March 2004

By James F. Mitchell, Concerto Software

You might not know it from the national news headlines, but there's more to the federal government's most recent telemarketing regulations than a 'do-not-call' registry. As the dust settles from consumers' rush to sign up for the list, it has become clear that making calls with a predictive dialer will never be the same again. Maybe that's not such a bad thing: leveraging the predictive dialer within the new federally mandated standards will help contact centers boost their productivity and gain competitive advantage, while helping to improve the reputation of the telemarketing industry.

The Predictive Dialer Is A Technology
Why does the predictive dialer matter? It can simultaneously place hundreds or even thousands of calls and filter out no answers, busy signals and an-swering machines, thus allowing only real people to be routed to agents. This makes it an indispensable tool for reaching out to large volumes of customers and prospective customers in a relatively short timeframe, and with a personal touch. For marketing departments, it builds brand recognition; for CFOs, it generates revenue streams. As a result, the predictive dialer has evolved into the centerpiece of any outbound marketing campaign, and is a key ingredient in a well-rounded contact center. However ' and this is going to be a recurring theme ' the predictive dialer is a technology. It is a means to an end, and a tool. Unfortunately, some tools have been used unwisely at one time or another.
Most organizations leverage their dialers intelligently, to support a business strategy and drum up sales. Still, overly aggressive dialer tactics by some parties have become a concern, because setting the pacing on a dialer too fast often results in 'abandoned calls.' (Abandoned calls are instances where the dialer is turning up live contacts more rapidly than agents can handle them, leaving an empty line when a consumer picks up the phone.) Abandoned calls tend to irritate consumers, and this aggravation was one of several drivers behind the dialer provisions in the recent telemarketing regulations. It's important to understand why the dialer regulations came about in order to understand better how to appropriately and safely leverage dialers today.
In addition to helping companies comply with the mandate that only three percent of calls can be abandoned, the dialer is important when considering how to comply with regulations on the transmission of caller I.D. information, reporting and even the much ballyhooed 'do-not-call' list. In a perfect world, you would flip a switch on the dialer and ' presto! ' achieve instant compliance with the regulations. Reality is slightly more complex. The predictive dialer is a technology, and for technology to be worth its weight, it must support an overarching business strategy. To truly comply with new dialer rules, organizations must make proactive, top-down appraisals of their businesses and the dialer's role in achieving business objectives.

A Culture Of Compliance
'Top-down' is the key here: predictive dialer compliance is executed in the contact center, but it begins in the boardroom. There is little room for error in dialer compliance ' mistakes will lead to hefty fines ' and management participation is integral to avoiding such penalties. All levels of management must be involved in evaluating and modifying corporate strategy to ensure that the dialer is in line with regulations and ethical business practices. Management must lend palpable support to teams that deal directly with dialers, and work to create a cohesive culture of compliance. In addition, managers must take it upon themselves to continually monitor abandonment rates and ensure they are within the dictated three percent limit.
To create a culture of compliance, management must instigate strategy changes in two key arenas: personnel and sales. On the personnel front, organizations must provide proper training and guidance to contact center supervisors (or whomever sets dialer pacing) on how to configure the dialer in order to keep the abandoned call rate below three percent. Organizations must also train agents regarding how to behave in view of the regulations. This includes providing guidance on how to handle 'do-not-call' complaints, as well as situations in which a consumer says 'no' to an offer or asks not to be contacted in the future. Agent compensation should be reviewed also to encourage appropriate behavior.
When it comes to sales, management must re-orient their view of how outbound dialing fits into the mix. Foremost, organizations probably will not be able to deploy the dialer to cast a wide net across customers, as they have in the past. Moving forward, predictive dialers will be used to contact a target group of consumers who do not mind telephone sales pitches, or consumers with a prior business relationship. Whereas the dialer has been the driving force behind sales efforts for some organizations, in the new regulated environment, companies must diversify their sales strategy, honing dialer outreach and expanding direct mail, direct response and e-mail marketing efforts. These alternative marketing angles can be leveraged to drive inbound calls or gain consumers' permission for direct phone contact.

