a movement. The nearly religious following of permission marketing denies several fundamentals that are important for direct marketing. Permission marketing assumes people know what they are granting permission for, and that their permission will extend to only those things for which it has been granted. It also assumes that the permission will remain in place regardless of how often it is used (or in some cases abused). Permission marketers often reference a 'ceiling' on the amount of participation in permission marketing schemes. After a certain number of early adopters get involved in the permission concept, an amazing thing happens...the pool becomes stagnant. Early participants start to drop out while new participants fuel a continuous cycle of treading water in a market pool that does not increase in size. While I'm not implying that some approaches that marketers are taking for individual companies, brands and offers won't be successful, this is not the only way to climb out of the hole created by DNC.

The Myth Of The 'Existing Business Relationship'
In the category of 'Smart People Who Say Dumb Things,' there are many outsourced and in-house teleservices executives who profess a lack of concern about DNC, as they claim they only market to existing customers. Congratulations! How long can that continue? Simply put, these existing customers will be over-dialed due to their existing relationships to the point that they will request to be put on in-house DNC lists. This will shrink the available lists, and the cycle will continue. Second, no one really believes that the FTC will leave the existing business relationship exemption at 18 months. If a recent House of Representatives action is any indication (proposed reduction of DNC list updates from quarterly to monthly), there are already forces at work to reduce the standards recently put in place. Finally, for outsourcers, this market will become overrun with competitors attempting to cut prices and push tests for entrance to the gates of this last bastion of outbound calling.

The Myth Of Offshore
I often wonder if an emigration policy exists in the Philippines, India and Canada for teleservices work. Not even the early settlers of the United States were as eager to claim homesteads of new land as international firms are in gaining U.S. teleservices contracts. It has gotten to the point that these international firms now refer to teleservices as 'business process outsourcing.' While many of these firms do excellent work, many trade publications report that international partnerships must be developed carefully. Simply leaving U.S. borders affords no greater protection from U.S. laws, and often leads to crucial performance setbacks. The same rules of engagement and measurement that apply to U.S. companies also apply to overseas partners. Unfortunately, under the ever-increasing pressure to shift expense, business managers often consider the math first, and never consider the customer.

The Myth Of Downsizing
Someone once said, 'You can't 'save' your way out of a recession.' Clearly, not everyone subscribes to this theory as many firms are shrinking their contact centers in hopes of weathering the current storm. The truth is, this is not a storm but a fundamental shift in the universe of teleservices. You cannot downsize your way out of this. Should you patiently sit and wait for things to get better by themselves? Of course not, but for outsourcers, it is time to go back to the basics, selling the concept of outsourcing. In-house operations and firms that employ them do not want to accept the risks associated with these new regulations. Sell what you are good at...outsourcing. Stop picking the low-hanging fruit (your competitors' customers) and get busy moving the 90 percent of business that is still in-house to outsourced partners.

The Myth Of Quality
I am amused when I listen to outsourced teleservices companies discuss why new prospects should do business with them. All conversations are referenced in terms of 'quality.' Quality employees, quality assurance, a quality process and quality systems are used interchangeably as though they are unique to any one firm. The teleservices industry has evolved to the point where 'quality' is the default. A baseline of quality assurance and compliance is expected. Companies must differentiate themselves through the performance of quality, thus yielding a legitimate outcome of security and sales. Quality is not a new safe haven, but an expected cost of doing business. The hope is that firms that can actually track their quality will correlate it to what clients truly desire.

The Myth Of Inbound
In recent years, numerous firms have begun to diversify their offerings by branching into inbound sales, technical product support or service. While these are great markets, the size of the pie has not gotten bigger just because more people want to eat. Erosion in price, quality and perceived value have been the hallmarks of firms changing their business models to focus on inbound. I agree that this is an excellent strategy if and when it is incorporated with the rest of an overall plan. However, our current situation involves sharks eating each other instead of searching for new waters. It remains the case that inbound is still a smaller component of the teleservices community and must overcome a large stigma. Firms with predictable volumes and close ties to their technology and customers are unwilling to outsource inbound calling. This market may grow, but not at the pace necessary to sustain everyone in the teleservices ecosystem.

So Now What?
With the aforementioned myths gaining in strength, there is always the tendency to despair once you see them for what they are'don't. Like all myths, there is a grain of truth at their core. However, firms simply need to build a navigational plan for their future that incorporates a strategy that works for them. In closing, when asked exactly what made him such a great hockey player throughout his career, NHL great Wayne Gretzky stated that he could simply, 'Skate to where the puck is going to be.' Where will the puck be? Therein lies another column for another time.

Tim Searcy has been involved in the direct marketing industry for over 25 years, beginning at the age of 10. He began his career making outbound telemarketing calls for his local newspaper in Omaha, but quickly advanced through the ranks and has had the privilege of serving as a senior executive in several of the largest and fastest-growing direct marketing companies in the world, including West Teleservices, APAC Teleservices, Transcom and Rapp Collins/Optima Direct. His most recent project has been fighting for the survival of the teleservices industry. As Executive Director of the American Teleservices Association's (ATA) Strategic Planning Fund, Mr. Searcy was responsible for working with the ATA Board and outside counsel to develop and fund the legal strategy to combat the FTC's recent revisions to the Telemarketing Sales Rule, as well as the pending review of the FCC's Telephone Consumer Protection Act.

For information and subscriptions, visit www.TMCnet.com or call 203-852-6800.

[ Return To February 2004 Table Of Contents ]