TELEMARKETING: Call centres must adapt their ways - James Curtis identifies the four key challenges facing the telemarketing industry

In the future, when people examine important social and business trends at the turn of the millennium, it’s quite likely that the explosion of teleculture will be on the list. The telephone has transformed the way companies communicate and trade, and radically altered the way people work.

In the future, when people examine important social and business

trends at the turn of the millennium, it’s quite likely that the

explosion of teleculture will be on the list. The telephone has

transformed the way companies communicate and trade, and radically

altered the way people work.



Call centres are now one of the biggest employers in the country and

more are opening all the time; only the other week Barclays Bank and the

Northern Rock building society announced the closure of high street

branches in favour of call centre-based operations. There are now nearly

5000 call centres in the UK, with up to 243,000 call staff; by 2002, the

number of positions will have reached 274,000 (Datamonitor).



Four key issues now face the telemarketing industry: how to sustain

growth; how to harness and defend against new technology; how to balance

global growth with the demands of local service; and, the biggest issue

of all, how to get the best from the people who form the foundation of

the industry itself, the staff.



In terms of the impact of new technology, there can be no better example

than the internet and how it could affect the telemarketing

business.



The internet has been about the only communication medium to have

outgrown the telephone in the past few years, so it is understandable

that some people see it ripping the heart out of the telemarketing

industry. However, others see it merely as a complementary technology

that call centres are well positioned to exploit.



Globalisation, too, is high on the agenda for most large companies, so

it is not surprising that ever more are seeking to serve multiple

foreign markets from centralised call centres, as IBM, Dell and British

Airways are doing at the moment. But as these global activities get

bigger and more difficult to keep track of remotely, companies will have

to ask themselves whether it might not be better to decentralise and

serve markets locally.



The industry must also face up to the fact that although telemarketing

is universally recognised as the lynchpin of customer relationship

management, few of the large communication networks have invested in the

industry.



Are we going to see more integration of call centres into larger

networks, or is there no need for physical integration as long as

teleservice is used in an integrated way?



The common thread running through these issues is people: how to make

the job fulfilling as call centres get larger; how to train them to make

the best of technology; how to recruit foreign language speakers; and

how to maximise their involvement and interest in the client’s

culture.





Internet implications



The internet has both positive and negative implications for the

telemarketing industry. On the negative side, customers communicating

with companies via e-mail could drastically cut the volume of phone

traffic. Banking has been one of the first sectors to see the net take

significant amounts of transactions away from the phone, and, with banks

such as Egg and Smile offering attractive deals for net-only customers,

this trend can only increase.



But on the plus side, the future points to the rise of the web-enabled

call centre, a multi-channel customer contact centre. Whether it is in

actually hosting web sites, or in offering online support for customers

using a client’s site, there are plenty of roles for the call centre to

fill. According to Datamonitor, the demand will be so great that

web-enabled call centres in the UK will grow at a rate of 105% a year,

leaping from the 30 in operation now to more than 900 in 2003.



But experience shows that many companies are simply not geared up to

handle customer contact via the web. Separate research by the Direct

Marketing Association (DMA) and Hewson Consulting reveals that between

30% and 40% of customer e-mails are never answered by companies, with

the remainder waiting up to three weeks for a reply. The problem is even

greater with foreign language e-mails. Research by telemarketing and e-

service specialist, International Marketing Solutions, found that 59% of

non-English e-mails were ignored by European companies, rising to 89% in

the US.



It is also thought that between 70% and 90% of consumers never complete

transactions on the web, abandoning their visit out of confusion,

impatience, or lack of additional information. The scope for telephone

support to address this and, in the process, to boost sales, is

obvious.



The only way to improve this situation is for call centres to invest in

web-enabled facilities. Top-ten telemarketing bureau, 7C, is a good

example of a call centre doing just that. The ex-AT&T customer care

operation recently secured pounds 10m in venture capital to invest in

web-enabled customer contact centres, allowing agents to deal with

customers in a fully integrated multi-media environment.



7C managing director, Juan Sotolongo, says: ’E-commerce in Europe is set

to grow from pounds 3.5bn to pounds 273.8bn by 2003, but many companies

are missing the boat by developing transactional web sites in isolation

from existing distribution channels.



