Editore"s Note
Tilting at Windmills

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September 22, 2003
By: Kevin Drum

TELEMARKETING BLUES....James Joyner reminds me of this New York Times article from a few days ago about impending doom in the telemarketing industry:

"It's D-Day," said Lisa Scheuerman, who operates a telemarketing center in Baltimore, with 17 callers selling mortgage refinancings in seven states, including Florida and Connecticut. "I could lose my whole business."

The industry says some two million phone-solicitation jobs could be lost within months.

It's true that the number of people who registered with the Do-Not-Call list 42 million was pretty staggering, although it's worth keeping in mind that about a third of those people were already on state Do-Not-Call lists. Still, it's a lot.

But even so, that 2 million number (sourced rather mysteriously from "the industry") sounds to me mostly like the usual kind of Chicken Little stuff you get from industry flacks whenever any new regulation is put in place. The invariable result is always supposed to be mass unemployment, industry collapse, and economic meltdown until someone points out reality. For example:

Federal labor statistics indicate about 450,000 people work in telemarketing, but the industry says that figure does not include most callers employed directly by larger companies like banks and insurers.

But the thing is that those "larger companies" are largely calling their own customers, which is still allowed. So the 2 million number is almost certainly completely bogus, the fevered imaginings of some industry lobbyist armed with a copy of Excel. (2 million! That's nearly a full 1.5% of all employment in the country!)

More to the point, however, is that I used to run a marketing department and I've done some telemarketing. There are a couple of things to keep in mind.

Speaking generally, the marketing budget is the marketing budget. If it turns out that telemarketing gets cut, the money will be spent somewhere else. So even in the worst case, there will be some job losses in telemarketing but they'll be made up elsewhere.

More specifically, this same point applies to telemarketing itself. Things may be different at very large companies (so don't take this to the bank), but when I did telemarketing we always worked backwards: if we wanted to generate, say, 100 new sales per month, we'd then figure we needed 1,000 serious prospects, and thus 5,000 connected calls, and thus 15,000 raw calls per month. (I'm just making those numbers up, but you get the idea.)

Basically, it doesn't really matter how big the pool of prospects is unless that math gets you to a number bigger than the 60 million people who still aren't on the Do-Not-Call list (or whichever subset of those people you happen to be interested in). There isn't a company in the world big enough to need a pool bigger than that.

Bottom line: state level Do-Not-Call registries have been around for a while and haven't had any impact on the industry. The national registry might have some impact, but I'd be surprised if it were more than few thousand job losses. And even at that, the marketing dollars will still get spent, so those few jobs will move to other areas fairly effortlessly.

In other words, hold your tears for the telemarketing industry. They aren't going the way of the buggy whip quite yet.

Kevin Drum 10:13 AM Permalink | Trackbacks

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