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Tuesday, December 07, 2010

I was chatting with a client the other day and they told me something that hadn't occurred to me previously.

They said that one of the things they liked about us is that we're not based in London.

Why? Because they found that london-based telemarketing agencies have trouble retaining telemarketers as their people are more transient in nature, only taking the job for a while before moving on.

And that does make sense, because when you think about many of the large call-centre or volume telemarketing agencies are located in areas outside London, usually lured there by local grants to boost employment.

But, beyond that, what does it really say about telemarketing agencies?

It says that most people will only work in one either if there is no alternative or they are "between" jobs.

Someone, who used to be a "team leader" in such an agency in a previous life, once told me how they used to literally drag people off the streets to put "bums on seats" and then bank on a few of their top performers to bring up the average and rescue the campaign.

So, why is this? What's wrong with most telemarketing agencies?

Typically, it boils down to a few inter-related areas:

1) Retention or "churn" - call-centres and volume telemarketing agencies have the highest turnover of staff than pretty much any other industry. Why? It's simple: they are terrible places to work and not everyone is suited to telemarketing.

Now, I'm not sure whether this is a "chicken or egg" issue, since if they were better places to work would they have less churn? But the fact is that the volume telemarketing game is a soul-sapping experience. This means that they have to recruit more just to keep the numbers up (since their business model is essentially selling resource) which in turn causes the quality to drop (as outbound telemarketing isn't for everyone) and so on, and so on.

Which brings us to the second issue:

2) High-cost base - all that constant recruitment, training and management costs is expensive. Add to that the technology overhead to record and monitor everyone and you can understand why telemarketing agencies run on wafer-thin profit margins. On top of that consider that telemarketing is a mature, highly competitive and price driven market and what's going to happen?

Margins get squeezed and with all that fixed overhead can they really afford to pay to retain the best talent? Which leads to...

3) Talent Drain - what happens to the best telemarketers? Do they become managers? Well, there's only so many management roles available and, realistically, the best telemarketers don't want to be a "manager". In our team we have people who have been there, done that and never want to go back. Great telemarketers (believe it or not) like telemarketing.

Do you pay them more? Maybe you can make them a "team leader" and pay a little more but there's only so much margin in this game. All that overhead, recruitment costs, management costs and the fancy BMW's parked outside for the account managers soon rack up.

So, what happens is that they leave and go freelance. As a freelancer they can be selective about the work they do and, if they team up with an associate model like ours, they can get a steady flow of quality assignments without the hassle of dealing with other telemarketers, account management, etc.

More money, less hassle.

And the traditional telemarketing agency has to replace them, which brings us right back to the first point, "churn".

For me, the model is broken and it's why I didn't set up a traditional telemarketing agency.

We work exclusively with seasoned telemarketers of the calibre most telemarketing agencies would kill for. We provide them with a steady level of high-quality, ongoing work which they would struggle to secure as a stand-alone freelancer.

The value we deliver for our clients is through offering strategic input and ongoing campaign management without the overhead of a traditional agency.

Essentially, our model provides a higher level of resource and service for less cost than a traditional telemarketing agency.

Think of it like this. The only way a traditional telemarketing agency (by which I mean a bricks-and-mortar location, technology overheads, account management teams, etc) can charge lower fees than our model is if they pay their people less.

And you know what they say about paying peanuts...

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Posted by: David Regler @ 10:19 am |   | Links to this post  

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