’They must bridge the gap between telephone-based and web-based customer

interactions, and the natural place for this is in a multi-channel

contact centre.’



Sotolongo adds that 7C is providing full multi-channel support for

clients such as Virgin, Dun & Bradstreet and the RAC.



Kieran Moulden, call centre director of Telecom Express, says:

’Operators need to bite the bullet and invest. The telephone line is a

means of communication, so whether it’s voice or e-mail, we should be

able to deal with it.’



Ultimately, the smart approach is to have systems in place so that

customers can contact you via whichever channel they choose.



But it would be dangerous to overestimate just how much traffic will

migrate to the web; research by Brann Contact shows that 86% of people

still prefer to telephone a company than contact it via the web.





The human dimension



Another significant issue for telemarketers was highlighted last week

when BT became the first major company to suffer a call centre strike.

Up to 4000 staff from 37 BT call centres stopped work, with further

industrial action planned for December 10.



It is still unclear whether BT will agree to the union’s demands

(Marketing, November 25), but working conditions is an issue which BT -

as well as other major call centre operators - will have to address.



As the telemarketing industry has grown to become a major national

employer, the media have become interested in it. One of the favourite

angles of attack is to look at the warehouses full of operators and call

them modern-day ’Satanic mills’, drawing comparison with the worst

excesses of the industrial revolution.



Tales of mundane work and staff surveillance to maximise call

productivity abound, leaving the call centre business with a serious

image problem.



There is evidence to suggest that poor working conditions, lack of

personal fulfilment, training or motivation has resulted in more than a

few negative press articles.



Brann Contact’s survey of 1000 UK consumers via BMRB revealed that 25%

of callers have had bad experiences with call centres, the most common

problem being operators’ inability to solve problems (65% of

respondents) and being passed onto other people (60%). Overall, the

picture is of poorly trained personnel unable to act on their own

initiative.



Clare Davidson, director of Brann Contact, says: ’This research shows

call centres need to move away from treating people like idiots and

start training them to think on their feet and work to their full

ability.’



Poor working environments have also resulted in unacceptably high and

expensive staff turnover rates. Chris Halward, director of human

resources and training at The Customer Contact Company, says: ’It’s not

uncommon for a call centre to lose 40% of its staff in one year, and 60%

or 80% turnover rates are not unheard of. When you think that it can

cost pounds 4000 to recruit and train an operator, you begin to realise

how important staff retention is. I think call centres spend so long

worrying over what new technology to implement that they forget the

human dimension.’



Some of the more forward-looking people in the industry are addressing

the staffing problem. The DMA has joined forces with six of its European

counterparts to develop a professional qualification standard for call

centre employees.



Robert Dirskovski, policy adviser on telecommerce at the DMA, says: ’We

want to raise the status of call centre staff and establish it as a

proper profession. People need better training to feel they have a

legitimate career path in telemarketing. We’re concerned about churn and

skill levels.’



7C, which has employed 1000 people since its creation 16 months ago, is

an example of a big agency realising it has to be proactive in its staff

strategy. It has put an emphasis on promoting from within and introduced

’Witness’ software, which allows people to assess and improve their own

performance. Director of corporate affairs, Sarah Barclay Hudson, says:

’It’s sad that some people in this industry still don’t recognise that

the way they treat people is some years behind where they should be. The

sweatshop label would be refuted by many, but is quite deserved in some

call centres.’





Questioning centralisation



As the telemarketing industry grows, it is being pulled in two

directions.



On the one hand, it makes sense for companies to take advantage of

economies of scale and build ever-larger call centres, serving

ever-larger markets. On the other hand, this increases the risk of the

staff problems mentioned above and, with networking and database

technology now cheaper and more sophisticated, may not even be

necessary.



Some anticipate that the future lies more with smaller, localised

customer contact centres - perhaps even with agents linked up to work

from their homes. If this model can work efficiently, it could do away

with many of the problems that come with large-scale operations,

especially for those conducting in-bound or out-bound work across

multilingual markets.



Neil Perring, joint managing director of BPS Teleperformance, which

conducts international work for clients such as Book Club Associates and

Alcatel, says: ’Five or so years ago everyone wanted to centralise, as

Dell did in Ireland. But now I think there is a trend toward

decentralisation. Many companies seem to have realised that cost is not

the only issue - centralisation can create practical and political

problems.’



