Outbound explosion

Many consumers don’t appreciate phone calls from the likes of aluminum siding marketers or survey groups during dinner. Business-to-business catalog buyers, however, are more receptive to telemarketing, judging by the increasing number of outbound programs and spending among b-to-b mailers.

In the 1998 Catalog Age Benchmark Report on Marketing (see February issue), 69% of the b-to-b catalog participants said they conduct outbound telemarketing. And according to the Direct Marketing Association, telemarketing has been the largest expense category among b-to-b marketers throughout the 1990s, with compound annual growth of 7.2% between ’91 and ’96, and even greater projected compound annual growth between 1997 and 2001 of 8.4%. Having spent $27.2 billion on telemarketing in ’91, b-to-b marketers are expected to spend $57.7 billion on the medium in 2001, the DMA says.

“Telephone selling is growing exponentially in b-to-b,” says consultant Bernie Goldberg. “It’s the logical form of contact for database marketing, which is also exploding among b-to-b marketers.”

In most cases, business catalogers that call their customers to sell products use their outbound programs in concert with catalog mailings or field sales efforts. But catalogers such as $703.7 million computer mailer Insight Direct are using outbound telemarketing to cut catalog mailing costs while increasing response rates.

Over the past two years, Tempe, AZ-based Insight has dramatically increased its outbound efforts by increasing the number of outbound sales phone reps from 374 in December 1996 to 652 by the end of ’97. Over that period, the cataloger’s number of outbound calls increased 93%. Long-term plans call for Insight to add another 200-300 phone sales reps a year, according to spokeswoman Valerie Paxton.

Insight’s outbound telemarketing efforts produced a 54% increase in profits, to $4.3 million for the quarter ended March 31. At the same time, revenue jumped 58% for the quarter, to $206.7 million.

Although he won’t reveal the figure, senior vice president of sales Dino Farfante says Insight’s investment in its outbound program has been “significant.” Insight calls the customers it believes are most likely both to be more responsive and to make larger purchases-typically companies with 100-1,000 employees. “We deal with purchasing and information systems departments, both of which are most receptive to our calls,” Farfante says.

Calls over mailings Whereas Insight previously relied on cold catalog mailings as its primary sales tool, now outbound telemarketers call first to offer products and the catalog, Farfante notes. Subsequent catalog mailings act now more as support mechanisms, while cold prospect mailings have diminished to a very small level that he won’t reveal. Overall, though, Insight mailed only 10.9 million books last year, more than 10% fewer than the 12.2 million books it had mailed in 1996. And “we expect to decrease catalog circulation this year,” says vice president of marketing Chuck Jarrell.

In the past, Insight was spending more on catalog mailings and less on completing the sale via inbound order calls. But now the cataloger is spending less on catalog mailings and more on closing the sales via outbound telemarketing efforts.

Romancing the phone Other business mailers, such as Kingston, MA-based construction publications cataloger R.S. Means, call customers to support their catalog mailings and field sales calls. Outbound phone reps call customers to make new product announcements and to follow up recent orders 30 days after customers receive their merchandise. “We call them to thank them for their order and let them know when a book they’ve just purchased is available on CD-ROM at a special price,” says the cataloger’s direct mail manager, Murray Smith Jr.

Like R.S. Means, not all b-to-b catalogers necessarily yield big sales via outbound telemarketing efforts. But more and more are certainly less hesitant to call customers not only for customer service and after-sale upselling, but for assorted promotional purposes as well. And b-to-b customers are by and large happy to hear from them.