Magazine article Marketing

On the Right Lines

Magazine article Marketing

On the Right Lines

Article excerpt

Despite the recession the telemarketing industry is booming. The vast majority of respondents claim profits are up. There are also a couple of swift turnarounds. Is telemarketing getting just recognition at last?

It seems remarkable, when the UK is still floundering in the economic mire, that 26 of the telemarketing agencies in this year's league table are claiming increases in 1992 turnover, with only five reporting a reduction. The others are either new start-ups, or have stood still. There's some support here for those who believe telemarketing is at last getting the recognition it deserves.

We're talking significant increases, too. Three are perhaps special cases. ABC Promotional Marketing Services took over the business of the failed Thirty Five Group in 1991, and thus featured as a new agency with no quotable figures in last year's table. This year, it's up near the top, claiming |pounds~4.28m (out of a total |pounds~10m plus turnover) derived from its telephone services. PBA Marketing is similar -- a relaunched version of PBA Holdings, which called in the receivers in 1991. And charity specialist National Telephone Team is obviously just getting into its stride, with turnover up from a mere |pounds~23,000 two years ago to |pounds~408,000 last year.

These apart, however, growth of at least 10% has been common among established agencies, with more than half the participants claiming at least 20%. The paradox is, several agencies now report fears of a new price war breaking out.

Half a dozen reasons are cited for the expansion in the industry. There is the much-quoted increase in the use of response devices -- telephone numbers or coupons -- in advertising, the growing use of marketing databases, which need constant updating, and the new emphasis on customer care. Improved software has made telemarketing more attractive to clients because it permits more sophisticated analysis. There is growth, too, in consultancy -- advising clients on setting up their own telemarketing teams -- and in basic traditional applications such as appointment setting and routine order booking.

Some of these changes have a bearing on the threatened price war. Telemarketing consultant Michael Hope, based at Farnborough (Hants), says: "The industry is growing at a rapid pace, margins are being squeezed, service is getting better, and technology is supporting the whole effort. All good stuff. But business at large is getting even harder, so good quality telephone marketing at affordable prices is what's needed."

The problem, though, is what are realistic prices? Martin Shields, managing director of Merit Direct, forecasts a further shakeout as a result of agencies quoting charges on which they cannot make a profit. "I heard someone the other day quote 30p to handle an inbound call," he says. "That's more ridiculous than BT used to quote in 1985, and we're eight years on! For a basic service, it has to be something like |pound~1. An operator will handle an average of 15 calls an hour, and without them making a contribution of |pounds~12-|pounds~15 an hour, how are you going to pay them and support the overheads and capital investment? This is not something special to telemarketing, it is pure business. This is reality."

Agency                                   Inbound turnover
1 Telecom Potential Group               |pounds~2,920,000
2 ABC Promotional Marketing Services    |pounds~2,140,000
3 Adlink                                |pounds~2,100,000
4 Merit Direct                          |pounds~2,072,000
5 Teledata                              |pounds~1,502,000
6 Brann Contact 24                      |pounds~1,365,000
7 Legion                                |pounds~1,213,000
8 The Decisions Group                   |pounds~1,000,000
9 Procter and Procter                     |pounds~924,000
10 CPM InTelMark                          |pounds~572,000
Agency                                  Outbound turnover
1 Programmes                            |pounds~2,380,000
2 Merit Direct                          |pounds~1,480,000
3 Procter and Procter                   |pounds~1,155,000
4 Adlink                                |pounds~1,050,000
5 The Decisions Group                   |pounds~1,000,000
6 Brann Contact 24                        |pounds~585,000
7 CPM InTelMark                           |pounds~429,000
8 TML (Telemarketing Link)                |pounds~375,000
9 National Telephone Team                 |pounds~367,000
10 PBA Marketing                          |pounds~360,000
Agency                                Fulfilment turnover
1 ABC Promotional Mktg Services         |pounds~2,140,000
2 Mailcom                               |pounds~1,050,000
3 Brann Contact 24                        |pounds~858,000
4 McIntyre and King                       |pounds~770,000
5 Legion                                  |pounds~693,000
6 Merit Direct                            |pounds~592,000
7 Telecom Potential Group                 |pounds~400,000
8 CPM InTelMark                           |pounds~358,000
9 Adlink                                  |pounds~350,000
10 Inpost                                 |pounds~300,000
Agency                         Consultancy servs turnover
1 Programmes                            |pounds~4,200,000
2 Procter and Procter                   |pounds~2,079,000
3 Legion                                |pounds~1,386,000
4 Brann Contact 24                        |pounds~780,000
5 Telecom Potential Group                 |pounds~680,000
6 Hoseasons Marketing Systems             |pounds~480,000
7 The Decisions Group                     |pounds~250,000
8 Merit Direct                            |pounds~178,000
9 Teledata                                |pounds~125,000
10 BPS Teleperformance                    |pounds~124,000

Changes in the markets for telemarketing, and in the technology, are also resulting in structural changes in the industry:

* Inbound telemarketing (handling incoming calls from customers) is growing faster than outbound (making calls to customers). …

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