It's been roughly three years since the National Do Not Call (DNC) Registry legislation went into effect, yet many marketers continue to hide their heads in the sand when it comes to regulatory compliance standards surrounding their outbound initiatives. Two reasons for this avoidance are that some enterprises remain unaware of the laws and of the responsibility businesses have to meet the regulations, while other corporate leaders fear not being able to replace outbound telemarketing dollars. Either way, businesses are beginning to pay the price for refraining from compliance--the FTC has commenced leveling hefty fines on companies that disregard the statutes. Satellite TV provider DirecTV was slapped a year ago this month by the FTC with a stinging $5.3 million penalty, after the Commission charged that DirecTV and the companies it hired to promote its programs had been violating DNC provisions since October 2003.
"My perception is that companies continue to struggle with DNC compliance because either they do not understand the laws or they do not take them seriously," says Matt Taylor, product manager at Interactive Intelligence. As DNC legislation continues to put pressure on outbound telemarketers, companies must educate themselves on how to market within the boundaries of the legislation and focus on appropriately altering their campaigns. This back-to-the-drawing-board approach, although federally mandated, is an opportunity for companies to adjust their telemarketing strategies to meet compliance demands while increasing outbound marketing revenue rewards.
What Is DNC?
At its core DNC is the result of consumer backlash against telemarketing initiatives that many consider intrusive, annoying, and unwanted. Telemarketers have long engendered the distrust and ire of consumers by contacting consumers using aggressive (and, in some cases, fraudulent) sales tactics, often during what consumers consider inconvenient times of the day and night. Essentially, the National DNC Registry is a list of consumer phone numbers that telemarketers are prohibited from calling. Enacted in 2003 thanks to the amended Telemarketing Sales Rule (TSR), the DNC list, which covers interstate and intrastate telemarketing calls, is managed by the FTC and is enforced by it, the FCC, and state officials. Consumers can add their home phone numbers, including wireless numbers, to the Registry either by phone or online for free, and their registration will be effective for five years. Since January 1, 2005, telemarketers and sellers have been required to search the Registry at least once every 31 days and to remove the phone numbers of consumers who have registered.
When DNC emerged, many consumers saw it as their line of attack against unwanted telemarketing calls. However, it is important for both consumers and telemarketers to note that DNC registrations do not necessarily mean an end to all telemarketing calls. Rather, the statutes were conceived to help curb the number of marketing calls consumers receive. DNC regulations cover any plan, program, or campaign to sell goods and services over the phone. Exempt from the regulations are calls from political organizations, charities, telephone surveyors, or companies that the called consumer has an established business relationship (EBR) with. An EBR exists if a consumer made an inquiry, application, purchase, or transaction regarding products or services offered by the person or entity involved, according to the FCC. The EBR exemption is valid for 18 months after the consumer's last business transaction, or three months after the consumer's last inquiry or application, unless the consumer asks the company not to call again.
DNC isn't just a federal issue. Several states, including Florida and Indiana, have adopted their own DNC lists with which companies must also contend. "The state laws have to be taken very seriously, and in the past a lot of marketers have blown those off," says Eric Holmen, executive vice president of operations and client strategy at SmartReply, a provider of retail voice marketing solutions. Companies that violate DNC legislations can be hit with fines of up to $11,000.
Hamilton Contact Center Services, a 20-year-old outsourced contact center bureau with multiple locations spread across the United States, is one example of a firm that had to rejigger protocols as a result of the DNC laws. The 450-agent-seat center opened its doors in 1986 as a purely outbound service agency, according to Angela Morris, vice president of contact center services at Hamilton. As client and consumer demands evolved, however, Hamilton sought to incorporate inbound, multichannel capabilities as a way to compete more effectively for potential business. It implemented Aspect Software's EnsemblePro (formerly Concerto's EnsemblePro) unified contact center solution in 2002.
Roughly a year after Hamilton went live with EnsemblePro, the TSR was revised, which led not only to the emergence of DNC legislation, but also to provisions about managing call abandonment. For instance, each call must be connected to a sales rep within two seconds of the consumer answering the call. But if a sales rep isn't available within those two seconds, the company must play a recorded message (without a sales pitch) that includes the seller's name and phone number. Additionally, telemarketers must let each called consumer's phone ring for at least 15 seconds (or four rings before disconnecting), and cannot abandon more than 3 percent of calls answered by a person, measured per day, per calling campaign.
