±±¾©Èü³µpk10

However, a combination of badly managed calls and increased customer knowledge of such strategies has put the future of outbound work in peril, with many predicting the death of the process within a few years. And one of the biggest clouds hanging over outbound telemarketing is the problems with, and resentment toward, predictive dialling technology.

Though designed to speed up agent productivity, predictive dialling has, in general, been calibrated badly, leaving customers with a disturbing silence when they pick up the receiver. Outsourcing agencies now claim to have adapted their systems to guard against these silent calls, but there is a general feeling that the damage has already been done.

As well as arousing the unwanted interest of government regulatory body Ofcom, the mistakes made with predictive dialling have pushed customers into action against those telemarketing companies that use the technology.

The latest NOP research, commissioned by the Direct Marketing Association (DMA) concerning registration to its Telephone Preference Service (TPS), highlights the true severity of the problem. The research indicated that of those registered to TPS - initiated for those members of the public who did not want to receive telephone marketing and sales calls - 37% had actually done so to stop silent calls. With 4.2m people already signed up to TPS, this equates to about 1m lost customers to the outbound telemarketing industry as a direct result of silent calls.

Tessa Kelly, director of compliance operations at the DMA, says: 'The growth of TPS complaints about silent calls, due to misuse of automated dialling systems, is certainly a damaging factor. We are working closely with Ofcom to clamp down on persistent misuse of phone networks. It's not that we're against the dialling technology. It just needs to be used in line with the DMA code of practice in which identification is a necessity.

'Contact centres have a responsibility to use the technology properly. Complaints don't go to the people making the calls; they come to bodies like us. The more complaints, the more the government listens, which is why legislation is introduced.'

The DMA's code of practice recommends that contact centres keep silent calls down to a maximum of 5% of their output, although some companies are still up at about the 50% mark. These persistent infringers, coupled with increasing pressure from customer groups, could drive the government to take a stricter stance.

The expansion of TPS to include businesses is one avenue that has been finalised by the DMA, coming into effect on 25 June. The service could also be the recipient of a high-profile marketing campaign, mirroring that of the Do Not Call (DNC) registry in the US. The DNC now has more than 55m people on its list and is severely limiting the ability of US telemarketers to talk to their customers.

'Outbound will face continued pressure following what has happened in the US,' says Bibi Bajwa, managing director at Teleperformance UK. 'Failure on the part of companies to act sooner - in terms of best-practice promoting DNC lists, TPS lists, having non-compliant diallers, and so on - remains the key issue. Everyone involved in outbound telemarketing needs to act sensibly and work together to protect the industry.'

Vicious circle

Silent calls are not the only cause of strong negative reactions from the public. A general period of consolidation in the outsourcing agency market due to overcapacity has meant a much sharper focus on bottom-line revenues. With this sort of price pressure and customers becoming harder sells, the supposed quick-fix of outbound cold-calling has proved too much of a temptation for a number of companies.

Mike Havard, managing director of independent consultancy CM Insight, explains: 'The negativity surrounding the outbound market has had a major impact on conversion rates. The decreasing returns from outbound activity have instilled a desperation among telemarketers which, in turn, has provoked a more aggressive sales approach. Thus, there is a stronger emphasis on one-off sales hits as opposed to nurturing customer relationships. It's a vicious circle from which the industry needs to extract itself or face dire consequences.'

John Price, managing director of Price Direct and member of the DMA's Contact Centre Council, believes that outbound as a telemarketing medium will not recover from the current tidal wave of bad publicity. 'While we live in a world where companies are only interested in reducing costs to gain short-term profits, the quality of calls will fall,' he says.

'This will promote more consumer disenchantment and bad press. There appears to be an environment where the rule is to make as much money as you can for now because it can't last long - and if you don't, someone else will.

'The death of outbound telemarketing is being brought about by a number of coincidental forces leading to customer dissatisfaction and an eventual over-reaction from consumers and legislation. The only way forward is a better framework of accountability that will enable self-policing. It is only when a major brand is exposed for upsetting thousands of consumers that it will wake up to the issue. My fear is that it is already too late for the volume consumer industry.'

The incumbent dangers of poorly managed outbound calls are beginning to penetrate the consciousness of the market but, with so many customers lost already, has it come too late? And where does the future of outbound telemarketing lie?

'Cold-calling has a limited shelf life and prospective outbound has seen a significant recent demise,' says Havard. 'The high-profile nature of the arguments against the current use of outbound will lead to legislation in all areas within the next two to five years. Outbound will still have a role to play, but it will be more as a customer relationship management tool.'

That many of the larger agencies have seen significant outbound downturns on the past year - both in terms of revenue and levels of activity - indicates that a restructure of the use of the medium has already begun.

Scottish firm BeCogent, which counts Scottish Power and Telewest among its clients, is one such agency that has a definite stance against contracts that are based on aggressive outbound selling. 'We have made it a rule to walk away from any deals that are sales-aggressive in their approach,' says chief executive Ron Peerenboom. 'It's all about evangelising a high-quality process and concentrating on getting the scripts right. The success of outbound is not in making loads of calls but in assessing the stickability of the customer. Remuneration is inextricably tied to the quality of the call.'

