| Introduction | Why telemarketing won't disappear | Targeted Telemarketing | Telemarketing to Classified Customers | Tactics for Targeted Telemarketing | Putting it all together |
The good old days were never that good.
And the best may be yet to come.
CLOSE-UPs Links to related articles and case studies: Invest incentive money strategically Inbound telemarketing and EZ Pay Use verification calls to sell EZ Pay |
Certainly the landscape has changed. Once upon a time, a boiler room could fire up an automated random dialer and sit back and watch the magic. Because it was so easy to call people, newspapers could reach virtually every household in the market as often as they wished.
But only now, as we face restrictions on our ability to conduct mass telemarketing, are the pitfalls of “the good old days” becoming more clear. Random dialing was coupled with random sales pitches with a one-size-fits-all approach. Newspapers would dial like mad to get the number of orders they needed for the week or the month. But the circulation didn’t stick. People who subscribed under pressure, who were not valid prospects to begin with, dropped off the books with stunning predictability – but not before reaping the rewards of a deep discount or costly premium. The telemarketer had been paid a commission. But the customer, and the unit of circulation that he or she represented, was gone in a matter of weeks, along with the sales budget.
There’s an old joke about two retail merchants talking shop. One says, “I am selling these new widgets as fast as I can. I can barely keep up with the orders. It’s fantastic.”
“Wonderful,” says the other. “What’s your secret?”
“Well, I buy the widgets for $10 and sell them for $9. And they’ve been selling like hotcakes,” he said.
“But at that rate, you lose $1 on every sale,” said the puzzled friend.
“Sure – but you gotta understand – I make it up on volume.”
That story’s worth a chuckle, until you realize that one-dimensional telemarketing operations were doing the same thing as the boastful merchant – giving their product away in transactions that generated a lot of “activity,” but which were destined to lose money.
What can circulation managers learn from animals? It's been said that most animals that escape from a trap will not fall victim to the same type of trap again in the future. That's one difference between the wild kingdom and the circulation jungle. Too often, circulation managers get burned by short-term, low-retention smile-and-dial telemarketing orders. They know that these orders have the worst retention rate. Yet at most newspapers, more money has been devoted to telemarketing than any other channel. As an industry, for many years, we kept repeating this self-defeating cycle. We kept falling into the same trap. As you'll see in this Guide, the situation is changing rapidly for the better. |
The truth is that the power of telemarketing had been diminishing for a long time. For one thing, consumers were barraged with calls from all sorts of telemarketers. Resistance rose. Telemarketing to people who didn’t want the calls eroded a paper’s brand image. Technology like caller ID reduced the ratio of unanswered attempts. The fact is that long before regulations added legal heft to the issue, many people had found their own ways to remove themselves from the telemarketer’s pool of prospects.
What’s left is a pool of people who could remove themselves from calling lists, but have chosen not to. These people may be less likely to resist calls, and more likely to respond. That theory remains to be tested, but it is backed by valid logic.
But this means newspapers that may have been calling their non-subscriber file four times a year and then lost as much as 60 percent of callable numbers are now calling those non-subscribers more often. Because they are making those calls more often, it is now more likely that the remaining folks will choose to remove themselves from the calling lists.
Because there are not as many available names and numbers on the list, it has become more costly to acquire customers through the telemarketing channel. Outside telemarketers are passing any additional costs on to newspapers.
Meantime, voluntary starts have been tracking down for 10 years or more. Contributing reasons may include softer demand for home delivery, a general lack of promotion, more aggressive sales programs that are capturing readers before they can call, or a combination of these factors.
Yet there is plenty of good news. Churn is down, because telemarketing is an order source that produces weaker orders that tend not to stick. Telemarketing starts have long been the least-retained order source.The reduction in telemarketing orders has coincided with reduction in churn.
There are extreme instances where some newspapers were so dependent on the telemarketing start, that when circulation goals were not met they would turn up the volume on this start source regardless of the consequence. The effect became cyclical, and each year the newspapers would throw more and more money into the telemarketing basket. In effect, circulation in some markets, at some newspapers, was being bought – just like the misguided merchant who loses $1 on each unit he sells, but “makes it up on volume.”
The impact of the telemarketing regulations has caused newspapers to explore other acquisition options -- in some cases with sparkling results.
