PLAYERS CHANGING IN TELEMARKETING INDUSTRY

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OMAHA-A flurry of acquisitions, mergers, consolidations and public offerings is a sure sign the telemarketing industry is maturing, key players agree.

"Nothing is a better indicator of an industry's growth and maturation then when it sees IPOs, mergers and consolidations," ITI Marketing Services Chairman Steven Idelman said in a keynote address in an industry conference last month. Omaha-based ITI, the nation's largest outbound and the eighth largest inbound telemarketing firm according to Telemarketing, recently was acquired by the investment firm of Golder, Thoma, Cressey, Rauner, Chicago. Included in the investor group were Mr. Idelman, a principal shareholder; his wife Sheri, ITI's chief operating officer; and other senior management. ITI's 1995 revenue totaled $125 million.

Sitel Corp., another Omaha-based telemarketer, went public in June. Sitel is ranked second in outbound and ninth in inbound by Telemarketing. APAC TeleServices, headquartered in Deerfield, Ill., with facilities in Iowa, has an IPO out now; annual revenues are $46.6 million. Matrixx Marketing, Cincinnati, is now owned by Cincinnati Bell. Last November, Matrixx, with revenues of $226 million and 9,000 employees, acquired Wats Marketing.

"We're seeing the major players getting bigger and stronger, fueled by the acceptance by corporate America. We'll continue to see consolidation," said Brent Welch, ITI president-CEO, in an interview. "The size of the programs are growing, sophistication is increasing, and they require a higher level of play from service agencies.

"The rapid growth of the telemarketing industry has attracted Wall Street and investment bankers," said Nadji Tehrani, publisher and editor in chief, Telemarketing.

Industry growth can be attributed to factors including corporate downsizing that is leading to the outsourcing of sales and marketing activities, and the fact that services agencies often outperform in-house telemarketing operations, he said.

In 1985, about $130 billion of goods and services were sold over the telephone. Today that number is $600 billion per year, Mr. Idelman said, citing Telemarketing estimates. More than 50% of all goods and services sold are sold over the phone, said Mr. Idelman in his speech.

Though the industry will be dominated by fewer, bigger players, some small niche players will survive, Mr. Welch said.

"Our industry has really become accepted by corporate America in the last five to six years.....the stakes have been raised, the level of professionalism has increased," Mr. Welch said.

"Competition has grown and entrepreneurial companies have had to reach out to additional sources of funding for growth. One way to get money is the public marketplace, an IPO, and we chose the private marketplace," he said.

Companies going public and those that have investment bankers buying into their operations will be successful "if they keep the regular management, the regular entrepreneur, intact and in place, the people who know the business. They have to give the existing management free rein and allow them to run the operation as they know best, then they will have a good chance to succeed," Mr. Tehrani said.

"But if they purge upper management.....and just keep getting bigger and bigger" it will be more difficult to succeed, he said.

Mr. Welch said industry trends tie in closely with database marketing, highlighting the need for database expertise. One trend is toward fewer, more highly targeted calls. Telemarketing calls are now not just sales calls, as programs increasingly provide clients with crucial marketing information, he said.

Telemarketing programs increasingly look at the history of the contact; what kind of customer they are; the success a company has had in talking to that contact; and the products and services that contact is interested in, Mr. Welch said.

"We have to be able to identify and find the right people and bring the right message to them at the right time in the right fashion. Relationship building is a big part of lifetime value. We want to talk to the customer, and not just with a sales message. To strengthen the relationship, we provide information and we provide customer service," Mr. Welch said.

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Top 10 outbound telemarketing firms

1 2 ITI Marketing ServicesOmaha, Neb.(402) 393-8000 18 Financial services (includ ing insurance), telecom munications, publishing

2 4 Sitel Corp.Omaha, Neb.(800) 25-SITEL 28 Insurance, financial ser vices, telecommunications

3 3 West Telemarketing OutboundSan Antonio, Texas(210) 690-6900 2 Financial services, insur ance, various product/ser vice sales

4 5 Matrixx Marketing Inc.Cincinnati, Ohio(800) 628-7499

13 Customer service, increas ing sales, 800-number response

5 6 APAC TeleServicesDeerfield, Ill.(708) 945-0055 16 Financial, insurance, telecommunications

6 9 ProMark One Marketing ServicesPhoenix, Ariz.(800)

933-0233 6 Telecommunications, fi nancial services, high tech

7 7 Edward Blank AssociatesNew York, New York(212) 741-8133

5 Financial services, tele communications, publishing

8 14 Results TelemarketingDania, Florida(305) 921-2400

34 Financial services, credit-card acquisition, insurance þservices

9 11 FutureCall Telemarketing WestColorado Springs, Colorado(808) 489-5134 2 Telecommunications, fi nancial, publishing

10 10 TeleService ResourcesFt. Worth, Texas(800) 325-2580

4 Customer service, reserva tions, sales & marketing

Source: Telemarketing magazine

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