Telemarketing League Table: Telemarketing 2004

Despite growing consumer resistance to telemarketing, the sector remains buoyant, with turnover up 11 per cent on last year. David Murphy reports.

Talk to the main players in the UK contact centre industry and you get the distinct impression that 'offshore' is fast becoming a dirty word.

Even among those operators who have decided that if they can't beat 'em, they'd better join 'em, there's a sense that, at a time when there's severe over capacity in the UK market anyway, offshore is just one more problem they could do without.

This was just one of the findings to appear in this year's Telemarketing League Table (compiled from results for the year ended 31 December 2003), the definitive guide to which call centres are growing, prospering or declining, and what their main hopes and fears are for the year ahead.

Offshore impact

The main impact of the offshore phenomenon, of course, has been to drive down prices, as some mid- and lower-tier contact centre operators (all those towards the top of the table claim they're refusing to chase business in this way) try to compete with the offshore operators to keep the business, even if this means running the account for little or no money.

"There are people out there pricing at cost or at a loss," says Roger Beadle, a director of Careline, which is responding to the offshore threat with its own Indian joint venture, launched at the start of the year.

"Maybe they're desperate to get a big-name client to sell off the back of."

But if prices are being driven down, that's not reflected in the turnover of the top 20 companies in the league table, which comes in at a total of £788.23m. At first glance this looks like a huge advance on the 2002 figure of £591.34m, but there is an explanation.

Vertex, which tops the table this year as it did last, has informed us that due to an error in last year's submission, its figures only included outbound calls. If inbound had been included as well, as it should have been, its 2002 figure of £163m would have been £282m. This would make the turnover for the top 20 in 2002 £710.34m. Even with this revised total, the 2003 turnover is a healthy 11 per cent up on 2002.

And even based on the revised 2002 figure of £282m, Vertex managed to grow its business by 15 per cent last year, off the back of a raft of new business wins, including Westminster City Council, Green Flag Group, Marks & Spencer and United Utilities. The company also bought 7C for a nominal sum in December 2002, following 7C's demise resulting from that of its client ITV Digital. With 7C came its clients, including Vodafone, Lastminute.com and UPS, plus its 750-seat offshore operation in New Delhi.

New metrics

Vertex enterprise director Mike Purvis is looking for a change in the way clients measure the service that Vertex, and others, provide, to answer the concerns many clients have about outsourcing customer contact to a third party.

He believes that in addition to the most commonly used metrics around calls per hour, call length and first-time resolution, clients should also be looking to measure the quality of the customer experience.

"Instead of measuring processes, we need to measure call outcomes," explains Purvis. "We also need to make sure that the conversations agents have with our clients' customers accurately reflect the client's brand."

This is how Vertex is working with long-time customer Orange, which, according Vertex market development manager Mike McKenzie, is investing a significant amount of money to ensure that the agents working on the Orange account reflect its brand values of honesty, friendliness and dynamism.

Agents, he explains, are chosen to work on the account as much for their behavioural attributes as for their competencies. They first undergo two days of Orange brand and culture training to get a better feel for the brand, followed by a 'soft launch', in which they spend five days field testing calls from other Orange call centre staff.

"It's quite an investment in brand training, but it's very important," says McKenzie. "A lot of money is spent on the visual aspects of branding, much less on the verbal side of things, even though research shows that it's the experience customers have that drives their perception of brand.

"Some companies, such as Orange, are recognising the pivotal role of the contact centre," he adds. "What we're doing here shows you can outsource and still maintain the brand's integrity, but it needs a partnership approach and a performance focus on interactions, not just transactions."

Public sector growth

In second place, this year as last, is Ventura, which grew its business by 15 per cent in 2003, and which is looking for further growth in 2004 from the public sector in particular.

"The public sector has been dominated by paper-based office activity in the past, but things are changing," says Ventura sales and marketing director Phil Telfer. "If you look at things such as pension credit and tax credit, in the past, you would have gone to your local council office and dealt with someone on a counter. Now agents are being trained up to go through the process of checking entitlements on the phone.

Sitel would have been ranked third, for the second year, but for the US Sarbanes-Oxley regulations, which prevents US companies from disclosing their earnings outside of scheduled stock exchange dates.

Like most of the top-tier contact centre operators, Sitel now incorporates an offshore element for those clients that want it. Sitel UK managing director Chris Hollamby says many of the solutions the company is designing for clients now combine an element of offshore within the overall proposition.

"We believe the combination of indigenous and offshore solutions is advantageous to both our clients and their customers," he says. "It enables us to combine offshore customer service capabilities with UK back-office functions, such as mailing and fulfilment, to provide a holistic solution."

