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HOW TELEMARKETING CAN BENEFIT BUSINESS PRODUCTIVITY
Telemarketing is the process by using the telephone to generate leads, make sales, or gather marketing information. Telemarketing can be a particularly valuable tool for small businesses, in that it saves time and money as compared to personal selling, but offers many of the same benefits in terms of direct contact with customers.
In fact, it is estimated that closing a deal through telemarketing usually costs less than one fifth of what it would cost to send a salesperson to make a sale in person. Though telemarketing is more expensive than direct mail, it tends to be more efficient in closing sales and thus provides a greater yield on the marketing currency.
Telemarketing is especially useful when the customers for a business’s products or services are located in hard to reach places, or when many prospects must be contacted in order to find one interested in making a purchase. Although some businesses operate exclusively by telephone, telemarketing is most often used as part of an overall marketing program to tie together advertising and personal selling efforts. For example, a company might send introductory information through the mail, then follow-up with a telemarketing call to access the prospect’s interest, and finally send a salesperson to visit.
Telemarketing can be either inbound or outbound in scope. Inbound telemarketing consists of handling inbound telephone calls, often generated by broadcasting advertising, direct mail, or catalogs, and taking orders for a wide range of products. Representatives working in this type of telemarketing program normally do not need as much training as outbound reps because the customer already has shown an interest by calling in.
Outbound telemarketing can be aimed directly at the end customer. For example, a home repair business might call people in its community to search for prospects, or can be part of a business to business marketing program. Representatives working on this side of the industry generally require more training and product knowledge, as more actual selling is involved than with inbound operations.
Major applications of business to business telemarketing include selling existing accounts, outbound new account development, inbound order processing and injury handling, customer service, and supporting the existing field sales force. As the costs of field sales continue to escalate, businesses are using telemarketing as a way to reduce the cost of selling and give more attention to marginal accounts. Telemarketing program can either be handled in-house by a company or farmed out to service bureaus.
One of the advantages telemarketing has over other direct marketing methods is that it involves human interaction. Used correctly and by professionals, the telephone is the most cost-effective, flexible and statistically accountable medium available. At the same time, the telephone is still very intimate and personal. It is individual to individual. Although telemarketing has been the center of some controversies, ranging from scams run over the phone to a number of legal issues that have been the center of debate at the state and national levels, the industry continue to grow.
TYPICAL TELEMARKETING USES
Although telemarketing can be used as a stand alone operation, it often works best as part of an overall marketing effort. Companies considering the use of telemarketing have to look at such factors as: which products and services are candidates to be sold by phone; whether telemarketing can be used to increase volume through upgrading the sale; how the process can help qualify prospects, define the market, and service existing accounts; and whether telemarketing can help generate new business. Some of the roles telemarketing can be used to fulfill include: selling, generating leads, gathering information, and improving customer service.
Selling
Telemarketing can either supplement or replace face to face selling to existing accounts. It can complement the field sales effort by reaching new customer bases or geographic markets at relatively low cost. It can also be used to sell goods and services independently, with no field sales force in place. This method often is used for repetitive supply purchase or readily identifiable products, though it can be effectively applied to other products as well.
The inside sales force can be used to replace direct contact for marginally profitable customers. A general rule of the thumb in business says that 20 percent of customers account for 80 percent of sales, so conversely the remaining 80 percent generates just 20 percent of sales. But businesses must keep in mind that marginal does not necessarily mean unprofitable. And the existing customer base is perhaps the most important asset in any business; sales increases most often come from current accounts, and it generally is less costly to maintain current customers than to search out new business.
Telemarketers can give these reliable customers the attention they deserve. The reps can phone as often as needed, determine the customers’ purchasing cycles, and contact them at appropriate reorder times.
In making such a consolidation between a direct and inside sales force, the company must be careful in determining which accounts should stay with field sales and which should be handled by telemarketing. Some businesses start their telemarketing operations with just small or inactive accounts, gradually increasing the size of accounts handled.
Lead Generation
Through telemarketing, a company can compile and update the lists of customer prospect leads and then go through these lists searching for sales leads. Telemarketing can screen the leads and qualify them according to priority, passing the best leads to the field sales force for immediate action. The inside sales force can also identify the decision maker with the buying power and set up appointments for the outside sales force.
Gathering Information
Telemarketing can provide accurate information on advertising effectiveness, what customers are buying, from whom they are buying, and when they will buy again. It is also commonly used in conducting surveys.
Improving Customer Service
Studies show it costs five times more to win over a new customer than to keep an existing one. By using telemarketing as a main facet of customer service, companies can go a long way toward keeping customers happy. In addition, when used in conjunction with current computer technology, a telemarketing program can be analyzed in terms of costs and benefits, using quantitative data on the number of contacts, number of presentation, total sales, cost per sale, and income per sale.
ESTABLISHING A SUCCESSFUL PROGRAM
Not all telemarketing programs are successful. Improper execution, unrealistic goals over a short time period, oversimplification, and lack of top management support have caused the ultimate failure of more telephone sales programs than can be imagined. Like any marketing strategy, telemarketing takes time to plan and develop. It takes time to gain confidence in the message, to identify weak areas, and to predict bottom-line results.
Some of the most common telemarketing misstates include: not considering telemarketing as an option; not giving it a total commitment; not utilizing the proper expertise; failing to develop a proper database; improper human resource planning; lack of proper scripts and call guides; lack of quality control; and failing to understand the synergy with other direct marketing disciplines. Management must understand and agree to the necessary personnel and financial resources, as well as the time required for program development and testing. Telemarketing and related direct marketing techniques can work astoundingly well. But they need a real chance to demonstrate that success. It doesn’t happen over a couple of weekends.
Experts agree that companies must be careful in forming telemarketing goals and objectives. Some of the most important factors for success include: developing a complete marketing plan with built-in criteria for accounting and analysis, writing scripts, sales outlines, and presentations to be performed, establishing training and hiring procedures for both supervisors and sales personnel; analyzing and evaluating campaigns; personnel, and cost effectiveness; having support and commitment from management for the telemarketing’s role in the overall marketing effort; establishing reachable goals; and placing a continuous emphasis on follow-up.
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