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The Telephone Preference Service (TPS) was extended on 25 June to offer businesses the same facility as consumers to block unsolicited calls.

Companies that use telemarketing to promote goods and services to businesses now risk a £5000 fine if they do not screen their lists.

Direct marketers are used to legal restrictions on their activities, but this move is a major stumbling block. The TPS has been in force for five years and the register now contains 5m numbers - more than 10% of active consumers.

That still leaves a big pool to fish in, but with the business universe estimated at just 3m, a similar opt-out level would have an immediate impact. In fact, 16% of businesses already plan to block marketing calls, according to a survey by Marketingfile. The level could increase as Corporate TPS becomes better known - only a third are aware of it so far, the poll found.

Marketers cannot point the finger at Brussels bureaucrats this time.

Although it forms part of the implementation of the EU's Privacy and Electronic Communications Directive, this particular element was initiated by the Department of Trade and Industry to appease small businesses, which complain that unsolicited calls are becoming more frequent and annoying. Some report dishonest tactics, where the caller pretends to be a relative of a named executive and demands to be put through.

Critics say the government is over-reacting to a minority gripe, and claim there is a clear distinction between intrusion on consumers' privacy and a free flow of information. 'This is an astounding thing in a society that is supposed to be increasing opportunities for developing enterprise,' says Nigel Pearson, managing director of Navigator Customer Management.

And Jo Smith, managing director of Business Locator, doubts that the benefit of unclogging the lines of a few businesses is worth the potential total loss of sales and describes the move as a 'catastrophe in the making'.

Economically damaging

When Marketing UK polled its 7000 members recently, 90% said the introduction of Corporate TPS would damage the British economy. A similar number said it would damage small businesses, which the legislation was nominally set up to protect. Almost one-third thought legitimate calls would be screened out, but not those from rogue companies which often come from outside the UK.

In the Marketingfile survey, 78% of respondents said calls to other businesses were either essential or useful for generating business. Two-thirds said they did not mind receiving calls from other small businesses, and in a show of defiance, almost one-quarter admitted they might not bother to check or cleanse numbers before calling them.

The register is a potential worry to suppliers of computers, software, printers and other office equipment and services, as well as all types of plant and machinery manufacturers. Media companies that use the phone to generate advertising are also having to reorganise their processes.

Large organisations are less likely to be hurt because in most cases their communications are too well-developed to rely on cold-calling. Many are taking the change in their stride as part of the general trend toward relationship marketing. 'TPS only forces companies into something they should be doing anyway,' says Alex Reeve, customer relationship management and online lead for Microsoft UK. 'The last thing we want to do is contact people in ways they don't want.'

Similarly, Jessica Stevens, general manager of communications at Canon UK, supports a mechanism that will help maximise return on investment.

'It's in our interests to focus on customers who want information and reduce wastage of unwanted contacts,' she says.

The biggest impact will be felt by small businesses such as couriers, printers and office cleaners, for whom telemarketing is a quick way to find customers locally. 'Larger established players tend to be included automatically on tender lists but smaller or newer ones have to fight far harder to be included,' says Julie Knight, managing director of Marketscan.

'They usually have more limited marketing resources and rely heavily on telephone prospecting to get a foothold.'

US precedent

So what is to be done? In the US, some beleaguered telemarketers are going to the courts, shocked by the impact of the new Do Not Call list for consumers which has swelled to 55m numbers in little more than a year.

Their lawyers hope to persuade judges that a measure which limits freedom of communication is unconstitutional. But long years of unchecked cold-calling have made their industry widely reviled and few predict much chance of success.

In the UK, most direct marketers have already accepted that consumers need protection from unwelcome calls and acknowledge that poor practice often causes annoyance. Even the email opt-in rule implemented in December, while considered useless in halting the flow of spam from the US, was seen as a call to improve practices.

Now they will have little choice but to integrate Corporate TPS into existing processes.

The immediate concern is how it will work,which is a challenge for users as well as telemarketers. Telephone numbers are recorded on the register rather than business names, so for bigger organisations with many numbers, blocking all marketing calls will involve a degree of effort.

Telemarketers also face grey areas. For example, if a firm is used to calling a particular business and then finds its name on the register, will it be committing an offence by calling?

