Anyone for Outbound Calls?

Anyone who has been following the debates about outbound calling in the media in countries such as the US and the UK in recent years might wonder whether there is any place for outbound calling, especially telemarketing, in a civilised society any more. It's as strong as that. At the heart of the disillusionment with outbound activities lies a massive disconnect between, on the one hand the technology for making outbound calls and how it is being deployed by call centres, and on the other hand, the acceptability of such calls to consumers.

The move to do not call (DNC) lists

It should hardly be surprising in any society with significant outbound calling volumes, that consumer pressure should lead to the establishment of a national DNC list. It's happened already in the UK and the US. Many other countries where they don't already have 'opt in' systems, are now considering them. Whether telemarketing practices are good or bad, DNC systems make sense. For, if people don't wish their privacy to be invaded, well that's pretty reasonable, and much as some telemarketeers think they can sell to anyone, their resources are best spent on consumers who at worst are benign about receiving outbound calls.

Given the opportunity to join national DNC lists, consumers have been doing so in droves. In the US most ABC households are signed up and in the UK market commentators are predicting the same within a couple of years. The upshot being that if outbound calling is to have a future, then it will need to be permission-based, i.e. opt-in. All of which has left many industry pundits in these countries wondering how did things go so wrong and what actions can be undertaken in the future to make consumers more amenable to accepting telemarketing calls. In particular, in those countries other than the US and the UK who have yet to put national DNC lists in place, marketeers will be asking themselves what things need to be done to persuade consumers to accept calls and not join up?

The Issue of Silent Calls

The major source of consumer disquiet on outbound calls is the extent of silent calls among them. All codes of practice and legislation for dialers have set limits for such calls in the range of 3% to 5%. These limits are very small when set against the levels of silent calls that led the US to regulate, and which are causing UK consumers to join the UK's national DNC, the Telephone Preference Service. For example, in the US before regulation was introduced there, silent call rates were running at up to several hundred per cent - i.e. when a consumer answered his phone, only one time in two or three would there be an agent on the line.

Those readers unfamiliar with the different types of silent calls will find this hard to believe, so let's consider a silent call rate of just 50%. Incidentally, if in any country you measure silent calls by the admirable code of practice established by the Direct Marketing Association in the UK, it's not difficult to see how easily a silent call rate of at least 50% can and does happen in practice; for example both as a result of silent calls being measured in the wrong way and also of consumers being put on hold, in the absence of any agent being available to talk to them. Some responsible marketeers, and there are plenty of them, find it hard to accept that call centres run their operations at such high levels of silent calls. But this is happening in all unregulated markets and to ignore the behaviour is to invite a consumer backlash.

Compliance and Dialer Behaviour

What does compliance mean in the context of such dialer behaviour? Think of the driver of a car who is given 50 litres of fuel to get from Point A to Point B. Then rationing sets in. The driver is obliged to siphon off 45 litres. How far will he get in his journey towards Point B?

Well, unless the engine undergoes a massive redesign, not that far in most cases - and thus it is with the dialing industry today. Instead of putting the effort into designing engines to cope effectively with compliance, the industry has spent its efforts providing white papers that offer and endorse compliance - hardly surprising - but without in the vast majority of cases actually enforcing it. Even if designs do improve dramatically, expecting the industry generally to police itself is simply naive. With one or two notable exceptions it will not happen, and given the opportunity many call centre supervisors will continue to ignore rationing and fill up their tanks.

So are compliance rules just too tough for any dialers, or to go back to our analogy, are we still in the age of the fuel-inefficient engine? The answer is a bit of both.

The US Regulates First

At all times over the past decade when anyone has set rules restricting dialer performance, little serious thought has been given as to whether dialers can cope. It is true that among the regulators, Ofcom in the UK has said that industry efficiency should not be undermined and the Federal Trade Commission (FTC) in the US took heed of the industry lobby. But these organisations have had little idea of the true impact of compliance on industry. Nobody told them that most dialers would not be able to deliver great performance at compliance levels, and even if they had, it would not have made a scrap of difference. The FTC in the US led the way in 2002-03 by setting allowable silent calls (slight misnomer, since in this case a message is played before call abandonment) at 3%. Why so low? Because the DMA code in the US was already down at 5% and it wasn't working.

In 2002 in perhaps some of the most unfortunate lobbying ever to grace Washington, national marketing associations there tried to persuade themselves and anyone else listening that the real level of silent calls was around just 5% of answered calls! If you are not sure about this, have a look at some of the submissions made to the FTC prior to their hearings in 2002, which are still available online. The problem with these claims, when presented as typical of the industry, was that the extent of actual abuse across the US was clearly so high that something had to be done. If the industry thought it was achieving 5%, well that wasn't working and a lower maximum figure had to be set!

The Need for Regulation

National marketing associations the world over need to get to grips with what dialers actually do, if they are to have sustainable outbound markets. They should recognise that an absence of enforceable regulations, especially with the enduring persistence of legacy and inadequately-designed dialers (not just our view; in 2003 the respected research group, the Meta Group called for a virtual complete overhaul of dialer designs) leads to very high levels of silent calls, as call center supervisors, under competitive pressure, turn up the pacing.

So consider doing what our grapevine tells us that the Australian Direct Marketing Association is planning to do. Go to your relevant national regulator and ask him to bring in rules with stiff penalties to stop dialer abuse. Totally counter-intuitive isn't it? Why would any self-respecting industry body want a government body to regulate its markets? But the evidence in the UK and the US is as plain as a pikestaff! If you wait for government to take the initiative the chances are that by the time they do, it will be too late.

Regulators have been slow to act in both the US and the UK, for different reasons. In the US the right to call and abuse consumers with telephone calls, any which way, seemed almost to be embodied in the constitution in the 1990's. By the time the regulators were asked to act the damage was done, and consumers in the US swamped the DNC list there. In the UK, consumers have been much less accepting of outbound calls than in the US. Unfortunately, the UK regulator, Ofcom, has been very slow to understand the workings of the dialer marketplace, and its gentlemanly calls for restraint rather than a firm set of rules and penalties have gone unheeded in many quarters until now. Your writer sat at a recent conference and watched the senior Ofcom representative present clap heartily when one speaker called for the UK outbound market to self-regulate! The English senses of fair play and personal responsibility appear to die hard within Ofcom. Let's just hope that this tradition of expecting chaps to do the 'right thing' in outbound markets doesn't persist until everyone in the UK has joined the UK national DNC list!

As a final thought, if you are a hard-nosed businessman or woman reading this and are concerned that you have made an investment in a dialer whose performance might suffer under compliance, then consider whether any pain this might bring is better than not being able to call people at all.

---

Next Issue

We will be back soon to consider the bogeyman of offshore dialing and to what extent this is fuelling the problem of silent calls, and if so whether it can be controlled. And we will be having another look at that hardy perennial of answering machine detection.

If you read this far, thanks for considering the arguments. If you agree, feel free to tell us. And if you disagree with what we say, then again tell us. We will be happy to publish any reasoned arguments that contribute to the debate on outbound, whether or not they match our our own views.