Since its inception in 1997, corporate intranet software provider Mindbridge has grown at double-digit rates annually; it will hit about $5 million in sales this year. Scott Testa, chief operating officer with the Norristown, PA-based firm, credits the work of its 20-person telemarketing staff for the company’s performance: “It’s an extremely effective way to capture business.”
About 85% of Mindbridge’s sales are closed via the phone, Testa says. While some Mindbridge products sell for six figures, most sales are for about $25,000. At that level, it usually doesn’t pay to have an outside salesperson visit prospective clients, he says.
Instead, the telemarketing group calls prospects drawn from a list of about 125,000 names. About one-third have some connection with Mindbridge; they may have downloaded white papers from the company’s Website, for instance. The rest are names from lists Mindbridge has rented or purchased.
Behind the success of Mindbridge’s telemarketing group is “a cultural belief that this group is core to our success,” Testa says. Mindbridge backs up that concept in several ways. Perhaps most compelling: Telemarketing employees have the opportunity to earn six figures. The company also accommodates employees’ needs — letting a working parent set hours that coincide with the school day, for instance.
Mindbridge’s experience illustrates the impact that a strong telemarketing initiative can have on a company’s performance. For an outbound telemarketing program to work, however, management first needs to address several questions. One is the reason they’re considering a program in the first place. They’ll also need to decide whether it makes sense to staff the program internally or work with an outside provider, and whether or not to have their salespeople use a script. Finally, they’ll need to determine how to measure the results of the program.
DIALING UP A PROGRAM
Many companies implement a telesales or marketing program when they’re facing a revenue challenge, say Doug DeBolt, senior vice president with West Business Services, a provider of business-to-business sales services based in Omaha, NE. The company may not have enough outside salespeople to reach prospects as frequently as it needs to, or — as with Mindbridge — the cost of sending a salesperson to smaller accounts can’t be justified.
Or sometimes a business finds that other methods of reaching customers, such as direct mail, aren’t working: “You’ve tried the usual attempts to tweak your efforts, such as testing new creative or a new list, and you’re still seeing diminishing responses,” says David Gaudreau, vice president of list brokerage with Greenwich, CT-based list services firm Direct Media. A telemarketing program can provide a needed boost to the sales effort.
Once they’ve decided to take the plunge, about half of b-to-b marketers outsource their outbound telemarketing programs, according to The DMA 2004 Catalog/Interactive Report. In part, the appropriate solution depends on the newness of the marketing program and the product being sold. It often makes sense to use an outsource provider until the program shows signs of success.
That’s the approach Labelmaster takes, says Ed Sieracki, director of sales with the Chicago-based manufacturer of industrial labels, signage, and books. Labelmaster sells a number of books of federal safety regulations, most of which are updated every couple of years. The company usually will hire an outside firm to call past customers and see if they wish to purchase the updated versions.
If the response is positive and revenue hits a predetermined level, Labelmaster may then bring the program inhouse, Sieracki says. “It’s always easier to keep track of things when you can monitor them a little more closely.”
When debating whether to outsource or handle the program inhouse, you also want to consider the cost of the equipment needed. The price tag quickly can reach several hundred thousand dollars, says Jim Mitchell, senior vice president of technology with Concerto Software, a Westford, MA-based provider of predictive dialing software and hardware. (Predictive dialing refers to a computer-driven process that automatically dials phone numbers and passes connected calls to available agents.). For its part, Mindbridge has spent about $500,000 on its telemarketing technology, Testa says.
Among the equipment needed, in addition to predictive dialing hardware and software, are devices to monitor and record calls. An effective telemarketing initiative also requires an automated system for tracking whom the sales representatives have called and when they called them. “Paper lists are a mess,” says Mary Ann Falzone, president of Falzone & Associates, a call center consultancy based in Sellersville, PA.
Likewise, a telemarketing system also should provide reports that will help management measure the success of the program. “You need to know the productivity of the people making the calls,” Falzone says.
Another necessary tool is an “automated tickler,” which notifies the salesperson when it’s time to follow up with a prospect. For less expensive and simpler products, such as consumable supplies, a successful call may be one that results in an order. But for complicated products or services with long sales cycles, a successful call may mean simply that the salesperson was able to identify the decision-maker and is providing additional information via mail.
Since 1993, industrial maintenance products mailer New Pig Corp. has been using a system called SxEnterprise from Atlanta-based Infor Global Solutions. Company employees have customized the system to incorporate what corporate sales manager Deanna Gibbons calls “trip wires.” These automatically notify the salesperson when certain criteria that would spur a follow-up call, such as a drop or an increase in sales volume that exceeds a certain percent, are met.
