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Is Telemarketing Feasible For My Business?
By Dave Kahle   Printer Friendly Version

There is no doubt that the systematic use of the telephone is the fastest growing sales and marketing strategy today. This rapid growth of telemarketing has stimulated marketers from companies and organizations of all sizes to question whether or not there is some application of telemarketing in their business.

If you're one, you may be asking the question, "Is telemarketing feasible in my business?"

The answer to this question rests in the answer to two more basic questions. First, do you have an appropriate application? And second, do you have the necessary resources to give a telemarketing effort a fair test?

Let's look at each of these in detail. First, the question of an appropriate application. Telemarketing applications fall into three general categories.

    1. Information Gathering.

    Telemarketing is the most powerful means of collecting marketing information about individual prospects and customers available today. This application of telemarketing can more than justify a telemarketing effort. Additionally, this information collecting can, and should, be an "add-on" aspect of every other telemarketing program.

    Ask yourself, "Can I use a database that precisely identifies your highest-potential prospects?" Or, "Can I make use of additional information about my customers?"

    Here are some examples which illustrate this application. An international manufacturer of large manufacturing equipment had been in business for over 100 years, and some of its equipment was in use for 60 to 70 years.

    But, the company didn't know where its customers were. Over the years, the equipment may have changed hands a number of times. Yet they had a series of offers they wanted to make to people who owned their units.

    So, the marketing task was to identify those companies who owned some of their equipment, and then to collect some information about those companies. We created a short-term telemarketing program to accomplish the task.

    Within three months, we had identified a national prospect base of over 1,000 companies, had the name and title of the chief decision maker, and knew exactly how many of my client units and the competitors each company owned. That was extremely valuable information, and provided the basis for additional marketing efforts.

    Here's a small business example of the "Information Collecting" application. My client was a large developer and manager of office buildings. As he was preparing to build his next building, he wanted to identify prospective clients to whom he would deliver a targeted sales message. The problem was to dip into the vast universe of people who lease office space and find those who were thinking about moving.

    My suggestion? "Let's call them and ask them." So, we created a telemarketing program that took us through the yellow pages and compiled a list of office managers, business owners, and branch managers who indicated they were considering moving or increasing their office space in the next 12 months. We then designed a direct marketing approach to take our message to those individuals.

    This aspect of telemarketing which collects information is so effective that I counsel my clients to build in "information collecting mechanism in every telemarketing program, regardless of the primary objectives. Thus every phone conversation between your company and your prospects/customers can be a means of collecting marketing information.

    2. The second general category of telemarketing applications has to do with using telemarketing to complete some aspect of your current sales and marketing system more effectively or more efficiently then is currently being done. Generally this means using telemarketing to replace some task that your sales force is currently completing, or for which your advertising is responsible.

    In this sense, telemarketing is used to increase effectiveness, or reduce current costs. It becomes a better way to do something that you are already doing.

    Here are some examples. A client was a small, local distributor of storage equipment. In theory, almost every manufacturer or distributor within its market area was a potential prospect. The key to making effective sales calls was to get in front of the prospect at the point at which he was considering expanding, or after he had budgeted for an equipment purchase. This was the task of the outside salespeople, who were making classical cold calls in their areas, introducing the company, and probing for needs and proximity to the buying decisions.

    In an effort to take costs out of the sales and marketing system and to complete this component more efficiently, we created a telemarketing effort. First, we called a suspect list, identified the primary decision-maker, and asked a few short survey questions regarding their future need for storage equipment. Those who indicated no current need were put into the database to be called next year. Those how indicated a need in the next twelve months were sent some basic information about the company, and then referred to the sales force. Thus the sales force was calling only on prospects who had already been identified as having a need and being close to a buying decision.

    We took a task away from a high cost source - outside salespeople - and gave it to telemarketing to more efficiently and effectively complete it.

    Here's one more example of this concept that may surprise you. Using telemarketing to replace media advertising as a way of identifying prospects.

    My client was the local office of a national direct-selling company. The local office relied on its national advertising to generate leads. We analyzed the cost per lead acquired in this fashion, and discovered that leads thus generated were costing the local franchises $35.07 each. We created a telemarketing program based on tared phoning into specific sales territories, and were able to dramatically increase the number of leads available, and, at the same time, to decrease the cost. The cost of leads obtained through telemarketing was $15.35.

    So, in this case, we used telemarketing to replace a step that was being accomplished by media advertising.

    Thus, the second question as you consider the feasibility of telemarketing is, "Can you use telemarketing as an alternative way to more effectively or more efficiently accomplish some task in your sales and marketing system that you are currently accomplishing in some more expensive way?"

    3. The third general application for telemarketing is to add some incremental component to your sales and marketing system that is currently not being addressed.

    For example, you may have some peripheral product line that isn't being sold effectively because the sales force isn't interested or motivated to sell it. That's a perfect application for a telemarketing effort combined with a simple print message.

    Or, you may have a service or major purchase that would benefit from a well-scripted, follow-up call. If you salespeople are too involved increasing the indicate sales, a telemarketer can be used to follow up and proved for additional, incremental purchases.
If you can answer yes to any of the above three questions, then you've passed the first test for the feasibility of telemarketing within your organization: you have an application.

Now you are ready to consider the next.

"Do you have the necessary resources to create and implement a telemarketing program?"

The primary resource is management commitment. Telemarketing, perhaps more than any other media, requires a commitment from management to resources and time to make it work. There are hundreds of decisions that need to be made in the process of creating and implementing an effective telemarketing program. And management must be committed to a thorough testing of the medium, or it will fail.

The primary reason telemarketing programs fail is a lack of effective management commitment. So the first resource necessary to make it work is management involvement.

Beyond that, there are no absolute requirements. We've designed telemarketing programs that have used one part-time phoner, and others that have several shifts and dozens of people. The amount of investment necessary is totally continent on the objectives of the program.

And, of course, the objective development is the responsibility of management.

With that component and sufficient cash resources, all the other components can be acquired relatively easily. Those include lists, scripts, equipment, supervisors, telemarketers.

Some of you are thinking, "How much cash?" Again, this varies dramatically based on the objectives of the program. However, as a rough rule of thumb, a telemarketing program can be created and implemented, and continued long enough to collect objective information on the effectiveness of it generally for less than it costs to acquire and maintain one outside salesperson, or create one mass mailing.

So, if you're asking yourself, "Is telemarketing feasible for my business?" ask yourself these questions: "Do I have an appropriate application?" and "Do I have the necessary resources?"

If the answer is yes to both, than yes, telemarketing is feasible for you.

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