The use of common sense is advised by both the Information Commissioner (IC), who polices the TPS, and the Direct Marketing Association (DMA), which operates it. 'If you are used to calling a business and it has never told you not to, the implication is that it is fine to continue,' says Tessa Kelly, director of compliance operations at the DMA. 'But when collecting information, you should be careful to say that you will be using it to contact people and continue to verify that.'

Miscreants have escaped fines in the past because the legal processes involved are unwieldy, although they usually succumb to pressure over a period of time. But this could soon change. 'The IC wants to stop flagrant abuses and is looking at ways to crack down harder,' says Kelly.

Telemarketers would be well advised to deter companies from registering in the first place. Ending the abuse of automation could be a good place to start - an astonishing 37% of existing TPS registrations were made explicitly to block 'silent' calls made by 'predictive diallers' that are then dropped because no agent is available. 'Companies also need to invest more thought in the data they are using and how they can target customers with products and services they actually need,' argues Dudley Larus, vice-president of marketing at call-centre software solutions provider Amcat.

Yet there are hopes that take-up of Corporate TPS will wane as its potentially negative effects are understood. 'A lot of beneficial working relationships start with an introductory phone call,' says Marketscan's Knight. 'Businesses may well find that TPS registration restricts their access to best-value products and services.'

In the meantime, direct marketers will have to find ways of adjusting to yet another piece of unwelcome legislation, but one that many see as inevitable. 'After two years, the direct marketing community is still bleating about the demise of the Electoral Roll and how that will continue to affect the industry,' says Lynn Stevens, managing director of Lloyd James Group. 'B2B marketers need to accept what has happened and move on, realising that there are other effective options open to them.'

TPS FACTS

- 16% of businesses are expected to sign up to Corporate TPS.

- The 5m numbers already listed on TPS include sole traders and partnerships.

- 46% of businesses that use telemarketing direct calls at other businesses.

- Of those registered, 96% are satisfied.

- 37% of existing TPS registrations are to stop 'silent calls' made by predictive diallers that are dropped on connection because no agent is available.

Source: Marketingfile, Brainjuicer2003, NOP

ESSENTIALS

Alternative channels

One potential consequence of the Corporate TPS is that companies will gradually reduce their reliance on the telephone and increase their use of other channels to reach prospective buyers.

Email would be one alternative, because it is a reliable way to ensure a promotion is read. 'A professionally branded interactive message is the best way to get through to the right person quickly,' says Mark Power, managing director of Concep Email Marketing Solutions.

On the other hand, email is of limited use for initial contacts, as the Draconian opt-in rule stipulates that an individual cannot be emailed without giving permission, which marketers often obtain via the telephone.

A more likely outcome would be a boost for direct mail, which so far has been less impeded than either email or telemarketing by the existence of the Mail Preference Service. This will keep the lines of communication open with companies that have registered with TPS. However, B2B marketers will have to use mail in a more sophisticated way than they often do at present, warns David Jeffries, marketing director at Pitney Bowes.

'A significant sign-up to the TPS will mean the direct mail arena will become more competitive and marketers will have to differentiate more effectively to make their messages hit home,' he says. Depth of information will provide the competitive edge, and Jeffries expects that suppliers will increase their use of the telephone to gather reliable data.

Prospects can also be encouraged to reply via any channel, as long as marketers have the technology in place to respond appropriately.

Departmental integration is essential to ensure that multi-channel messages are picked up and the information is acted on in a timely and professional fashion. For example, if a respondent replies to an offer by phone, it would help the call centre agent to access an image of the printed communication that person received, Jeffries suggests.

This provides the agent with the most up-to-date knowledge and helps ensure a high-quality dialogue. The gist of the conversation must be communicated to colleagues in the marketing chain to ensure a holistic portrait of the prospect is captured.

CORPORATE TPS

- Anyone making an unsolicited promotional or fundraising call must check first to see whether the business is registered.

- Cold calls to numbers on the list could result in fines of up to £5000.

- The TPS lists numbers, not subscribers. Marketers can call any number not on the list, even if it is a direct dial number of a business that has registered its main switchboard number.

- Companies that called a business before it registered may continue until advised otherwise.

- Market researchers or opinion pollsters can make calls if they are not promotional in any way.

- The contact details of screening suppliers and their rates are available at www.tps-online.org.uk.