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It's difficult to know exactly how long the telemarketing industry has existed for.
According the Wikipedia telemarketing page, DialAmerica were one of the first market entrants and commenced inbound and outbound calling way back in the 1950s.
The industry has grown steadily since and experienced a boom in recent times with the advent of new telemarketing technology, decreased telecommunication costs and the growth of cheaper overseas based call centres in countries like India and the Philippines.
A 2005 PricewaterhouseCoopers report dramatically highlighted one of the biggest reasons for the increase in telemarketing activity. Telemarketing wages in countries like India are typically less than half that of western nations.
The industry has come under heavy fire recently from consumers in response to a reported increase in the volumes of calls received.
The backlash is quite apparent online.
In 2012, Google's web index boasted a whopping 2 million plus pieces of content matching the search query of 'hate telemarketing'.
Some companies are also reporting the number of people refusing calls is on the rise.
Many commentators are now predicting that the telemarketing industry will decline in future years, but just how likely is this?
Predicting the overall rise or fall of a marketing channel is no simple thing. But one thing remains highly likely, business will continue to invest in telemarketing as long as it's remaining profitable. So what impacts profitability and how might this change?
Below are some of the key challenge facing telemarketing programs today and some thoughts on how these challenges will need to be addressed in order to keep telemarketing viable.
List quality: Telemarketing and indeed any form of direct marketing is largely a success or failure based on the 'list' quality.
The list is primarily relevant to outbound calling and usually consists of current and past customers, prospective buyers and people who have never been in contact with the company.
Very broadly, lists are referred to as warm or cold. Warm lists are people that have previously purchased a product from a supplier. A cold list tends consist of people who have not purchased and do not have a prior connection with an organisation. These names are often obtained from a telephone directory or commercial list supplier. Warm lists tend to be highly profitable for organisations with a reasonable buffer against poor results. Cold lists tend to perform worse than a warm list and anecdotal evidence would suggest that cold lists have degraded in performance in recent years.
In order to prevent telemarketing programs from falling by the wayside, there will be a greater need to ensure customers have enough trust in companies to supply their telephone number and be willing to engage with the relevant company.
Companies will also need to develop innovative programs that generate their own high quality proprietary cold lists.
Agent quality: Agents are the telemarketing operators who either make an outbound call or receive inbound calls.
Agents need to be skilled in order to maximise results and many a telemarketing program has failed due to lack of skilled agents. Agent quality also becomes more of a challenge when utilising agents in foreign call centres who may not have experience in making sales in what's often a second language.
One of the key challenges to keep telemarketing vibrant will be in managing a careful balancing act between employing higher paid and performing native English speakers and overseas based agents in order to maximise results.
Labor costs: Good salespeople are hard to find and are often expensive.
One of the challenges going forward will be managing potentially escalating labor costs alongside the breakeven point of telemarketing programs. Rising labor costs may well see more marginal telemarketing programs being dropped from the annual marketing plans of many companies.
Legislative risk: In recent times there has been stricter legislation enacted in many nations to combat the rise in telemarketing programs and consumer concerns.
Many companies that rely heavily on telemarketing as a source of revenue may be impacted by unexpected changes to telemarketing and communication laws. Telemarketing may reduce in volume as a result of this although it's hard to categorically claim that it will 'fall by the wayside'.
Reputation risk: There's a long history of companies altering their marketing tactics in response to concerns around damaged reputation.
It's quite possible again that companies may elect to rid themselves of many telemarketing programs, however as long as companies are profiting from telemarketing, it's unlikely that it will disappear as a channel.
In summary, telemarketing is certainly facing some challenges, however we are more likely to see telemarketers becoming more sophisticated in their approach to the channel rather than the entire channel falling by the wayside.
Justin Fleysman is a marketing consultant with over 10 years experience in direct marketing for commercial, public sector and not-for-profit organisations.
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