Why telemarketing won’t disappear
While there may be an underlying current to say goodbye to telemarketing at some newspapers because of the increased costs, lack of retention, and legitimate legal fears, this does not mean that the industry should disregard telemarketing.
If anything, telemarketing is more important now, and we just need to determine better uses for it. We’ve already discussed some roles for telemarketing in the new era – targeted calling, retention efforts, upgrades, and promotions where telemarketing is combined with other sales channels.
Telemarketing will also be important in places where door-to-door sales are not an option because of distance, such as rural settings, or gated communities and apartments. In these cases telemarketing stands as a viable option especially when used as a component of a new-mover campaign or targeted direct mail and calling.
Let’s look at some examples of newspapers integrating telemarketing in a Strategic Selling portfolio along with other sales channels.
The News-Press in Florida purchases lists for telemarketing, "so that we can identify specific targets and campaigns," said VP/Market Development, Teresa Calkins. The paper targets lists such as apartment dwellers; people with children; formers; newcomers; older adults and retirees. "Basically, we try to target our sales pitch to the lifestyle content that we perceive each target group needs and wants," Calkins said. "Perceiving is really not the right word. We actually know from our research what major groups within our market say they read and want to read. So pitches in print and on the phone reflect
what we know about our targets. We do very little discounting in our market, so we have to sell content. Knowing your customer is critical to our sales." She stressed the use of good lists that have been well culled. It's important to remove churners, "do not calls" and non-paying customers.
The News-Press has developed what it calls "shoebox" databases. "They are labor intensive but are quite targeted. For example, we have drawings at most of the events we go to." The sole purpose is to develop a database of folks who enjoy art (art fairs); enjoy shopping (malls); enjoy food (Taste of the Town).
"Their phone numbers are run through the do-not-call list and subscriber database to produce a list for telemarketing. The sell rate from these targeted lists is often three times as high as less-targeted lists. Once they are in a database, we then have their e-mail address and post office address for non-telemarketing sales after telemarketing gets done. So, if we couldn't contact them via phone for whatever reason, we can try them via
mail or e-mail."
Calkins said the paper has become much more targeted about its sales efforts, using a variety of sales methods combined with telemarketing. She gives one example: "We sampled a large number of homes, followed by a targeted direct mail piece. Then followed those two sales vehicles with telemarketing calls to the homes that did not respond to the sample fliers or the direct mail. That campaign resulted in a 20 percent lift in response rate, which is better than if we had only telemarketed or only direct mailed or only sampled," Calkins said.
In addition to outbound sales efforts, the paper is encouraging its Customer Service staff to assume more retention responsibilities. "What is different is the philosophy, the mindset, the actual responsibility of the staff for the sales and retention of the customers they deal with," Calkins said. "For example, in other industries, take catalog sales for instance, you can call for a bathing suit, and the rep on the phone may entice you to
purchase a new cover-up, beach sandals and a hat. You called for a $60 suit and get a $200 dollar invoice! Our customer service reps are being trained to take the order, and to upsell." A customer who calls in for the Sunday-only offer may be offered the 4 week free 7-day EZ Pay offer, or the weekend package. When calling for a vacation stop, we take the restart and sell a vacation pak or a donation to NIE.
Other trends in strategic telemarketing
On a more macro level, newspapers are trending toward an increased focus on new-mover programs, stop-saver programs and sampling, said Rob Oden, vice president of Circulation Development, Inc., a company that provides newspapers with telemarketing, direct mail and other sales services. Newspapers are having success with upgrades and special offers pitched to high-return prospects through “existing” or “prior business relationship “ exemptions to the federal and state do-not-call lists. Oden also said the markets can be analyzed to identify non-contacted households as prospects for sampling, door-to-door sales, door hangers, direct mail and other alternative sales channels.
Combining sampling with a telemarketing follow-up is another trend, he says.
“Some of these focused, targeted programs have a lower cost-per-order and higher retention rates than cold campaigns,” Oden said. “However, the volume of total starts produced is lower.”
Telemarketing to classified customers
Another tactic that employs the power of targeted telemarketing involves your current classified advertising customers. “We are looking for unique ways to leverage our brand through telemarketing,” said Steve Wagenlander of The Post and Courier, Charleston, SC.“One example would be a partnership we have struck with our classified advertising department. We are target marketing non-subscribing households that use our classified advertising.”
