Management Summary As consumers (and after all, everyone reading this report will be both businessperson and consumer) we want to have our cake and eat it. How many social gatherings bemoan the irrelevant telemarketing call, which neither betters the service or product we currently have, nor fits our individual circumstance. Yet many of us have benefited from receiving information on the better value product or service which has either saved us money, or provided a useful extra that we did not have before, or both. This latter phenomenon is less discussed at social gatherings. Government is similarly schizophrenic. Whilst the caring state seeks to impose still further opportunities to opt out of phone-based marketing approaches, regulators mourn the fact that incumbent (and often poor value) providers are relying on their dominant position (and these self same restrictions on new entrant marketing) to hold onto customers who are not necessarily receiving best value products. In one well-publicised example, the energy utilities regulator said this year that consumers should actively change provider in order to obtain better value. Telemarketing is one of the most effective ways of putting an immediate and compelling proposition in front of people – so long as it is relevant and offers a value that is outside of the 'commodity' norm of its industry. For marketers in any of the sectors that this report covers, however, little information exists on benchmark telemarketing campaign expectations. This contrasts with the important benchmarking development that have taken place over the last few years for direct mail in the financial sector – notably through the TANK initiative. Our report therefore seeks to make the first step in rectifying this crucial information gap in the telemarketing scene. The report covers only the arena of competitive propositions. It is impossible to incorporate poor practice into the exercise – and of poor practice there unfortunately remains a great deal. This study, which is based on interviews and validation with best practice corporations and their agencies, provides a benchmark of likely campaign results – defined in terms not merely of response, but of actual conversion to sale. Interestingly, average conversion to sale rates through telemarketing – where the proposition is competitive, relevant, and directed at a cleaned and deduplicated database, reach just over 10%. This exceeds the response rate for (all) consumer direct mail campaigns by over three percentage points. However, it should be noted that in this comparison, the direct mail rates are for all campaigns, and not just vest practice campaigns. General insurance telemarketing performs typically at around double the rate for fixed-line telecoms and credit card equivalents. This is as much as testimony to the gulf between best and worst practice in the insurance industry, as it is to the quality of credit card and fixed telecoms practitioners. However, it does also point to the difficulty – and indeed, challenge – that these two latter sectors face in differentiating their offering from the competition. Some leading practitioners are now turning to affinity relationships to enrich their proposition for the consumer, and to provide better value packages through such affinity associations. The same could also be said for the utilities industry, where price-competitiveness is strictly regulated. On the other hand, it could also be argued that the sheer reach and presence of utilities providers, along with their endemic brand trust with the consumer, make a brand stretch into other services (even through affinity relationships) easier – affecting the attraction of any bundled deals the organisation chooses to present to the consumer. Consumer perceptions of the ease and reliability of switching providers also come into play. Mobile Phone and Insurance telemarketing top the table in our study – apparently a good standard of telemarketing practice. Yet this may also reflect the propensity of consumers to move suppliers, having had previous experience of trouble-free switching. In conclusion, it is hoped that the publication of this report from Telecom Express will inspire further study into benchmarking measures for best practice telemarketing. In so far as such initiatives improve standards, this can only be to the benefit of marketers, agencies and consumers. Consumers benefit from better targeted, more relevant offers. Agencies secure long-term business with clients who consistently receive the ultimate commercial satisfaction – good sales. And marketers are able to make stringent, but realistic, demands on their agencies. Principal Findings The lowest performing sector (Fixed-line Telecoms) delivers conversion rates at around 50% of the highest performing sector (Insurance). However, this disparity is believed to stem not from a gulf in standards, but rather because markets experience different levels of customer inertia.
Insurance (15.2%) and Mobile Telecoms (12.4%) are both sectors where the official regulator has made it simple and reliable for customers to switch. Although this fuels higher conversion to sale rates, it also requires companies in these industries to put devote greater campaign budget and effort in order to combat their own customer defection rates.
Utilities (9.92%) deliver conversion rates just below the average (10.75%), reflecting the fact that the sector is taking brand extension into additional services or products at a rather steadier pace than was predicted at the time of deregulation. The regulator for this sector has recently gone on record encouraging consumers to switch suppliers in order to obtain better value and introduce fiercer competitive forces. Yet at the same time, switching rates are believed to be clamping down on core utility products, although the same may not be assumed for bundled deals which bring together a number of related products, increasingly including financial services.
Fixed-line Telecoms (7.84%) deliver the lowest conversion rates of the sectors studied, demonstrating that the sector is not yet able to encourage the kind of customer mobility that is prevalent in its mobile equivalent – and this is despite the regulator's initiatives on number portability. We might also conclude from these figures that the progress of new customer acquisition for broadband products is tempered by their lack of universal availability.
Finally, credit card (8.4%) comes second from bottom out of our studied sectors. Nevertheless, these conversion rates contrast starkly with response rates of just a fraction of a percent for direct mail campaigns in this sector. If the industry continues to move away from blanket direct mail, and turn to targeted telemarketing, its marketing reputation as a whole may improve and make the sector direct marketing initiatives more acceptable to the population at large. At least for certain customer segments, best practice telemarketing could well turn out delivering the best cost-of-sale rates for the credit card industry, out of all the marketing disciplines.
Methodology The database used had been cleaned and deduplicated Segmentation had been used to define the relevant target audience A compelling proposition was being proffered, making a clear competitive distinction from the market norm
About Telecom Express Telecom Express is a call handling company, providing reliable response handling solutions for a wide variety of corporate, agency and media clients. Established in 1989, our origins lie in the automated sector. The growth that we have achieved over the years led Telecom Express to open our first live call centre in 1999. The success of the call centre has expanded our offering to encompass all areas of automated and live call handling. |
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