Hamilton relied on EnsemblePro's outbound messaging functionality to ensure compliance. Rather than dropping a call, the company plays a tailored message that identifies the client it's calling on behalf of and provides a phone number enabling the consumer to place an inbound call if she is interested.
Other TSR amendments included requiring telemarketers to transmit their telephone number, and when possible their name, to consumers' caller ID services. This, however, can be particularly difficult for outfits like Hamilton, because they must convey the identification for each individual client, not Hamilton's own personal information. But, with EnsemblePro, "We can send caller ID so that people know who's calling, and we found that people are more likely to pick up the phone when they know who's calling," Morris says.
Fear Factor: The Beginning or the End?
Prior to the enactment of the DNC Registry the telemarketing industry estimated the DNC list could cut its business in half, costing it up to $50 billion in sales each year, according to published reports. "I do believe there was a great deal of concern about the health of the outbound telemarketing industry with the advent of DNC legislation three years ago," says Ken Landoline, customer-centric strategies senior analyst at Yankee Group. "However, while I believe there may have been a mild dip in growth rates of the outbound telemarketing sales after DNC was implemented, I think the industry was quick to make adjustments that allowed the outbound business to continue to grow, and for vendors of innovative outbound technologies to thrive through this decade."
For example, some airlines use proactive communication to keep customers up to date on flight delays, while some financial services companies call customers to notify them about unusual account activity. The world outbound dialing market enjoyed $170.8 million in revenue in 2004 and will reach $204.9 million in 2011, according to Frost & Sullivan, thanks largely to outbound dialing systems' ability to help organizations take a more active role in customer service.
Still, many industry voices agree that revenue generated specifically through outbound telemarketing has suffered a slight slip at the very least. "What we've seen is that pure telemarketing calling lists have decreased by 30 percent to 50 percent," says Jim Mitchell, senior vice president of the technology office at Aspect. "This has caused a decrease in overall revenue for outbound telemarketing call centers." On the positive side, telemarketers are seeing a higher percentage of contacts per calls placed, and a higher percentage of sales per contacts. Mitchell says: "The existence of the DNC list has removed customers who do not want to be called, leaving a pool of willing prospects that companies can contact. Companies are making fewer calls per hour, but are achieving better results."
Even so, combating the negative impacts of DNC isn't easy. Step 1 is to determine whether or not DNC even applies. "The way you handle calls that qualify [under DNC] differs greatly from calls that don't qualify," says Bern Elliot, research vice president at Gartner. "The first thing to know is which one you're doing." Mitchell adds that "companies should not fight the system, but get their own legal advice and develop technology guidelines for use internally."
If a company does not qualify for exemption, Step 2 is to scrub in-house call lists. "DNC compliance involves scrubbing call lists against both the federal list and state lists," Interactive Intelligence's Taylor says. "Some larger telemarketers maintain these lists in-house and scrub appropriate lists against them. Other telemarketers use outsourced DNC scrubbing vendors." He cites vendors like Call Compliance, Contact Center Compliance, and PossibleNOW. Companies should also maintain an internal DNC list (a roster of consumers who ask the company not to call anymore). "Companies that show a good faith effort to do DNC scrubbing should not have issues," Taylor says. In addition to scrubbing, companies also "need to make sure that scripts are compliant and that caller ID and other types of technical requirements--abandonment, caller ID, curfews--are in line," says William Raney, a telemarketing law attorney at Copilevitz & Canter.
Companies must also reevaluate marketing campaigns for potential customers (those that they don't have an EBR with) on the DNC list and consumers that they have an established relationship with. When it comes to targeting potential customers on the DNC Registry, marketers don't have the ability to phone consumers to deliver a sales pitch. They must leverage other channels to present offers that are relevant, targeted, and compelling, motivating consumers either to contact the company directly or to give it permission to contact them. For instance, effectively use the company Web site. "If the content and information on your Web site is enticing people to establish a relationship with you--even if they don't buy on your Web site--you want to have them register with you and give you permission to contact them," says Carol Meyers, senior vice president and CMO at Unica.
