Outbound, Outsourcing and the new world order
With the introduction of the Do Not Call (DNC) list most people both within the call and contact centre industry and those outside of it, assumed that this would be the death knell for outbound calling. The DNC eliminated huge volumes of people who you couldn’t phone. While there are exemptions and exceptions it forced many firms and organizations to change the way they do business.
Telemarketing or outbound calling was once the primary activity of call centres. Companies employed outbound telemarketing because it works; thirty years ago people often were genuinely happy to receive a call from hundreds or thousands of miles away. Over time more and more companies and organizations began to use to outbound telemarketing themselves or contracted with a third party outsource agency to place call on their behalf. The introduction of predictive dialing greatly improved the number of
calls that an agent in a call centre could make and the number of calls soared. Pretty soon consumers were receiving two, three five calls a day and their frustration with telemarketers calling to ‘sell them something’ became common.
Enter the Do Not Call list and the frustration with telemarketing calls crystallized into 150 million Americans signing up. In Canada a DNC list has just been (September 30, 2008) launched and on the first day the number of people calling overwhelmed the operator. It is likely that we will see more than half of all Canadian phone numbers registered under the DNC.
According to Contact Babel legislation has had an impact on outbound telemarketing activities “14% of respondents said that their outbound calling had greatly reduced due to legislation, although 56% said that it had reduced in some way (which is up from 41% last year)”. This reduction of outbound activity has been seen over the past decade from approximately a 50/50 split between inbound and outbound to today only an estimated 18% of call centres would define themselves as exclusively or primarily as outbound.
So with fewer people to call what are companies and organizations doing? Perhaps surprisingly they are still calling. Sales calls to new customers are still the number one activity even though the universe of ‘call-able’ numbers has been greatly reduced, cross selling and customer service activities represent other significant segment of outbound telemarketing.
Increasingly companies and organizations look at outsourcing and off-shoring their outbound calling requirements and much of this activity is provided through third party outsource agencies. There are a number of reasons for this:
• Outsourced firms tend to cost less than completing the work internally (much less if an offshore provider is employed),
• Access to skills, staff and technology that the company may not possess internally,
• Compliance issues related to legislation (DNC)
Outbound calling completed by third party firms will generally be completed on a cost per hour basis, on a dollars per sale basis, often called ‘pay for performance’ or P4P, or on a base plus bonus structure. These rate structures reflect risk and which of the parties (outsourcer or client) is accepting the risk. As expected cold call selling is often outsourced on a P4P model as it does not cost the company any money unless the outsource firm actually makes a sale. Of course this is not completely true a company the
sponsors high volume P4P campaigns does run the risk of eroding Brand value due to the volumes and/or quality of the calls. Hourly rated programs tend to be service and customer satisfaction type of calls and Upselling, cross-selling and renewal activities are often structured on a base plus bonus basis.
There is a high correlation between P4P programs and offshoring. A casual study completed by the author found that more than 75% of P4P program opportunities reviewed were targeted to offshore firms calling into North America. The reason for this is cost. While it is virtually impossible to make a cost comparison on P4P activities as the unit price varies by product and/or service it is possible to look at hourly costs to establish as baseline. A recent survey completed by The Taylor Reach Group, Inc. found that hourly rates varied across Canada from a low of $20 per hour to a high of $32 per hour for outsource firms located in Canada. Generally Toronto (and other major urban centres) had the highest rates and more distant and/or
rural locations had the lower rates.
This compares with hourly rates in the $12 to $14 dollar range offshore.
There are challenges and risks to bear in mind before you rush to offshore your outbound telemarketing activities. From an effectiveness perspective these include; language issues, geography issues, inflexible scripting , issues understanding the product or service if it is not prevalent in the culture of the off shore location; and issues of context if the offshore agents are not familiar with the culture in North America. There are also risks from a financial point of view. The stated rates do not include the cost to source, vet, negotiate, or contract with an offshore service provider. Nor do they include the 20%-30% premium to manage an offshore partner. Lastly offshore outsourcers generally have a lower sales conversion rate due to the challenges above. Once these considerations are taken into account to costs offshore become similar to those onshore.
If you are contemplating outbound telemarketing outsourcing to a third party firm should certainly be considered. You need to ensure that the rate structure is appropriate to the type of calls you wish to have placed (sales, service, satisfaction services etc); that the technology employed is appropriate (predictive, progressive or preview dialing); and that risks related to legislation are mitigated through a compliance program. The first organization to be fined for violating the US DNC was AT&T, through one of
their outsource partners. Don’t let this happen to your organization.
Outbound telemarketing is not going away any time soon. Companies and organizations that employ or wish to employ outbound calls will need to be vigilant and know and mitigate the risks. Third party outsource firms have developed compliance programs to ensure that their actions are compliant with the rules. Outsource firms have significant risk to their livelihood if they are not operating under the rules, far more than most of their clients would have. And as a result these companies will have and continue to
invest in maintaining their compliance.