Every two months the paper extracts all transient/household classified advertising customers from the classified database, purges the subscribers and identifies the ZIP codes that have carrier delivery. This list is sent to the outsourced telemarketing vendor. The offer is a 33 percent discount off the regular quarterly rate and includes a free three-line classified ad when the subscription order is paid in advance. Here’s how the program looks, by the numbers:
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45 percent of the list can be called after subscribers and both our internal and national do-not-call lists are applied.
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Approximately 45 percent are subscribers.
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Of the 45 percent dialable records, the newspaper is able to contact about 60 percent, with a closing rate of 5 percent.
The program offers a way to get a list for telemarketing purposes that involves people with a vested interest in the newspaper. Just as important, the offer is relevant and unique to this group. The closing rate of 5 percent is impressive. At the time this Guide was written, this program was new, and long-range retention results were being studied.
Targeted telemarketing requires a new scorecard
“For newspapers, telemarketing can still be a very viable source for new subscriptions as long as we’re willing to change our approach,” said Bob Bensman, president, Ver-A-Fast, which provides outsourced circulation sales services to newspapers.We need to shift from measuring a call campaign’s success by sales per hour to sales per lead. This is important because we no longer have an infinite amount of numbers to dial, so we need to generate more subscribers per 100 leads.
With a smaller number of records to call as the result of federal and state restrictions, “We also need to make sure that we are actually contacting people and not just dialing telephone numbers,” Bensman said. Traditionally, only 50 percent of telemarketing files are being contacted. Whatever the sales percentage, this means that only half of the total possible sales are being realized.
The real key for future telemarketing success, Bensman said, mainly resides in the ability to obtain and maintain quality data. “It’s very important that your non-subscriber file has accurate names and addresses appended to as many telephone numbers as possible.”
“The sales percent on dialing phone numbers without names for most newspapers has dropped to such a low level that they cannot justify the high cost per order associated with it,” Bensman said. Consumers are just not responding to calls where they are not referred to by name or when the caller needs to get their entire address, he said.
Quality data can have a significant effect on sales but it does come at a cost, “and this cost needs to be measured,” Bensman said. “Most newspapers we talk to now allocate a data cost of $3 or more per sale. Just buying cheap data doesn’t mean that your data cost per sale will be low. Higher quality data costs more, but the increased cost should be more than offset by higher sales,” he said. “By testing and measuring different data sources, you’ll be able to determine what works best for your newspaper. The good news is that recently, some very good new data has become accessible.”
There are now several ways for newspapers to access data, Bensman said. These include:
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Aggregators. Aggregators traditionally compile data from many sources, including old phone books, which means some data can be as much as a year old and consequently 20 percent to 30 percent inaccurate.
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Regional Bell operating companies. “This is very good data but unfortunately, it no longer provides all the data for a market,” Bensman said. Several years ago theregional Bell operating companies had to begin allowing competition for local service so they could begin offering long distance service. In some markets, up to 50 percent of the local service is now billed through these competitor companies, which means only 50 percent of the total data is available.
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Specialty/niche provider. The third way is through specialty companies or niche providers of data that have acquired unique access to “real-time data.” This means that the data is updated daily. This source is able to provide all data for a market but traditionally costs more to acquire than the other two sources.
Tactics for targeted telemarketing
By now you can see the theme emerging for successful telemarketing in the new era: Targeted databases with tailored offers. In addition to those already mentioned, here is a roundup of some of the other specific types of data that every newspaper should be considering:
RESIDENTIAL NEW MOVERS
Generally, new-mover call campaigns perform better than “cold” campaigns. The psychology of moving makes people more receptive to changes of all kinds. Their routine is being fundamentally altered, so they are more willing to entertain new options. When people move, even within the same market, they establish new buying habits and will spend more in their first year than the average person spends in five years, with a major amount of that spending being done in the first three months.
There could be people in your market who haven’t subscribed to your paper for 20 years, but when they move they are making a lot of new life choices and could be very open to becoming a subscriber.
The key is to reach these new movers as close to the date of their move as possible. If you do not reach new movers until two or three months after their move, it is generally too late. They have already made the majority of their decisions and established new buying habits.
It’s also important to note that when existing subscribers move, they do not always immediately transfer the paper. We need to contact these people and get the paper started quickly. The more time that goes by without the paper, the more likely the new movers will think they can do without it. The very thing that works for us with non-subscriber new movers can work against us in this case.