There is also some explanation needed about third-placed MM Group. Last year, it acquired Contact 24, although the deal only came through in September 2003, so the additional turnover that it gives to MM Group is only one-quarter's worth.

Return on investment

All of the top 10 companies, with the exception of seventh-placed Thus, are predominantly inbound and all predominantly live, although fourth-placed Broadsystem puts the split at 50:50. For managing director Caroline Worboys, 2003 was a year in which the company started to see payback on the investment it has made in the technology to enable seamless integration within the contact centre environment of voice, email, SMS and web.

"If you really want to get tangible, consistent quality results, it has to come from solid foundations, with caller line identification, databases being able to talk to each other and complete integration between voice, email, SMS, and everything else," she says. "I can now see the massive investment we made to have everything handled under one package starting to make a difference."

What's interesting about this is that a couple of years ago, contact centres that had made such investments were struggling to get clients to pay for it. But now, according to Worboys, the contact centre's infrastructure, information architecture, its ability to develop applications, and maintain and manage data, are becoming an essential part of the client's risk assessment during the decision-making process.

Like Broadsystem, Merchants is also pitching itself as a value-added partner, refusing to chase business at any cost.

"A lot of outsourcers are trying to compete on price," says chief executive Bruce MacLeod. "They'll pick up business, but they'll become commoditised and this will damage their margin. They'll never be able to resist the onslaught of very low-cost offshore options."

Instead, he says Merchants is looking to build strategic relationships with its clients to drive up the value of each interaction they have with their customers, whether the interaction starts as a sales interaction or not.

"Outsourcers that do just what they're asked by the client are really missing the point," says MacLeod. "It's all about creating strategic relationships at board level within clients, so that as the outsourcer you're aware of the client's strategic objectives and you can tell them which ones you can positively affect and which you can't. Then you prepare your solutions and creative suggestions around those creative objectives. Otherwise, you're only doing what the client asked for, which is only one part of the job."

Market polarisation

There's clearly a degree of polarisation taking place between the top-tier operators, who all claim to be maintaining realistic fee levels by offering a value-added service, and those who, perhaps lacking the technology to do so, are forced to compete on price against offshore operators.

Some of the remarks about these offshore operations border on the disparaging, but the consensus seems to be that for high-volume, prescriptive, script-driven business, they're more than competent, which is why so many UK operators now have an offshore element to their offering. By the same token, most UK operators agree that for more complex interactions, the offshore operators aren't yet capable of handling the work. But it won't stay that way forever.

"As these offshore operations become more competent, they'll move from low-value transaction-based business to higher level, more complex interactions, there's no doubt about it," predicts MacLeod.

This could happen within the next couple of years, he adds, so where does that leave UK operators when the offshore competition can do everything they can, including the more complex work, all for a lower fee?

"It means we have to ensure we offer better quality and are more innovative in the way we sell over the phone," says Andrew Pearce, managing director of sixth-placed Inkfish. "We have to take the steps to push ourselves above and beyond what we're doing today to ensure that conversion rates improve and utilisation of data is better. We have to be aware that offshore centres are emerging and that they'll challenge us in two or three years' time."

Some would argue that it would take a serial optimist to see anything positive, from a UK perspective, about the offshore issue. But Broadsystem's Worboys believes it has done something to raise awareness of the contact centres, with a positive impact on new business and staff recruitment.

"India has been a great catalyst in terms of raising awareness in the UK about contact centres," she says. "A lot of companies that have never heard of outsourcing are thinking that if a company can outsource to India, then they can feel confident about outsourcing to a company down the road."

From a recruitment perspective, meanwhile, Worboys feels that the outsourcing debate has made people realise that this is a complex industry, and that this can do no harm in attracting the high-quality staff needed to take on multi-task roles.

Staffing issues

Staff recruitment and retention is always high on the contact centre agenda, of course. Many operators make the point that winning more complex contracts, which bring with them a need for better-trained, more highly-skilled agents, means is it essential to recruit a higher calibre of agent in the first instance.

Sixteenth-placed Arvato is combating staff attrition by trying to open agents' eyes to the bigger picture. Everyone who joins the company undergoes a training development programme, which runs for a total of 12 weeks over the course of the year. It includes an initial two-to-three day induction course covering the organisation, the company's work ethic and cultural differences from other operators, then goes on to customer service training and IT skills, including Microsoft Outlook, Word, Excel and PowerPoint.

Finally, the programme covers data protection and legislative issues and how these affect an agent's day-to-day work.

Arvato sales director Phil Crossley says the training is well received.

"The feedback we get tells us it's appreciated," he says. "We find that when we want to transfer people from one job to another, they're happy to move. We also find that they're prepared to invest their own time in it, outside of business hours."