Common-sense selling

CPM managing director Mike Hughes emphasises that outbound is still an important element of the telemarketing mix. 'There is still significant outbound business to be done, providing the industry behaves itself,' he says. 'It's proven to work if done responsibly. Don't harass the customer; don't call during anti-social hours. It's just common sense.'

The evolution of the outbound market away from aggressive selling has become particularly pertinent in certain industry sectors. Outbound work in the utilities market is one area that has died off considerably, with the feeling that every potential customer has already been called. The focus on how much work remains in this and other sectors like it has switched into cross-selling opportunities - a strategy that requires a level of trust in the existing customer relationship.

Andrew Briggs, chief executive of Merchants, says: 'In today's market, outbound can only really be used to maintain and enhance relationships with existing customers, otherwise it is likely to be a negative experience. Where the UK, in particular, lags behind other countries is in bringing intelligence to outbound calling. The industry is not doing itself any favours by throwing bigger lists at the problem and disregarding the negative brand impact of cold-calling. We need to look at convergence and making the campaigns much more targeted.'

Cold-call challenge

The increasing emphasis on the use of data in outbound work has also provided niche outsourcing agencies with market advantage. While the larger agencies are veering away from being outbound-centric, a number of smaller firms are picking up the slack and running with it.

There are still those, however, who would take up the challenge, such as Glasgow contact centre Callpoint Europe, which recently completely re-evaluated its business model toward a heavy emphasis on outbound work.

Ivor Guild, group sales director at Callpoint, explains: 'You cannot underestimate the challenges inherent in outbound, compared with inbound, activities. At Callpoint, we recognise this as a people business. Our callers must respect that an unsolicited call is being made, hence a relationship must be quickly developed with the called party. Callpoint has a sister company, Peoplepoint Careers, which specialises in the recruitment and training of skilled personnel. Others who put unskilled or semi-skilled outbound "sales" agents at the end of phones and expect them to succeed will have a rapid learning curve. They have either tried and failed or, more likely, decided not to invest in this line of business.'

Without doubt the past year has seen major changes in the use of outbound calling - driven mostly by clients and the general public. Outbound remains a powerful tool, but its future lies in being used more for customer relationship management than in cold-calling, and as a trigger for sales, with the acquisition of new customers increasingly coming from other contact channels.

For an industry that habitually suffers from short-termism, the current use of outbound as a one-off sales driver will have little lasting effect.

The longer the bulk of agencies refuse to acknowledge both customer and client dissatisfaction with the existing process, the sooner legislation may force them into a corner from which they cannot escape.

FACT FILE

Outbound activity

- The average outbound revenue derived from the top 30 agencies in the industry was £5,966,413.

- Only three of those top 30 agencies were 100% devoted to outbound activity.

- Less than 30% of the top 30 agencies practising outbound work considered it their primary activity.

- Recent research from NOP showed that 96% of those registered with the TPS are satisfied with the service.

TOP 30 OUTBOUND AGENCIES

Rank Agency Turnover Outbound Outbound

2003 (pounds) (%) (pounds)

1 MM Group 45,199,000 36 16,271,640

2 Vertex 323,100,000 5 16,155,000

3 Sitel UK* n/a 33 15,729,450

4 Thus 24,600,000 60 14,760,000

5 Ventura 112,000,000 13 14,560,000

6 Broadsystem 38,863,000 30 11,658,900

7 HBS CC Services 10,500,000 90 9,450,000

8 Response Handling 19,000,000 47 8,930,000

9 Inkfish Call Centres 25,100,000 35 8,785,000

10 The Listening Company 14,120,000 60 8,472,000

11 Garlands Call Centres 16,200,000 46 7,452,000

12 CPM* n/a 35 7,145,250

13 SR Teleperformance 11,354,197 60 6,812,518

14 Pell & Bales 6,914,000 95 6,568,300

15 BeCogent 13,584,000 39 5,297,760

16 Telegen UK 6,000,000 85 5,100,000

17 iSKY Europe 10,000,000 45 4,500,000

18 Market Reach 4,330,000 100 4,330,000

19 Merchants 23,505,000 18 4,230,900

20 Arvato Services 12,300,000 30 3,690,000

21 Telefocus 3,030,000 100 3,030,000

22 The Telemarketing Co 2,868,847 100 2,868,847

23 HCL Technologies 13,770,000 20 2,754,000

24 Dataforce Group 9,100,000 30 2,730,000

25 Portal Hosting 5,703,000 40 2,281,200

26 MGt 7,475,631 30 2,242,689

27 The Ops Room 3,403,317 63 2,144,090

28 EWA* n/a 30 2,077,800

29 2Touch 5,500,000 36 1,980,000

30 Positive Contact 2,421,934 80 1,937,547

* Figures affected by US Sarbanes-Oxley Act taken from Companies House

financial data supplied by Willott Kingston Smith