Also, because of the psychology of the new mover, contacting new mover subscribers can pay big dividends. This is a great opportunity to switch carrier-collect customers to your EZ Pay program and also attempt to upgrade their service or extend their term. They are open to change at this point, so capitalize on that fact.
BUSINESS NEW MOVERS
Another important data source is new-mover businesses. Millions of new business offices change addresses every year.
New-mover businesses have similar buying profiles to residential new-movers in terms of needs and spending habits during the first months of their move, and they make good subscription prospects.
However, they have an additional need that is distinctive and important to newspapers -- they need to advertise. They need to let people know they are in their new location. They need to promote what they sell or do. They may also need to hire new personnel to make their business successful in its new location.
So besides offering a subscription, you can partner with your advertising department and offer an incentive for the business to become an advertiser. Some new-mover businesses also have the potential to become single-copy vendors.
Lists can be procured from the same list vendors that provide data on new movers and other data sets.
PRE-APPROVED SAMPLING
What’s the best way to approach new movers to make the most from each precious lead? For many papers, a pre-approved sampling program is the way to go.
We’ve already talked about how valuable new movers are and the importance of not wasting leads. Calling a new mover list with a subscription offer will normally result in sales to perhaps 5 percent to 10 percent of the leads. This is generally considered good for a telemarketing list, but leaves 90 percent to 95 percent of the leads unsold.
Papers that have offered those same new-mover leads a two-week sample, have seen up to 60 percent of the people accept the sample.
Verification of sample delivery should take place immediately. During the second week of service, a follow-up call is made to check on delivery and to make the sales pitch — preferably offering an auto-renewal type of billing. Of the people who accepted the two week sample, many convert to paid subscribers. It’s a very non-threatening way to get new movers to try the paper. Once they try it, you have a good chance of keeping them.
The program becomes even more attractive if a third-party sponsor can be found for the samples. This offsets the cost of the samples, and most importantly, allows the newspaper to count the samples as paid circulation. It is a great opportunity for the advertiser to deliver their message.
As a rule of thumb, a newspaper with 100,000 home-delivery subscribers generally has new-mover volume to support 500 samples per week. This means that during the first week, you add 500 copies to your circulation. Then beginning in week two and each week thereafter, your circulation is boosted by a total of 1,000 copies. That’s because at any point in time, 500 addresses are in their second week of the two-week trial, and 500 more are added for their first week of the trial. Practically overnight you’ve added 1,000 daily and Sunday copies ongoing.
Add to that the number of paid subscribers that result from the sampling, and you’ve got an extremely effective new-mover program. Be sure to do your own due-diligence to establish that your program is ABC compliant.
BUSINESS-TO-RESIDENTIAL CONVERSION
Some papers have the potential to increase their “callable” leads by identifying former business numbers that have been reassigned as residential numbers. Many newspapers put business numbers on a no-call list that is used as a “delete file” whenever a new-call campaign is being created. Newspapers have discovered that as many as 15 percent of those numbers have been disconnected over time and reconnected to a residential non-subscriber. Newspapers report subscription sales rates as high as 15 percent on this converted file because these consumers have not been called for a long period of time.
DISCONNECTS
Another way to squeeze more out of our data is to access lists monthly of disconnects and compare them to subscriber and non-subscriber files. Each month the disconnects should be dated and scrubbed against new-mover records. After four to six months, the disconnects should be called in a separate file. Any active telephone numbers represent either a non-published new mover or a new mover who was not initially received. This tactic has the potential to increase sale rates substantially compared with sequential dialing.
Also, newspapers can take their entire internal or system disconnect file -- accumulated weekly from their telemarketing teams -- and work through the same process, with similar results!
INTERNAL DO-NOT-CALL FILE CLEANSE
One more way to add more callable leads is to keep your internal do-not-call file lean and clean. With approximately 20 percent annual mobility across the United States and Canada, approximately 20 percent of the telephone numbers on your internal do-not-call file can be eliminated. This means that after a couple years, up to 50 percent of the telephone numbers on your internal do-not-call file no longer belong to the person who requested to be put on the list. They moved, and their number was reassigned, but you have not been able to call the new person because you didn’t know.
The problem in the past was that there was not an accurate and effective process for accomplishing this. Today, through a multi-step monthly process, permanently disconnected and newly connected numbers can be identified and removed.
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It’s important to note that not all disconnects are being removed, only those numbers that have been permanently disconnected and are going to be reassigned to someone new at some point down the road.
