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Outbound Dialing Makes a Comeback
Changing rules give vendors new opportunities.
For the rest of the November 2013 issue of CRM magazine please click here
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After more than 10 years of sitting on the sidelines, the outbound market is starting to fight for its life. This is a paradox, as it was the 2003 National Do Not Call (DNC) Registry legislation in the United States that started the downward spiral of the outbound dialing market, and it is the Telephone Consumer Protection Act amendments that went into effect in January and October of this year that are rousing this sector.

The concept and practice of outbound dialing has been vilified by consumers and regulators, despite being a positive and high-value activity when performed properly. Unfortunately, too many organizations do not know the rules or choose not to follow them, hurting the reputation of the entire sector and reflecting poorly on companies that reach out to customers for their mutual benefit. Additionally, a couple of sectors have been excluded from the dialing regulations, namely political campaigns and fund-raising organizations, further exacerbating the public's distaste and frustration. (Many call recipients are aware of the DNC concept, but not its details and exclusions.)

Why Consumers "Hate" Outbound Calls

By the time the DNC registry went into effect in 2003, the U.S. telemarketing industry was out of control. Too many companies were using power dialers to "blindly" call anyone they could reach to try to sell all types of products and services. Many of these companies (and their third-party outsourcers) were overaggressive and used unethical practices to deceive consumers. They were realizing diminishing returns from their calls as consumers became more educated. By the time "blind" dialing was mostly stopped by the DNC legislation in the U.S. and by similar regulations in other countries (not everyone follows them, as we all know), only 1 percent to 3 percent of calls were being converted into sales. This means that 97 percent to 99 percent of the calls were ineffective and a waste of money and resources for the companies investing in outbound dialing programs.

What's Next in the World of Outbound

In recent years, phone calls have become a less preferred mode of communication. (A large percentage of Millennials, for example, prefer texting to calling.) The number of landlines is still falling at a rapid pace, a pattern that is expected to continue.

The outbound world is changing. Companies need to interact with their customers in their channel of choice, which may vary based on time of day and day of week. This means that companies that want to reach their customers and prospects need to use a number of channels to be effective. The top business channels today are phones (landlines and cell phones), texting/short message service, chat, email, and, increasingly, social media (Twitter and Facebook, for starters).

The practical realities of today's consumers are driving changes in technology. It's no longer sufficient or effective just to use an outbound dialer, even if it were allowed by the regulations. Companies need to develop effective multichannel outbound/inbound/blended strategies to communicate consistently and effectively with their customers. (Prospecting is a different story.) Many of the outbound solutions that companies are using are out of date, not up to the challenge, and, in some cases, a potential liability. For any organization that's been using the same dialer for more than 10 years—and many companies are in this situation—it's time to replace the solution. An especially compelling reason to look into acquiring a new solution is that most of the old dialers are not in compliance with the current regulations.

The good news is that some of the outbound vendors—fully automated and attended solution providers—are finally investing in their solutions. Whereas the 2003 legislation froze research and development investments in dialing solutions because the vendors did not think they could recoup their investments, the new set of laws is having a different and more positive impact. There are now more outbound vendors than ever before, even if the offerings are not yet ideal. In the past few years, vendors have introduced many on-premises and cloud-based solutions into the sector, and are challenging the traditional leaders. Companies are looking for alternatives to inflexible legacy solutions with outdated user interfaces and limited functionality and channels.

Market dynamics and uncertainty are compelling companies to change the way they do business and handle their outbound activities. The new legislation, which is confusing and lacking in clarity, is driving companies to seek legal advice and guidance. It is also prompting them to review and enhance the way they reach out to their customers and prospects. Some enterprises have asked their outbound vendors to provide them with a "nontelephony" dialer to ensure that they cannot be accused of auto-dialing any cell phones, for example. The concern is that the government has significantly increased its oversight in this area. Substantial fines have been levied for violations of the dialing regulations during the past 12 months. Government communications indicate that attention to consumer protection is expected to intensify in the near future.

Enterprises are asking their outbound vendors for help in complying with the consumer protection regulations. This is a great opportunity for the vendors to enhance their products to deliver new capabilities to help their enterprise customers meet the new (and changing) requirements. Just as the introduction of the Payment Card Industry Data Security Standard drove substantial investments in recording and workforce optimization solutions, DMG expects the outbound dialing vendors, particularly the more agile ones, to take advantage of this opportunity to introduce substantial innovation and initiate a much-needed upgrade cycle.

It's in the Cloud

Dialing vendors were quick to move to the cloud due to the frequently changing demands of outbound campaigns. Whether companies are calling to sell new products and services, collect outstanding debts, or build and enhance existing relationships, volumes are highly variable. As a result, the required number of agents and capacity change frequently. Most enterprises do not want to pay for peak capacity only to have resources sit idle for most of the time. Instead, they want the flexibility to rapidly and cost-effectively scale their outbound infrastructure up and down to meet the changing needs of their business.

Another important benefit of using cloud-based vendors is that they deliver ongoing innovation and upgrades at no incremental cost. Given that so much is in flux in the outbound market, and substantial innovation is expected from the vendors, this is an important advantage. Users won't get stuck with obsolete technology as the regulations change or are clarified. Alternatively, users can strike a similar deal with premises-based providers that are flexible and willing to put their commitments in writing.

Challenges Ahead

Momentum is picking up for the outbound market. Outbound solutions can make positive contributions to companies. Consumer protection laws around the world are not intended to prevent companies from contacting their customers; instead, they are designed to stop bad and unethical business practices. New laws are presenting outbound vendors and enterprises with substantial challenges as they strive to adhere to the regulations while continuing to meet their business objectives. These challenges have woken up the market, and are driving a much-needed round of innovation. There are many outbound vendors in the market and the offerings differ substantially, despite the marketing messages that make many of them sound the same. Prospects should look for multichannel solutions sold (on-premises or in the cloud) by vendors that are investing in the future of this market.

Organizations that don't know the rules—or don't follow them—have hurt the reputation of the entire sector.

New challenges are driving a much-needed round of innovation.


Donna Fluss (donna.fluss@dmgconsult.com) is founder and president of DMG Consulting, a provider of contact center and analytics research, marketing analysis, and consulting.


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