Telemarketing Services
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Industry Overview
The US telemarketing industry includes 5,000 companies with combined annual revenue of about $15 billion. Large companies include Convergys, Teletech, West, and Sitel. The industry is concentrated at the top: the 50 largest companies hold about 60 percent of the market. Despite the dominance of big companies, most firms are small, with annual revenue less than $1 million and fewer than 20 employees.
Competitive Landscape
Demand is largely driven by consumer spending and business activity. The profitability of individual companies depends on efficiency of operations. Big companies have the scale to provide services to large corporate customers. Small companies can compete successfully for small and midsized customers because there are few economies of scale. The industry is very labor-intensive: average annual revenue per employee is just $35,000.
The industry has been sharply affected in recent years by regulatory controls on telemarketing practices and strong competition from offshore operators.
Products, Operations & Technology
Major services are telemarketing sales, customer care, technical support, and call answering. Smaller companies generally specialize in one of these services. Telemarketing sales - also called "customer acquisition" - consists mainly of making outbound phone calls to sell products or services to new customers. Customer care and technical support consist primarily of taking inbound phone calls from existing customers or from new customers placing orders. Technical support helps customers figure out how to use a product, often such as a computer or computer program. Customer care can involve passive activities such as taking orders and answering billing or technical support questions, or active activities such as follow-up calls to customers and cross- or up-selling. Answering services include automated voicemail systems and live operators, and are often used to provide information to callers outside of regular business hours, especially for critical businesses like doctor offices.
Some companies also provide credit collections services and employee or member care services, such as explaining healthcare benefits to customer employees or members of managed healthcare plans.
Telemarketing companies operate call centers, also called "customer management centers" (CMCs), where employees (sometimes called "agents" or "seats") sit at computer workstations and either answer incoming telephone calls or make outgoing calls. For sales calls, computer systems, called “predictive dialers,” initiate calls using a call list, screen busy signals and answering machines, and route answered calls to an employee along with a marketing script. Call lists may be acquired from client companies or brokers, or through the firm’s own research. For customer care and technical support, computers route incoming calls to an agent who has the information the customer needs, and may provide detailed information about both the product and the caller. Large call centers may hold 500 workstations.
Because computer systems and labor are expensive, telemarketing firms closely monitor capacity utilization and try to maximize the efficiency of their operations. With phone traffic uneven during the day and week, companies may use a large number of part-time employees. Incoming customer service traffic is heaviest during business hours, while outgoing marketing activity is heaviest in the early evening hours. To use labor and computers most efficiently, some companies operate “blended” call centers that handle both customer care and sales.
Computer and telecommunication systems are important aspects of call center operations. Computer systems typically monitor efficiency such as call volume, the average time to answer a call, the average call length, abandoned calls, and call success rate (“contact conversion rate”). The integration of call center activity with customer computer systems ("computer-telephony integration," or CTI) allows call centers to operate as extensions of customers' own phone and information systems.