Telemarketing

Telemarketing is DIRECT MARKETING conducted entirely by telephone; the term includes both inbound and outbound telemarketing. Inbound telemarketing usually involves a toll-free number that customers can call to obtain information or make purchases. Outbound telemarketing involves a sales force using the telephone to contact customers and potential customers. The advantages of telemarketing are that it offers the quickest and most direct way to reach consumers, provides immediate feedback to the seller, and allows sellers the opportunity to overcome consumer objections. It is also often the least costly method of direct marketing. Telemarketing programs are managed either in-house or by a service bureau. In-house operations allow for greater control over personnel, scripts, budgets, and incentive policies. They are often appropriate for companies with technical PRODUCTs requiring considerable explanation to consumers and for companies with rapidly changing products. Service bureaus are often cheaper than in-house operations for small companies and companies that do not have 24-hour operations. Service bureaus reduce the time and CAPITAL cost to get started, in addition to providing experienced telephone sales staff and knowledge from past telemarketing operations. Telemarketing is almost as old as the telephone; stockbrokers began “cold calling” in the 1930s. In the 1940s and 1950s, many magazine publishers found telemarketing was an effective way to sell to new subscribers and keep customers whose subscriptions were ending. With the introduction of 800 numbers in the 1960s, inbound telemarketing grew rapidly. Today predictive-dialer systems automatically dial numbers from the company’s database and instantly connect calls when consumers respond. Computer database systems have combined with on-line scripts and ordering and information systems to make telemarketing a high-technology industry. In the United States, over 900 companies employing almost 5 million people work in telemarketing. Telemarketing is an alternative to the DIRECT MAIL business, in which a 2 percent response rate is considered a good standard. In outbound telemarketing, 6 to 8 percent response rates are normally achieved. Like direct mail, the success of outbound telemarketing is tied to the quality of the database being used. Even if the telemarketer has a good database, his or her efforts are not often positively received; virtually every household has been interrupted during dinnertime by a telemarketer. In 1996 the Federal Trade Commission created telemarketing sales rules, including the following.
• Identify the caller.
• Restrict calls to daytime and early evening (none after 9 P.M.).
• Maintain do-not-call lists.
• Disclose the total cost of all goods, SERVICES, and refund policies.
• Release the phone line within five seconds once the other party has hung up the phone.
• Never send unsolicited advertisements by fax.
• Disclose the odds of winning prizes and any restrictions on receiving prizes or merchandise. Also specify that the customer does not have to make a purchase to win a prize.
In recent years, many states created “do-not-call lists” that citizens can subscribe to. Telemarketers operating in the state are required to purge these consumers from their databases. The Direct Marketing Association also maintains a Telephone Preference Service and a do-not-call list, and in 2003 over 50 million Americans signed on to a national do-not-call list.