SUPPLEMENT: TELEMARKETING; Steaming ahead at full speed

With turnover and investment in capacity continuing to surge ahead, it has been an exciting and profitable year for Britain’s telemarketing industry, writes Ken Gofton

With turnover and investment in capacity continuing to surge ahead, it

has been an exciting and profitable year for Britain’s telemarketing

industry, writes Ken Gofton



Britain’s telemarketing bureaux grew by almost 30% last year, helped by

the expansion of DRTV, customer care lines and telephone support

services.



This is not only in line with estimates from other sources - notably the

ARM (Advertising, Research, Marketing) Group which keeps a close watch

on the sector - but it also mirrors closely the 30% jump reported in our

league table of direct marketing agencies last month (Marketing, March

14).



The turnover figures reported by the telebureaux in this year’s

Marketing league table total pounds 164.8m, up 28.8% on the pounds

127.9m from the same companies in 1994. Undoubtedly, this partly

reflects the industry’s surge in investment, which has not yet run out

of steam.



A year ago, we were commenting on the growth in capacity resulting from

the opening of new call centres by bureaux such as The Decisions Group,

The Merchants Group, Brann and Teledynamics.



Since then, Mitre Group, which owns both Decisions and Merit Direct, has

set up a new subsidiary (The Call Centre), Telemedia in Bristol has

opened a second centre to double its capacity and Readycall has acquired

a second site.



And Mailcom is planning a pounds 4m investment in the North-east which

will double or treble the number of live operators it can field. This is

‘a hell of an investment to take on the chin’, says director Neil

Shotton, but is the direct result of the continuing growth of DRTV.



Marketing produces its league tables as an aid to client marketers

seeking suppliers. It is important to keep in mind, however, that all

the marketing service sectors are very fragmented and suppliers have

developed from a range of backgrounds and cultures.



This is particularly true in telemarketing. While our main table gives

an overall ranking, we have once again produced separate tables

indicating which are the biggest players in each of the main areas of

specialisation - such as inbound calls (whether handled personally or by

computer), outbound calls and fulfilment.



Missing from this year’s table is Bristol’s BT Connections in Business,

which might surprise a few people as it headed last year’s listing with

a pounds 17m turnover. The explanation is that politics and diplomacy

are involved.



BT was one of the pioneers of telemarketing in the UK, but this has

always rankled with other bureaux, which don’t like the idea of

competing with the organisation which also owns the network they use.

You can imagine the questions: Is their cost structure the same as ours?

Do BT staff have any incentive to refer business to their own

telemarketing arm?



BT officially withdrew from the commercial market a few years ago, to

concentrate on telemarketing services for its own needs. But having

opened a showpiece, state-of-the-art call centre, it decided last year

to participate again in our league table.



This revived the competition row within the Direct Marketing

Association. The result is that BT has diplomatically decided not to be

in the league, although still active in the market. ‘We feel that our

position as number one could be viewed as misleading, given that most

our turnover is derived internally from BT campaigns and programmes,’

says Jon Reynolds, marketing and research manager.



‘BT is interested in growing the overall telemarketing industry and is

committed to supporting the success of all bureaux in the UK.’



The decision means that automated specialist Broadsystem, a subsidiary

of News International, returns to the top slot again. However, it’s the

Mitre Group taken as a whole that emerges as the dominant force in UK

telemarketing. Although the three subsidiaries - Decisions, Merit and

The Call Centre - will compete against each other for contracts, they’ll

link up on big projects. They are already a pounds 30m operation, with

The Call Centre barely into its stride.



Decisions this year has doubled its turnover, making it the fastest

growing of the larger bureaux. And it has leap-frogged over its sister

agency Merit in the process.



Decisions gives a number of explanations for the surge, mainly related

to market growth in areas such as customer service and consultancy. But

its move to a new call centre at Kingston upon Thames has boosted

capacity and winning the international, round-the-clock, on-line call

centre contract for Microsoft’s Windows 95 must have helped. That

business is shared with sister agency Merit Communications in Brussels

and covers Europe, Africa, the Middle East and Asia Pacific.



While BT is one notable absentee from this year’s table, another is

Interactive Telephone Services (ITS) in Southampton. This is the company

originally set up to run a telephone quiz game, Telemillion. Arguably,

it was doing nothing that the TV channels don’t do every day of the week

with their easy-to-answer competitions, but ITS - more of a challenge to

the National Lottery than any TV quiz - was prosecuted and found guilty

last year of running an illegal lottery. It has left the company with a

very modern, automated, under-employed facility.



There is a welcome return for The Merchants Group after it chose not to

appear last year, having just completed a management buy out and a move

to a new HQ in Milton Keynes - yet another state-of-the-art call centre.



Now the move has bedded down, empty floor space has been quickly mopped

up for new call stations and the group, which gets more income from

consultancy than any of its competitors, is looking to go public,

perhaps by the end of this year.



There are a few other significant moves to note. The advertising and

marketing services group Omnicom, which includes the UK’s biggest direct

marketing agency WWAV Rapp Collins, has merged its two telemarketing

agencies to form the pounds 3.3m Intelmark, coming in at number 16. It

is formed from CPM Intelmark in Oxfordshire (with roots in sales

promotion and field marketing) and the telemarketing arm of fulfilment

specialist Granby Marketing Services.