Technology Fixes
In short, organizations must first comply with the spirit of the law by calling only those consumers who have given their permission or have an existing business relationship. Then, once companies have created a culture of compliance, there are a number of technology details to bear in mind. As mentioned earlier, setting the pacing on the dialer at the appropriate rate is critical for compliance with the new acceptable abandonment rates. Pacing will vary from enterprise to enterprise, but managers need to determine the rate of dialing that ensures that agents are available to handle live calls. In general, though, dialing rates will have to slow down across the industry to adapt to the new abandonment rules, and 'machine-gun' dialing will soon become the relic of a bygone era.
It is also important to note that calls are considered abandoned if an agent is not transferred to the line within two seconds of a consumer's greeting. Therefore, to conform to the new regulations, dialers must be able to distinguish a live party on the line and route an agent to that call in less than two seconds. For the latest breed of dialers, meeting this sanctioned time limit is possible, even while high-end features like answering machine detection are enabled. However, over the years, the predictive dialer has proved to be a remarkably reliable technology and many contact centers have not updated their dialers in quite some time. In fact, many dialers in use today can take as long as four to five seconds to transfer an agent to a live call ' a blatant infraction of the new legislation. Organizations with older models must review their dialer performance to ascertain whether their technology can meet the challenges created by the regulations.
On the other hand, if no agent is available to handle a live call, organizations can comply by playing a recorded message to identify the organization making the call and outline the reasons for calling. The ability to play a recorded message is critical to reducing the number of abandoned calls and remaining within the acceptable limit, because it allows contact centers to staff a call even when all agents are occupied. Obviously, this type of automated messaging is beyond the scope of predictive dialing; however, in order to aid compliance today, dialers must have the flexibility to either easily integrate with messaging or IVR (interactive voice response) systems, or be part of a unified platform that innately offers these functionalities together.
Another key component of the dialer regulations with respect to abandonment rates is reporting. While consumers' complaints will be the primary tool for the federal government to police the industry, companies will need to keep detailed, real-time reports in case government auditors come knocking. The government now demands increased diligence and more meticulous reporting across the industry. Consequently, organizations must develop exacting processes for keeping track of dropped calls, including a more robust reporting structure. In so many words, once again, the predictive dialer is a technology. While technology is certainly helpful in this effort and dialers will need to include advanced reporting functionality moving forward, creating a culture of compliance through training is of utmost priority when updating reporting procedures.

Mr. Unavailable
Although the three percent abandonment rate and the two-second rule are the aspects of the new telemarketing regulations that deal primarily with predictive dialers, other facets of the legislation affect how the industry can leverage dialers. The government now stipulates that telemarketers must transmit their information to the caller I.D. services or devices that are prevalent in many American households. Yes, it's true'Mr. 'Unavailable' has been legislated into extinction.
However, this portion of the revised Telemarketing Sales Rule (TSR) poses a problem for some service bureaus that make outbound calls on behalf of several clients concurrently, because under the new regulations service bureaus are obligated to transmit separate identification information for each organization they represent. Unfortunately, existing communications hardware often hampers efforts to enable dialers to transmit the requisite information. Many companies are connected to the outside world via a T1 line, which allows the transmission of only one set of contact information. Therefore, organizations needing to display contact information for multiple sources will have to switch to an integrated services digital network (ISDN).

Customer Information Is King
Predictive dialers also play a role in safeguarding customer information and ensuring compliance with the 'do-not-call' registry. The bottom line is that organizations can no longer use dialers as repositories for customer information. Companies that have not made the move to top-flight billing or CRM systems for housing customer information should seriously consider it. The regulations mandate renewed vigilance when it comes to customer information, and keeping detailed records of customer interactions can help avoid costly fines. To function within the confines of regulations, dialers need to be fed numbers from advanced information storehouses that are cross-checking contacts against the 'do-not-call' list and previous interactions. In turn, data must be sent back to the warehouse for use across the enterprise after a dialer call wraps up. Again, this is not a case of how you deploy the dialer, but making sure the dialer connects to other technology that aids in the quest for compliance.

