TELEMARKETING: Talking Business - The telemarketing boom is being fuelled by a flood of new entrants rather than established players, according to a new survey by Marketing. Robin Cobb writes

Telemarketing’s meteoric growth has made it one of the biggest industries in the UK. The total spend has been expanding at 40% a year and was recently estimated in Marketing as at least pounds 12.5bn. But this explosive growth is fuelled mainly by newcomers still flocking to the medium. Behind this, there are indications that the more established clients may be deciding it is time their budgets were levelled off or even reduced.

Telemarketing’s meteoric growth has made it one of the biggest

industries in the UK. The total spend has been expanding at 40% a year

and was recently estimated in Marketing as at least pounds 12.5bn. But

this explosive growth is fuelled mainly by newcomers still flocking to

the medium. Behind this, there are indications that the more established

clients may be deciding it is time their budgets were levelled off or

even reduced.



On the surface, the picture looks rosy. In a survey of 300 clients,

carried out for Marketing by InTelMark, 42% say they are spending more

on telemarketing now than in the last three years. However, another 50%

say they are spending the same or less.



The survey covered the sectors of FMCG, automotive, financial services,

retail and mail order, leisure and travel, telecommunications, utilities

and a sprinkling of consultancies. Among those participating were Lever

Bros, RHM Foods, Jaguar, Texaco, Abbey National, Co-operative Bank,

American Express Europe, Eagle Star, Lombard, Standard Life, Coopers &

Lybrand, Asda, BT, British Steel, 3M, the BBC, Cresta Holidays and

British Midland.



The conservative pronouncements on spending plans provoked surprise

among telebureaus and consultants. At Telecom Potential Group, for

instance, head of marketing Maggie Evans says: ’By and large, the

companies we are working for are still increasing their usage.’



Niki Turner, sales manager at The Ops Room, points out that it is not

unusual for expenditure to rise in three- or four-year cycles, as

opposed to year-on-year, as technology is upgraded or service levels

periodically increased. Similarly, Lisa Tomlinson, senior consultant at

Ogilvy Teleservices, says: ’There is a cyclical element in both

in-sourcing and out-sourcing, but an organisation never stands still.

After the set-up there needs to be further intellectual and financial

investment to continue to maintain service delivery and market

share.’



However, Mark Osman, managing director of InTelMark, believes that the

reported slowdown in spend by seasoned telemarketers reflects the

probability that these companies are finding more cost-effective ways of

applying their budgets. ’I know that financial services companies are

increasingly targeting more profitable customers rather than applying a

blanket approach,’ he says. ’Companies are using telemarketing in

conjunction with database marketing and beginning to reap the rewards of

this discipline.’



Nevertheless, telemarketing takes up a sizeable chunk of respondents’

total marketing budgets. Although 42% place it at a modest ’less than

10%’, for the majority it ranges upwards from this to more than 50%. It

appears that most are spending around 30% of their marketing investment

on telemarketing. However, these figures may be fudged by differing

interpretations.



Although many of the companies in the survey may in the past have

concentrated on above-the-line activities, they are now substantially

committed to below-the-line. Between them, they have reached the point

where their average budget is tilted 51% to below-the-line.



The survey maps how these companies are getting the most out of their

spend by exploiting the versatility of the medium. The biggest single

application is new business lead generation (employed by 28% of

respondents) demonstrating its value as an active income-generating

tool.



This is closely followed by the twin functions of customer care and

customer service (26% each). In fact, if these two are taken together,

the care/service focus remains paramount.



In the same way, servicing and retaining customers are seen as the most

important marketing issues currently facing businesses (27% and 23%

respectively).



But priority is given by 22% of respondents to acquiring new

customers.



Profitability comes next, with brand awareness lagging far to the

rear.



While industry figures show that inbound has greater volume than

outbound (although outbound is on the increase) they are given almost

equal weightings by this sample of tele-veterans. A decisive 66% employ

both, against 19% using inbound only and 15% sticking to outbound. It’s

a further example of how telemarketing facilities, once in place, can be

used to play all tunes.



’Whereas probably the largest segment would once have been inbound, more

companies are using a combined approach,’ Osman explains. ’I think this

is one of the most interesting findings of the survey. It is indicative

of the active approach that companies now bring to customer care and

service, as well as to lead generation, rather than regarding them as

passive operations.’



Evans agrees: ’Instead of calls being for a single purpose, people are

getting wiser and using the technologies and capabilities to

call-blend.’ And on the balance between inbound and outbound, she notes

that outbound is currently expanding at a faster pace, albeit from a

lower base.



Whether or not outbound will eventually overtake is a moot point. Evans

draws attention to a report from the US - traditionally a couple of

years ahead of the UK - that outbound calling is actually decreasing as

a proportion of the total.



Ogilvy’s Tomlinson observes it can be the case that having set up its

inbound services first and written off any capital expenditure, a

company may decide to get the most out of its investment by adding the

outbound element. She also notes that in boom periods companies have

typically gone into customer acquisition mode; when the bust time

arrives they switch to customer retention tactics. She believes today’s

marketers are keeping out of the boom-bust cycles by balancing both

objectives.



The Ops Room’s Turner draws a distinction between calls to homes and to

businesses. ’I don’t think people will ever be happy at receiving cold

calls at home, but the business environment is different.’



Neil Perring, joint managing director of BPS Teleperformance, comments:

’Traditional outbound lead generation work is not growing hugely. I

would say the biggest growth is in direct sales, both outbound and

inbound.’



While some of the findings of the survey may be controversial, there is

one on which there is unanimous agreement by telemarketing

professionals.



This is that telemarketing is seen as one of the most important

functions in the marketing mix. The largest segment of respondents - 31%

- awarded it eight out of an ascending scale of one to ten. It’s why

there are now as many as 7000 call centres in the UK, employing 1% of

the nation’s workforce.



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