Rushton Connections, in Colne, Lancashire, has secured a management

buyout from Holiday Cottages Group (formerly Country Holidays), now part

of Thomson. It’s a profitable operation, but Thomson had made it clear

that there was no long-term future for non-core activities. In turn,

Rushton’s managing director Mike Bingham is no supporter of the idea of

big telephone users offering bureau services to third parties as a way

of mopping up spare capacity.



He’s also coming out fighting. ‘Using the advanced technology now

available, there is a real opportunity for the smaller, medium-sized

bureaux to combine strategically to provide DRTV clients with an

alternative to using the bigger, impersonal agencies,’ says Bingham.

‘We’re currently investigating this concept with several of our

competitors.’



Telecoms logic might suggest that it doesn’t matter where a bureau is

based, but in an attempt to improve client service, there is a trend

towards having more than one office.



Often, this is the result of takeovers or mergers, as with Intelmark and

Granby. Leeds-based Interactive Media Services, which claims the largest

number of interactive, automated lines in the country, has bought Reed

Telemedia and in the process gained a London base. Teledata has offices

in Glasgow and North London, Senator in Liverpool and Enfield.



Brann has dropped ‘Contact 24’ from the name of its Bristol telebureau,

signalling greater integration between the telemarketing arm and the

direct marketing agency in Cirencester. Director Brenda Hawkins says it

is driven by client need.



‘They are reaching out to their customers, perhaps with increasingly

sophisticated and segmented messages and with a growing need for the

customer to be able to respond easily, in a variety of ways,’ she

explains.



The gaps are widening between the large and medium-sized and between

medium and small bureaux. In turn, this affects the types of work in

which they can specialise. ADS in Manchester, after a move to new

premises and an expansion in staff, has turned in a sparkling

performance this year. But, says telemarketing director Sally Penn: ‘We

know our limitations. We have 80 work stations now, up from 15 a year

and a half ago, but we are not able to handle huge response volumes.

What we are interested in is building real, proper, strategic

relationships. It is a question of knowing which part of the market you

are best suited for.’



No doubt saying ‘Amen’ to that is Telemarketing Link (TML) in Slough, an

offshoot of the international ad agency Euro RSCG and thus a sister

agency, for example, to Evans Hunt Scott. TML was one of the fastest

growing bureaux in last year’s table, but this year has seen a fall.

Tina Stanley, its new managing director, says the bureau made the

mistake of chasing after the fast-growing DRTV sector when it didn’t

have the resources to do it properly.



It is much better suited to offering a quality service which, she

claims, the bigger and more volume-oriented bureaux find difficult.

Meanwhile, it is hoping Euro RSCG will find the money to move it to

bigger premises.



Finding the appropriate niche will become more important, not just as

competition increases, but as the type of work required by clients

becomes more and more diverse. CDMS, for example, was asked recently to

take on a small research campaign among convenience stores, using

operators who could speak Hindi.



Says Teledata managing director, Peter Beverley: ‘There was a time when

telemarketing bureaux pushed more or less the same approach to call

handling and telebusiness for all clients and situations. It was a case

of ‘everything is a nail to a man with a hammer’. Clients do not and

should not take such a limited view any more.’



------------------------------------------------------------------------

Big companies - the top 10 fastest growers

------------------------------------------------------------------------

  Agency                     Turnover            Turnover            %

                               1995                1994           Change

 1 The Decisions Group   pounds 15,600,000    pounds 7,500,000    108.00

 2 GWC Group              pounds 2,500,000    pounds 1,500,000     66.67

 3 ADS Telemarketing      pounds 5,200,000    pounds 3,400,000     52.94

 4 Mailcom                pounds 7,105,000    pounds 4,916,000     44.53

 5 Teledata               pounds 9,500,000    pounds 6,800,000     39.71

 6 McIntyre  & King       pounds 6,110,000    pounds 4,446,000     37.43

 7 Interactive Media     pounds 10,000,000    pounds 7,400,000     35.14

   Services (Catch)

 8 Merit Direct          pounds 12,855,000    pounds 9,600,000     33.91

 9 Intelmark              pounds 3,300,000    pounds 2,500,000     32.00

10 Brann                  pounds 9,100,000    pounds 7,050,000     29.08

(formerly Contact 24)

------------------------------------------------------------------------



------------------------------------------------------------------------

Small companies - the top 10 fastest growers

------------------------------------------------------------------------

Agency Turnover Turnover %

1995 1994 Change

1 CDMS pounds 274,000 pounds 44,000 522.73

2 Inpost pounds 1,200,000 pounds 400,000 200.00

3 Direct Dialog pounds 800,000 pounds 350,000 128.57

4 Chase Response pounds 350,000 pounds 160,000 118.75

5 Ralton Group pounds 929,000 pounds 470,000 97.66

6 The Ops Room pounds 1,500,000 pounds 800,000 87.50

7 Price Direct pounds 330,000 pounds 200,000 65.00

8 BPS Teleperformance pounds 1,893,000 pounds 1,182,000 60.15

9 Mediaphone pounds 1,229,000 pounds 800,000 53.63

10 Senator International pounds 1,700,000 pounds 1,268,000 34.07

------------------------------------------------------------------------



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