A Well-Stocked Stream
Once organizations have revamped their business strat-egies and adapted their technology to support this strategy, where does this leave them? What does the industry gain from the labor of compliance? Indeed, smart organizations could stand to attract new business and profit by adhering to the regulations. The tightening of abandoned call rates will help contact centers better plan and forecast their agent usage, making sure that calls ' opportunities to generate revenue ' do not go unanswered. In other words, the regulations will force outbound dialing operations to create a more productive workforce.
The national registry will also trim out consumers who are unwilling to purchase products or services via the telephone. Instead of fishing in an ocean, telemarketers will now be casting into the waters of a stocked stream, calling a more qualified pool of prospective customers. Thus, combined with an optimized workforce, telemarketers should be able to convert a higher percentage of calls to sales, as compared to a setting where upwards of six percent of calls are abandoned. In short, the regulations will create more effective and lucrative outbound dialing operations.
While compliance with the regulations can have financial and productivity benefits for individual organizations, it will also benefit the industry as a whole. Telemarketing has gotten a bum rap over the past several years, due mainly to an extreme minority of fraudulent operations and aggressive dialing tactics. Heeding this round of regulations will help clean up the perception of the industry and demonstrate its respect for consumer wishes. Additionally, compliance now may prevent future legislation in other types of indispensable outbound operations, such as collections. Also, as the charlatans are weeded out, the regulations will also help convince the public that telemarketers are legitimate business people, selling legitimate products and services. After all, the practice does generate billions of dollars in revenue annually!

The Next Frontier: Proactive Customer Care
The regulations will also encourage organizations to find alternative functions for the predictive dialer to complement telemarketing and expand revenue opportunities in new ways. Of these future applications of the dialer, proactive customer care should be on the top of the list. Limited in the ability to reach out to non-customers, organizations should increasingly leverage dialers to contact existing customers, not only to upsell and cross-sell them, but also to offer top-notch customer service. For example, if an airline has a flight delayed, it can proactively call passengers to alert them of the delay. Utilities can call customers to alert them of power outages and blackouts. Retailers can deploy the dialer to follow up with customers who have just purchased big-ticket items to make certain they are satisfied. Banks and other financial services companies can reach out to new account holders to welcome them aboard. As you can see, there is a universe of applications for dialers in addition to telemarketing ' and with a little creativity, dialers can continue to generate revenue and drive customer loyalty in the future.
Parting Thoughts
One caveat as companies draw a roadmap to telemarketing regulations compliance and think about how they will now deploy dialers: consult your legal counsel. The government has written many complex new rules to govern telemarketing. While I've outlined some suggestions for dialer compliance above, it is necessary to sit down with your organization's lawyer to get a firm interpretation of the laws and to understand how they apply to your business. Ideally, consultation with legal experts will also help organizations formulate their cultures of compliance. Remember: the predictive dialer is a technology ' it can't read the law books or implement the strategy for you!
One final pearl of wisdom: treat people with respect or it will only get worse. There were several drivers behind these regulations, but foremost they were a reaction by consumers to perceived privacy violations by telemarketers. Whether these abuses are real or imagined, it is apparent that the best way to make a sale is to abide by consumers' preferences. Aggressive dialing and abandoned calls are not part of a smart sales strategy. A sound strategy, the right technology and respect for customers' wishes will help close deals and clean up the industry's public image.

James F. Mitchell is senior vice president and CTO of Concerto Software, Inc. (www.concerto.com), a provider of customer interaction management solutions for contact centers. As a co-founder of Concerto Software, then called Davox Corp., Mitchell helped pioneer and proliferate predictive dialing technology.

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