Transferring skills

At fifth-placed Prolog, business development manager Paul Turner says it benefits from the experience of staff who have transferred their skills from other industries. "Where we're based, in Sherwood, the mining and textiles industries have disappeared, so we have people who held managerial positions in those industries who are now carving out a second successful career for themselves with us."

And, Turner adds, when staff see colleagues being promoted from within, it gives them real encouragement that there's a career development path in place that they too can follow.

Meanwhile, MM Group director Rachel Robinson says clients seem to be finally getting the message that agent training is a necessity, rather than a luxury.

"We've seen more of our customers willing to invest in training of their agents in the past year, and the training period for agents is getting longer," she says. "Now, two weeks of very intense training isn't unusual. Two years ago, one week was considered a long time."

The agents, then, may be getting better, but the contact centre operators themselves are still plagued by the issue of silent calls, which have done more than anything to fuel negative perceptions of the telemarketing business over the past 12 months.

Improving perceptions

These, however, are just part of a bigger problem afflicting outbound telemarketing, which, according to Vertex's Purvis, all comes down to targeting.

"Clients and outsourcers alike need to be sensitive to growing customer resistance to cold-calling and understand that badly-planned, uncoordinated outbound activity will be damaging for all players, as the number of people opting to rule themselves out of receiving telemarketing calls increases," he says. "Responsible outsourcers and their clients must, when acquiring customers, improve their use of analytics to identify as accurately as possible those people for whom their offer has relevance. A scattergun approach is no longer acceptable."

What with silent calls, increased Telephone Preference Service registrations caused by badly-targeted outbound activity, and downward pricing pressure caused by increasingly sophisticated offshore competition, the UK contact centre industry has a lot to think about. How it rises to these challenges will dictate which companies thrive, and which merely survive, in 2004.

TELEMARKETING LEAGUE TABLE

Rank Company Call centre Number Activity Activity

turnover of work- (as % of (as % of

(pounds m) stations turnover) turnover)

2003 2002 in out live self-

bound bound service

1 Vertex 323.1 163.3 1,000+ 70 5 86 14

2 Ventura 112 97.4 1,000+ 81 13 98 2

3 MM Group 45.2 33 1,000+ 40 25 82 18

4 Broadsystem 38.86 34.95 400-500 65 25 50 50

5 Prolog

Connect 32.2 32.1 500-700 70 5 90 1

6 Inkfish Call

Centres 25.1 22.7 1,000+ 55 43 98 2

7 Thus 24.6 25.4 1.000+ 33 65 99 1

8 Merchants 23.5 20.75 1,000+ 78 18 100 0

9 Echo Managed

Services 20.5 18.2 500-700 99 1

10 RHL 19 12.3 500-700 45 51 98 2

11 Garlands Call

Centres 16.2 12 1,000+ 49 46 100 0

12 Advanced

Telecom

Services 15 14.5 >50 80 0 10 90

13 The Listening

Company 14.12 13.74 500-700 35 55 95 5

14 BeCogent 13.6 13.22 500-1,000 53 43 95 5

15 2Touch 13 13 400-500 60 36 79 21

16 Arvato

Services 12.3 10.7 500-700 60 40 95 5

17 SR

Tele-

performance 11.35 11.88 500-700 30 55 100 0

18 iSky Europe 10 12.5 500-700 45 45 70 30

19 Ant Marketing 9.5 6 1,000+ 15 80 100 0

20 Dataforce

Group 9.1 8.15 250-300 45 25 80 20

21 Careline

Services 8.5 5 400-500 60 30 98 2

22 Pell & Bales 6.94 5.25 150-200 2 83 99 1

23 Telegen 6 6 250-300 15 85 100 0

24 Kingston

Commun-

ications 5.75 7.1 500-700 20 95 5

25 The Message

Pad 5.29 4.98 100-150 70 5 100 0

26 Navigator

Customer

Mgnt 4.84 4.6 95 35 100 0

27 Market

Reach 4.33 4.25 100-150 45 100 100 0

28 Chorus

Direct 4 3 350-400 10 90 100 0

29 Chase

Response 3.9 2.9 120 40 40 98 2

30 Financial

Telemarketing

Services 3.8 2.8 250-300 50 40 100 0

31 The Ops Room 3.4 2.911 75-100 24 45 100 0

32 HSM 3.34 2.58 100-150 10 90 100 0

33 ION Group 3.1 2.3 150-200 45 35 85 15

34 Telefocus 3 3 75-100 0 100 100 0

35 The Tele-

marketing

Group 2.87 2.59 150-200 0 100 100 0

36 Carlson

Marketing

Group 2.17 2.69 75-100 75 5 70 30

37 Phonetics 1.6 1.8 75-100 80 15 100 0

38 Arden Direct

Marketing 1.5 1.3 >50 40 10 100 0

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