Who ya gonna call?

Mar 01, 1999 10:30 PM  By

A telemarketing campaign can boost a business-to-business cataloger’s sales significantly, but calling individual customers isn’t cheap. Many business catalogers using telesales know it’s critical to determine which customers will pay off before they reach out and touch them.

According to b-to-b catalog consultant Bernie Goldberg, president of Direct Marketing Publishers in Yardley, PA, the cost of a telesales call-made to customers by phone reps who are knowledgeable about the products and can answer questions and make suggestions-ranges from $20 to $35. Even a call with a scripted conversation costs about $6, Goldberg says. “So the customers you call must be able to generate the kind of revenue to make it worthwhile.”

R.S. Means, a Kingston, MA-based catalog that sells data on construction costs to facilities managers, contractors, and architects, telephones the top 20% of its housefile several times each year. “We try to reach our more prolific buyers,” says Murray Smith, manager of direct response.

To identify those buyers, Smith scores each of the 250,000 names in the company’s database according to the recency, frequency, and monetary (RFM) model; customers with high RFM scores receive calls. These efforts pay off with an average phone order of about $200, compared to the $125 average order for R.S. Means’s catalog, Smith says. Telesales account for about $5 million of R.S. Means’s $15 million in annual sales; the rest comes from direct mail, theInternet, retail sales, and cooperative sales through trade associations.

At Transcat, a $70 million Rochester, NY-based distributor of electronic test equipment and instruments, “customers get called based on their SIC [Standard Industrial Classification] code, size, and potential for more business,” says vice president Bob Dunn. For instance, buyers in the chemicals industry are usually long-term customers and therefore warrant a call. And to ensure a minimum level of business, most calls go to firms with more than 100 employees.

While Transcat doesn’t track orders generated via its telesales program separately from other orders, Dunn says telemarketing efforts more than pay off. He claims that one employee cultivated an account now worth $100,000 a year simply by calling and talking with the customer.

What you need Three elements are vital for a successful telemarketing program:

* A specific offer to make during the phone call, usually for a higher priced item. Transcat’s telesales department sold 40 units of a $3,500 product over a three-month period, Dunn says.

* A dedicated outbound telesales force. Inbound reps are less diligent about making calls during their downtime, Goldberg says.

* A good department manager. A telesales center is a production environment, in that the more calls you can motivate your reps to make, the more revenue you’re likely to reap. For that reason, Goldberg recommends hiring a manager from a fast food restaurant, “or someone who knows how to work within quality standards and still keep things moving.”

The costs of starting and maintaining a telephone sales program can be higher than most mailers think. Let’s assume an outbound phone rep makes $30,000 a year. Add on benefits, computer and telephone equipment, management time, and overhead, and that amount can triple, says consultant Bernie Goldberg, for a cost of $90,000 a year per phone rep.

You have approximately 230 selling days in a year, once you account for weekends, sick and vacation days, and training time. On average, a phone rep will dial the phone about 50 times a day but actually complete only 15 calls a day. (A completed call means the rep spoke to a decision-maker who decided whether to make a purchase.) Crunching the numbers, $90,000 divided by 15 calls times 230 days gives us $26.09 per completed call.