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Numbers that are temporarily disconnected because of lack of payment, problem on the line, or someone who disconnects their home phone for an extended vacation or splits their time during the year between the north and south should not be removed since it is not definite that the number will stay disconnected.
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If we look at all disconnects for a given month, and then look at them again four weeks later, on average we see that 17 percent are now live again. This 17 percent cannot be removed from your internal do-not-call list.
Once we’ve eliminated numbers that should not be on the list we can append the current name and address to the list and send out a direct mail piece. Newspapers that are doing this annually, report a 3 percent to 5 percent return. Along with sending a direct mail piece, the list can be routed and given to crews or carriers to solicit starts.
It’s also important to make sure that you keep your internal do-not-call file separate from the federal and state do-not-call files. They are mutually exclusive, and just because a number comes off of one list doesn’t mean you can take it off any of the others.
INSTALL DATA
As mentioned earlier, having accurate data is extremely important to telemarketing success. Non-subscriber files should have names and addresses appended to as many records as possible. Since the introduction of local-number portability, newspaper telemarketers can no longer dial by prefix and be assured that you are in fact calling a specific geographic market segment. Obtaining install data for an area ensures that you are obtaining all listings, usually by ZIP code, so different offers can be tested based on the demographic or psychographic characteristics of an area.
Telemarketing as part of a multiple sales channel experience
"We have had very good success with our client campaigns since implementing a new data management module in mid-2003,” said Andy Orr, president of Circulation Services, Inc. His company provides outsourced sales and marketing services to newspaper circulation departments.
“We anticipated the effects of the national do-not-call list and took the proactive approach to ensure we were going to get the absolute best returns even with the diminished list sizes,” he said. “Our ITdepartment spent months developing code that actively adds and removes numbers from campaign call lists based on call history, frequency, disposition codes, demographic data, list vendor additions and any other reliable source. After cycling through a calling rotation, we're able to go back through the lists and decide the most tactical media and message for clusters of households based on a number of varying criteria.”
For example, “We're using this strategy with a client in South Carolina. We had worked with this newspaper before the national do-not-call list took effect, so we had some historical data to compare. Since implementing our new data-management module, their sales-per-hour has held steady -- even though the new regulations have slowed down our dialers dramatically,” Orr said.
“I suppose that's the true test of this whole thing. You need to integrate your telemarketing results into all of your other acquisition and retention methods.”
Orr gives an example from suburban New York. “We worked with the client's circulation sales team and identified those households that we were not having any luck connecting with, yet they appeared to be the most likely to subscribe based on demographic and call-result data we mined from the calling lists. We did a 13,000-piece postcard mailer offering a two-week free sample and got a 5 percent return on the mailer. Then, after the sample was delivered, we followed up with a telephone call and converted well over 25 percent of the respondents. We captured a lot of households who would not respond to traditional cold-call telemarketing.”
Orr sums up the new philosophy of telemarketing this way: “You should never ask the same people the same question in the same manner over and over and over again, which is what we have all been guilty of for years. By varying the method and the message and using telemarketing not just as a blanket order source but also as an intelligence-gathering tool, newspapers can continue to get copies into the houses and apartments in their markets.”
Telemarketing can become a stronger source of orders than ever before, even if the quantity of new orders is reduced. Now, before moving on to our next discussion, which involves all of the other (non-telemarketing) order sources and how they fit together, take a moment for our next Challenge Quiz on making telemarketing a stronger source of sales orders:
1. Telemarketing has always been a reliable source of high-retention orders.
True False (answer = false)
2. The use of “shoebox” databases (gathered at festivals, events, etc.) with targeted scripts is labor intensive but generates sell ratios that are much higher than cold calling.
True False (answer = true)
3. Giving Customer Service Reps “ownership” over new customers does not boost retention during the crucial early weeks.
True False (answer = false)
4. Classified customers represent a pool of prospects for outbound telemarketing with a subscription offer tied to “free-classified-ad-with-subscription” offer.
True False (answer = true)
5. Combining sampling or postcard mailings with telemarketing follow-up yields dramatic increases in the ratio of sales from a given pool of leads.
True False (answer =true)
6. Sample copies delivered to new movers can count as paid circulation as part of a multi-channel telemarketing program if they are sponsored by a third party and meet ABC criteria.
True False (answer =true)