Looking for new customers? Forget outbound telemarketing as a means of getting them.
“Prospecting for new business via phone is a low-percentage activity,” says John Hirth, president of Selling Dynamics, a sales process management company. “It has a high failure rate.”
But there is a good use for outbound calling, and it works especially well in business-to-business.
For one thing, you already have a relationship with the customer, so the annoyance factor is reduced.
And retention can be a better investment regardless of the medium. “It costs you less to keep customers than to comb the world looking for people who need your products,” says Gary Pudles, president/CEO of The AnswerNet Network, a contact center services provider.
Want to know how to go about it?
The first step in creating an effective outbound retention program is determining which customers to target.
“You have to be able to organize your customer data,” says Clate Mask, president of Infusion Software, a vendor of sales and marketing automation software for small business. “Then you have to be able to slice and dice that data in meaningful ways.”
Let’s say that some clients disappear after six months. Figure out who they are and what characteristics they share.
Maybe they haven’t opened e-mail marketing messages in that time. Perhaps they have service tickets piled up. “You start to come up with data points that are fairly telling of customers that are likely to go inactive,” says Mask.
The next step is determining what to make of that information.
This is the process used by Block & Co., a banking supplies merchant. “Our inside sales team is the front line sales team for our company,” says vice president/general manager Barry Litwin. “Their role is to retain customers by building close relationships over the phone.”
Block’s agents start by tagging wandering accounts. “Through the data they capture, they’re able to identify customers who have defected,” Litwin adds. “We work with them on a monthly basis to identify underperforming accounts and design strategies to bring them back into the fold.”
How do they do that?
“When we identify an at-risk customer who converted to a competitor, our account managers calmly ask a series of pre-formatted questions devised to explore the buyer’s motivation for conversion. Many times, low price is the response, but we know people buy more based on relationships than just on price.”
Litwin adds that “price is generally used as a deflection.” The customer might be reluctant to expose the real reasons for fear of disappointing the rep. He lists some of the other reasons for switching:
The buyer favors another loyal vendor relationship.
The buyer’s boss influenced their decision because the buyer could not articulate our value appropriately.
An incentive the buyer received from the other vendor was better than our traditional offer.
Sometimes the relationship stops with the buyer and does not include the supervisor. “When this is revealed, we ask our buyer to secure an online meeting,” Litwin says. The purpose? To “formally address the relationship benefits with the buyer and their boss.”
Don’t focus only on clients who are about to jump ship, however. Pay some attention to the loyal ones, too. “You should have a loyalty campaign that will prevent customers from going at risk,” Mask says. “Send them offers, ask them to provide you feedback on how you can improve.”
Who should call
That’s all well and good. But who should handle this work? In a perfect world, your agents would make retention calls when they aren’t busy with other phone conversations. But different types of calls require different skill sets.
One option is to use “blended agents” generalists who can handle calls of all kinds. But Pudles argues that this can work only in “extraordinary circumstances,” such as when the script is the same for both outbound and inbound calls.
Instead, he prefers “staffing tightly for each program.”
What does that mean? To hire only those agents necessary to handle each type of call and make sure that each agent has the appropriate personality and temperament for the type of work you are asking them to do, he says. “Then you can turn to an outsourcer to provide you with enough capacity to maximize your inside staff while shifting some of the volume risk onto the provider.”
According to Pudles, outsourcing telemarketing generally costs from $25 to $34 per rep hour, depending on the complexity of the program and the number of hours the client is willing to commit to.
But if you end up using your existing agents, the change in tasks can keep them fresh and motivated. “If you have an inside sales staff that is purely out prospecting, you’ll burn them out and have a lot of turnover, and that’s expensive,” says Hirth.
Your job is to train your agents in how to turn the sales talk on and off when needed so they can handle both types of calls.
But before your agents pick up the phone, know what your goals are. “What are you trying to accomplish?” asks Litwin. “A lot of times you’ll just say, ‘Let’s start calling our customers.’ But what you want to do depends on whether you’re doing it internally or through an outside agency.”
If it’s the latter, “you’re paying more of a premium, so you have to be very specific about what you want,” he notes. For example, are you looking for feedback on how you’re doing? Do you want to advise customers on how to get more value out of the products they’ve already bought from you?
A clear goal will also help you save your customer’s time — and your own. “Don’t call me for the ‘howdy call,’” says Susan Fischer, former senior vice president of marketing and e-commerce for Newark InOne, a distributor of electronic components. “Call because you have a new service or you picked up a new supplier — something that is relevant to what I do and will make my job easier.”
The bottom line? It must be compelling.
And avoid the heavy sell. Sales agents know how to prospect and close. But those same skills can turn off customers when used in a retention call. “[Agents] have to get out of ‘Let me tell you what I have for you’ and get into ‘Let me ask what’s happening with you,’” explains Hirth. “Retention is about looking for unspoken needs, and the fastest way to find those is through questions.”
The agent should never get on and say, “Our product will reduce your production time.” That’s a benefit statement that will make the customer feel he’s being pitched.
Instead, the caller should ask a question such as, “Is reducing production time something that’s important to you?” This will draw an answer that will help you determine what that customer needs.
But the questions should always show that you’re familiar with your client’s business. Forget that rule, and “you’ll lose the intimacy you might have with that customer,” says Pudles. Let’s say you’re selling call center services. Don’t start by asking: “Have you ever used a call center?”
A good salesperson will figure that out on his own, and then ask: “What do you like most about your current outsource provider?”
Also, focus on the positive. Pudles recalls that a woman who had just bought a new business called customers to ask what problems they’ve had with the company. This was a bad idea.
Ask a person about their troubles with your product and you’re likely to get some very negative answers. Rephrase the question to ask what the person likes. This will elicit helpful responses while keeping things on an upbeat note.
Customer churn is a natural part of the business lifecycle. As Kenny Rogers says, you have to know when to roll ‘em and know when to fold ‘em.
You can’t retain certain customers “because of situations outside your control,” says Fisher. “For example, the market may be down or there may be a shift to other countries.” And remember that customer retention is not a one-shot deal but an ongoing process. You can’t use it as Band-Aid to solve problems like poor service.
The trick to retaining customers is to keep them happy all the time, not just when you call them. How? Offer superior products and service, and provide multiple “touches” via e-mail notices, mailed newsletters, and so on.
Fischer concludes that “every part of our organization is based on customer retention. We start retaining them the minute they become a customer.”
Linda Formichelli has written for Call Center Management Review, Nation’s Business, and USA Weekend and other publications.