While most of the DNC or “do not call” regulations apply to business-to-consumer calls, the line between consumers and businesses can get fuzzy, especially when calling on small-business owners. Penalties for violating the regulations can hit five figures — per call, notes Mitchell. Outsource providers typically have experts on staff that stay abreast of laws.
On the other hand, by managing telesales initiatives themselves, management can capitalize on their employees’ knowledge of the company and its customers. “We’ve found that we get a better ROI from our internal staff,’ says Testa of Mindbridge. “They have a better idea of what the customers’ needs might be.”
Tipton, PA-based New Pig doesn’t do traditional telemarketing, but it does manage its accounts via the phone, using its own staff to do so, Gibbons says. Representatives complete a three-month training period, during which they learn the company’s products, computer systems, and business processes, and undergo sales training. “The training is intense,” Gibbons says.
SCRIPTED OR NOT?
Should sales representatives use a script when they call customers or prospects? Most experts say that a line-by-line script can hinder productivity, as representatives won’t learn to respond to answers that don’t follow the script.
But many organizations provide their salespeople with “talking points” they can use to initiate a conversation and determine prospects’ needs. These include information on the company’s products or services, as well as questions to better determine customers’ needs. At New Pig, for instance, a salesperson may ask what sorts of solvents and coolants the company uses on its machines, as that can dictate the cleaning products most appropriate for their operations.
In addition, “we want to understand what they need us to be as vendors,” Gibbons says. So a salesperson might ask whether the company would like New Pig to hold the customer’s inventory until they’re ready to use it.
Employees of West Business Services rarely use a script, says senior vice president DeBolt. Rather, they take a consultative sales approach similar to that used by field salespeople so that they don’t come across as conventional telemarketers. In fact, “we really don’t use the term telemarketing,” says DeBolt, as the word carries too many negative connotations.
When measuring the success of a telemarketing program, start with a realistic assessment of the difficulty of the sales effort. This will depend on how well the prospects know you and the product or service you’re trying to sell. The less they know about you, the harder the sales effort will be.
That’s why it makes sense to measure several aspects of a telemarketing campaign, says Ruth P. Stevens of eMarketing Strategy, a New York-based business marketing consultancy. These include the cost per lead, which is the cost of the campaign divided by the number of leads, and the cost per contact, which is the cost of reaching a prospect. Another is the qualification rate, calculated as the number of respondents to a campaign who become qualified leads.
It’s also critical to measure the return on investment of the overall telemarketing initiative. This is calculated as the cost of the campaign vs. the sales that resulted. If several methods, such as direct mail, e-mail, and phone were used to contact a prospect, determining the return can require allocating revenue among the various initiatives.
This can necessitate making educated guesses rather than precise allocations about which contact method or methods resulted in a sale. Even so, you should be able to get a reasonably good idea of just how effective the telephone campaign was.
“It might be tough in the short run. But if you don’t know the campaign ROI, you can’t make sensible ongoing marketing investment decisions,” Stevens says.
Minnetonka, MN-based freelance writer Karen M. Kroll has written for Inc. and IndustryWeek, among other publications.
Connecting with an outsource provider
Several steps are key to ensuring that your relationship with an outside telemarketing services provider is productive:
Check experience. “Look for business-to-business experience, and if you’re lucky, industry experience,” advises Ruth P. Stevens of eMarketing Strategy, a business marketing consultancy in New York. A sales representative who can talk intelligently with technology experts may not be as effective calling on medical professionals.
Provide information. It doesn’t make sense to hire a company to sell on your behalf if you don’t give them information they need. Of course, there’s always a concern with providing information considered proprietary. That said, “if you can’t trust them, maybe you shouldn’t be doing business with them,” says Jim Mitchell, senior vice president of technology with Concerto Software in Westford, MA.
Link systems. If possible, it’s helpful to link your computer system with that of the third-party provider. Then sales representatives can, for instance, access information on customers’ past purchases before they call and connect customers to your computer system to schedule follow-up calls, says Doug DeBolt, senior vice president with West Business Services, a provider of business-to-business sales services based in Omaha, NE.
Understand payment. Some telemarketing arrangements are negotiated on a pay-for-performance basis. Others are contracts at a certain rate per hour — but often with a provision that the rate will increase should sales exceed a certain level, so be prepared.
Track results. When working with a third party, it’s especially important to have a way to track actions taken and to be taken. Some questions to nail down: To whom did the representatives talk? Was this the name on the initial list? What sort of follow-up action is expected?