It has become a truism that existing customers make better future customers than complete strangers. Outbound telemarketing is far more fruitful when conducted with people you already know. A charity that wants to enlist door-to-door collectors, for instance, will get a better response by ringing existing donors and asking them to take to the streets, than by cold calling names from the phone book.
So, knowing this, who on earth would want to bother with cold calling, and risk the wrath of the recipient and the demoralisation of the caller?
For some organisations, the pool of existing customers is practically endless. BT, for example, (main picture above) can call on millions of users of its basic service to attempt to sell them others. However, for some businesses, existing customers are as good as useless. Once someone has bought double glazing, that’s it; you can’t sell it to them again. Home improvement specialists are the ones who rely on cold calling – an appropriate name, since unsolicited calls leave many people cold: 37 per cent of residential customers now ask for their names to be excluded from the telephone directory – up from 24 per cent in 1991.
“The complaints ratio is very small – Oftel received about 1,000 complaints in the year to September 1997, compared with an annual total of cold calls estimated at about 400 million,” insists David Ballard of the Glass & Glazing Federation (GGF), “but nearly half the complaints are about window companies.”
To lower the number of complaints, particularly in the face of European legislation putting a blanket ban on all cold calling, the Direct Marketing Association set up the Telephone Preference Service in 1995.
As with the Mailing Preference Service, customers who consider unsolicited calls to be an invasion of privacy can register their animosity and be included on the TPS list. This is then distributed to subscribers quarterly at an annual cost of up to 3,500, depending on the size of the operation. Subscribers get the advantage of not wasting calls on hostile recipients.
The trouble is that the scrupulous who sign up and abide by the rules of the TPS, including all members of the DMA and GGF, end up shelling out money and creating work for themselves in cleaning their prospect lists against the TPS list, while the bad guys continue to call whoever they like.
Jonathan Pearce, principal of call-centre company TSC Europe, says: “The worst offenders – the heaviest users of outbound calling – are not members of the DMA.”
So what’s in it for the good guys? Tessa Kelly, manager, governance, of the TPS, says: “Licensees of the TPS do save money. It’s also less demoralising for staff if they are not constantly calling people who don’t want to be called.”
“The trouble is that it’s voluntary,” says Pearce. “Also consumer awareness of the TPS is very low – only ten per cent.
“I don’t think the TPS is doing enough to market itself to domestic users,” says Pearce.
Kelly explains that the TPS is already doing more to raise its profile, particularly by encouraging more input from the phone operators. She says: “Apart from the leaflets telling people about the TPS going into libraries, Citizen’s Advice Bur eaux and other consumer-facing organisations, the service is mentioned in phone books and leaflets are going out with BT and Cable & Wireless bill statements. Registrations are taken by the phone companies, too.”
The process of signing up to the TPS has also been cut back to one stage instead of two. Whereas consumers used to have to send off for a form and then register, they can now make one phone call.
However, these are small steps. The latest EU draft directives on data protection, telecoms and distance selling require member states to allow private phone owners to object to unsolicited calls. It’s still up to member states to determine how these requirements are incorporated into national law. The danger is that if self-regulation fails, drastic measures, such as a blanket ban on cold calling, may be imposed. Cold calling is already forbidden in Germany.
For its part, the telecoms watchdog Oftel has produced a consultation document outlining its recommendations for restoring consumer faith and reducing the number of people who choose to be ex-directory, citing telesales calls (19 per cent) as among the reasons for their decision.
One Oftel proposal is that electoral roll data should not be combined with phone directories. The DMA objects because this would reduce the accuracy of data used and lead to more infringements of data protection rules rather than fewer.
The DMA suggests that greater penalties for those who breach the rules would help bring wayward telemarketers into line and achieve the objectives of privacy protection. Kelly cites the ever-escalating numbers of consumer watchdog TV programmes as one of the best ways of encouraging companies to play by the rules and, of course, media coverage increases awareness of the TPS, which can only be a good thing for her.
The DMA sees just one sure way of cleaning up the telesales act. “Use of the TPS should be mandatory,” says Kelly. “It should be compulsory for all outbound callers to screen all listings. Then we could lower prices and it wouldn’t be just the good guys paying for it.
“At the moment, the TPS works well for big companies that use automatic dialling systems and can buy cleaned-up electronic lists of numbers; for the small companies that buy the TPS list, it takes a long time to wade through it to check whether people mind being called. If it was mandatory, people would stop going through the phone book for leads and would use only clean lists.”
Mandatory membership of the TPS should go alongside tougher penalties for those who break the rules. Pearce believes: “Oftel has limited power. Levying fines would make people think.”
Ultimately, Oftel could remove the phone licence from a company making junk calls if it repeatedly offended. It has already made use of this power to eradicate sex lines. “The threat of having your phones ripped out would certainly be a deterrent,” adds Fricker. “But there would also be intermediate measures, starting with warnings.”
In the absence of enforcement by legal means, there are still compelling reasons for supporting the TPS. Apart from fending off the threat of draconian legislation, greater public awareness will lead to more consumers pinning up the telecommunications equivalent of a “Beware of the Dog” sign. A more comprehensive list will ensure fewer telemarketers come away from a phone call with a rip in their trousers or tooth marks in their ankles.