For example, it may be easy to find a team of Italian, French and German

nationals to man a pan-European helpdesk run from London, but is it so

easy to find staff willing elsewhere in the country? Dell is reported to

have had such difficulties that it has tried to recruit foreign

nationals at the airport as they arrived in Ireland.



As a centralised business, it is also difficult to manage and monitor an

international team and predict call volumes from each country.



Telecom Express’ Moulden believes centralised multilingual telemarketing

’can be heavy going and raises all sorts of problems. It’s great in

theory, but in practice a lot of the supposed economies just aren’t

there. If we were going to do it, we would open up in the specific

country.’



As well as helping in international markets, localisation can also

benefit the domestic scene. CAP Gemini and BT Syncordia Solutions

(owners of BT CiB) are both investigating how remote tele-working can

improve efficiency.



Simon Daisley, head of marketing at BT Syncordia, says: ’Technology

allows us to consider things such as virtual networks, with agents

working at home, linked to a central database. The important thing is to

centralise your data, though not necessarily your human resources. I

find it doubtful that the future lies with big warehouse-like facilities

- the underlying need is for customers to get information, and it

doesn’t matter where it comes from.’



Daisley adds that the technology exists to monitor productivity across a

virtual network. The concept could boost the calibre of agents, as it

will appeal more to highly able people who, for reasons of geography,

family or disability, cannot travel to a central facility. Daisley says

BT is developing such a system for Cellnet.



CAP Gemini, meanwhile, is currently investigating ’telecentres’ -

mini-call centres manned by between ten and 15 people, with the feel of

a local community centre. The centres could potentially be used for work

with one of its biggest clients, Virgin Trains, for which it operates

two Scottish call centres, selling tickets.



Alan Meekings, vice-president of Gemini Consulting, says the company

’wants to fit in with people’s lifestyles’. He further explains that

some regionally based call centres eventually soak up all the skilled

people in the area. The small telecentre approach would allow the

company to set up cost effectively wherever there are people willing to

work. ’We want to be smarter in how we find better quality people,’ he

says.





Integration of services



Perhaps one of the more surprising aspects of the growth in

telemarketing has been that the world’s big communication networks have

not invested more in the industry.



There has been no lack of enthusiasm in design, sales promotion and

direct marketing agencies, but there has been a relative reluctance to

buy into the pounds 1bn UK telemarketing sector.



A look at Marketing’s April 1999 league reveals that only three of the

UK’s top 50 telemarketing operations are directly owned by marcomms

networks.



Brann Contact, at number eight, is a subsidiary of the US Snyder

Communications Group and part of the Brann Worldwide network. Telecom

Express, at 22, is owned by Abbott Mead Vickers, part of the Omnicom

group. InTelMark, at nine, is a division of the Omnicom-owned Alcone

group, and has recently been merged with CPM International, Omnicom’s

field marketing agency.



Apart from a handful of others, such as Wunderman Cato Johnson’s

teleservices division - owned by Young & Rubicam - and WPP’s ownership

of OgilvyOne subsidiary, Teleconsult, there is no real evidence of

substantial network investment in the industry.



But the merger of InTelMark and CPM and some investment in call centres

in the US by WPP suggest that more integration is on the agenda. The

turning point could be the influence of the internet.



Customer relationship management is the Holy Grail of all

self-respecting communication networks, so they want to deliver customer

satisfaction through whichever channel the customer chooses. Being able

to offer a fully integrated CRM service has to include the phone and the

internet.



One of the biggest factors putting networks off call-handling operations

is that it is capital-intensive, low-margin, high-volume work. But as it

captures more of the CRM high ground, there is surely potential for

margins in telemarketing to increase, not least by bolting consultancy

onto the core call-handling operations.



Perhaps the networks are waiting for the UK call centre market to settle

down. As shown by the rollercoaster ride of Sitel, which saw a 16.5%

fall in income last year and a plummeting share price, some operators

built too much capacity, too quickly.



As the market matures and volumes become more predictable, the sector

may prove irresistible to networks seeking to put CRM at the core of

their business.



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