Apply a similar approach to direct mail campaigns: Deliver clear, appealing content, but also provide the consumer with the ability to request more information or specify that a company rep can contact him. It's about "getting people to opt-in," SmartReply's Holmen says, and putting "the control and empowerment on the consumer's side of the table." Ask what communication channels customers prefer to use and honor their preferences. "Let them tell you how they want to be communicated to if they want to."
If telemarketers choose to call DNC-registered customers who they have established relationships with (which is legal), it is also necessary to craft compelling and relevant offers to get consumers to bite. "There's often the temptation to put far too much into the script," says John Keyes, director of product management at SoundBite Communications, a provider of hosted, automated customer contact solutions. "The best scripts get right to the point and tell you who it is, why they're calling, and what they're offering."
Even with targeted offers and stellar scripts, marketers must be especially sensitive when dialing customers that they have an established business relationship with, but who are also listed on the Registry. These consumers may be under the impression that they shouldn't be receiving any telemarketing calls. That means companies must educate agents and consumers on what the law means. "Agents should be educated on technology and trained on how to respond to DNC questions," Mitchell says.
Also, consider training CSRs on cross- and upselling to help convert inbound service calls into sales opportunities. However, avoid making agents' lives more difficult than they already are. Flag calls to existing customers on the DNC Registry. This will make agents aware that the customers they're about to call may not be receptive to the call, according to Meyers.
By being aware, agents can raise their sensitivity levels. And again, make sure, should a consumer ask not to be called, to honor that request and to add that person to the internal DNC list.
For companies that are serious about keeping customer frustrations at bay, integrating cross-channel marketing campaigns--especially if consumers opt in for communications through modes like email and text messaging--is another must. (These channels have their own legislation issues. See "CRM in the Age of Legislation," August 2005.) "A lot of times in a company channels are owned by different people," Meyers says. "That can really lead to a lot of disconnect and to a customer getting the same offer via different channels and feeling bombarded. One of the best things a company can do is use its marketing automation technology to track outgoing customer communication over preferred channels to avoid conflicting offers. [Also] make sure there's a lot of consistency across those channels." Keeping track of things this way will help companies avoid overcommunicating to and annoying customers.
"I believe that sales of the outbound industry will continue to grow--in single-digit growth rates, perhaps--for at least the next five to eight years or so, as the interest in proactive telemarketing grows and enterprises continue spending in this area," Landoline says. "After that it's impossible to say, given all the variables that can and will affect this industry. The bottom line is that it would be a risky venture for any vendor to put all of its eggs in one basket and to utilize outbound telemarketing as its sole line of business. I believe this marketplace will ultimately be best served by multichannel contact center application suite providers serving the inbound, outbound, and blended contact center industries."
Contact Associate Editor Coreen Bailor at cbailor@destinationCRM.com.
The DNC Registry regulations do not apply to calls:
from organizations with which consumers have an established business relationship;
for which consumers have given written permission;
that are not commercial or don't include unsolicited advertisements; and
by or on behalf of tax-exempt nonprofit organizations.
DNC legislation comprises many components. Here are a handful of Web sites that offer more information:
American Teleservices Association: www.ataconnect.org/
Call Compliance: www.callcompliance.com/
Contact Center Compliance: dnc.com/
Direct Marketing Association: www.the-dma.org/
Federal Communications Commission: www.fcc.gov/cgb/donotcall/
Federal Trade Commission: www.ftc.gov/bcp/conline/edcams/donotcall/
Most consumers at some point have received emails claiming that cell phone numbers will be released to telemarketers. But "U.S. wireless numbers do not have to be on the DNC list to be prohibited," says Lisa Pierce, a vice president at Forrester Research. "The legislation prohibits the reception of prerecorded or automated messages, or the use of an auto dialer to reach a wireless subscriber."
As more consumers abandon their land lines and rely solely on their wireless devices and number portability (transferring a land line number to a cell phone and vice versa) increases, keeping track of transferred numbers can cause headaches for many telemarketers. "As time goes by," Pierce says, "and more people switch--one way or the other, or possibly multiple times using the same number--it would make sense for the FCC to require that all carriers provide each other with information on the type of number being called, and that this information be provided to telemarketers in the same format as the originating carrier provides them caller ID with." --C.B.