'Do not call' does not hurt direct marketers

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The do-not-call list, now 87 million numbers strong, has had surprisingly little impact on the marketers who dreaded it and spent more than $80 billion a year on telemarketing.

Marketers and their associations said the 2-year-old list-which has swollen to nearly 87 million phone numbers since it was launched by the Federal Trade Commission-has obviously thrilled consumers. And it has changed how marketers use call centers, which have shifted the bulk of their business from cold-calling for prospects to managing existing customer relationships. Many contend they've found the shift in sales tactics has resulted in results as good-or even better-than telemarketing.

In other words, while the telemarketing companies that were paid to make the calls in the past have been hurt by do not call, the opt-in model is proving as valuable for marketers as the old invasive model.

"When the national registry came out, there was a lot of doom and gloom," said Joseph W. Sanscrainte, director-regulatory affairs and general counsel, Call Compliance, a company that helps phone centers comply with the list. "The industry has proven to be remarkably resilient."

EXPECTING THE WORST

Tim Searcy, CEO, American Teleservices Association, concedes that his group, which represents call centers and marketers, overestimated the impact the list would have on call-center employment. "At the end of the day, we expected a much worse impact than we got," he said. "The industry moved to marketing to existing relationships and that takes more people to do than prospecting because the calls are longer."

ServiceMaster, a provider of home services, was initially alarmed by the do-not-call registry, since four years ago its TruGreen lawn-care service generated about 90% of its sales through telemarketing.

The implementation of do not call prompted the company to draw on its experience of dealing with Indiana and Missouri's earlier state lists. It changed its marketing mix to include more direct mail as well as having employees go door-to-door in neighborhoods where it already had customers, said Dennis Sutton, chief operating officer. This year, it expects less than 50% of its sales will come from telemarketing.

And after several flat years, the unit's sales actually grew in 2004. Customer-acquisition costs are still higher than they were, but not by much. Mr. Sutton said he expects they will soon be lower than under its old telemarketing model. "We were nervous, but we're thrilled with what we've accomplished," he said.

"Clearly there has been impact on sales and profitability for some folks, but for others it hasn't been as dramatic," said Lou Mastria, a spokesman for the Direct Marketing Association. "Some agencies have closed, while others are testing new things, from direct-response TV to radio and print to live-chat technology."

Complicating any look at the impact of the list on sales is a pull-back in telemarketing was under way by some marketers. "We had been cutting back telemarketing anyway," said Brian Wolfe, president-consumer marketing, Time Warner's magazine group.

less reliance

He said the magazine group hasn't used telemarketing to generate leads for a while and has lessened its reliance on telemarketing for subscription retention because of "lack of effectiveness." Subscription-retention calls aren't covered by the do-not-call registry.

Jack Lindner, VP-sales and marketing of Special Data Processing, a Clearwater, Fla., firm that generates leads through sweepstakes and other direct-mail programs prompting consumers to call in, said his company has seen business rise because of the do-not-call list. Consumers who call for a sweepstakes or other promotion hear promotional messages from magazines, credit cards, newspapers, lenders or music if they wish and can qualify to be called by marketers.

Eileen Harrington, the FTC's associate director of marketing practices, said the do-not-call program is working well. "Consumers tell us that they are very happy with the result: they receive dramatically fewer unwanted calls. "Second, the system is working well for industry," she said. "The direct-marketing industry is thriving, notwithstanding the dire predictions heard during the rulemaking proceeding."

contributing: james b. arndorfer

Layoffs expected as a result of the list were not as bad as anticipated

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