While it plainly has many faults, marketing is an industry that is acutely conscious of its potential to create controversy – even hostility or resentment – among both businesses and consumers. Consequently it strives to avoid confrontation with government and regulators wherever possible. This is why a culture of self-regulation and policing has been enthusiastically adopted; the industry has been eager to keep its own house in order, thereby avoiding meddling by higher powers.
But such a culture makes regulation, when it comes, all the harder for marketers to stomach. Such intervention is rare, but despite the best efforts of industry representatives, sometimes unavoidable. Its imposition is the cue for marketers to become the ones feeling the resentment.
Without doubt, the best recent example of such legislation certainly in business-to-business was the Privacy & Electronic Communications (EC Directive) (Amendment) 2004, which extended the right to opt-out of telemarketing activity to employees of incorporated businesses. The general public, sole-traders and partnerships had been able to register with the Telephone Preference Service since it was established in 1999 largely as a result of the backlash to the huge increase in outbound consumer-focused telemarketing. An EC directive required this option be extended, and in June 2004 the Corporate Telephone Preference Service (CTPS) began taking registrations from incorporated companies (and employees thereof) who no longer wished to receive telemarketing calls. Thereafter any company which telemarketed to an opted-out number risked a £5000 fine.
To date, according to the CTPS (which is managed under licence by the Direct Marketing Association (DMA)), approximately 150,000 numbers have been registered on the service. This, Tessa Kelly, head of the CTPS acknowledges, is a ‘drop in the ocean’ compared to the number of active business numbers in the UK, but it is still ahead of expectations. Kelly further claims the numbers of registrations is beginning to rise faster, as awareness of the service and interest in it grows.
She is coy, however, on the potential scale of demand, refusing to divulge any estimates on the eventual size of the CTPS database. She points out that the Telephone Preference Service (which administrates the opt-out for consumers, sole traders and partnerships and is also managed by the DMA, alongside the Fax Preference Service) has seen numbers continually increase over the whole of its lifetime, now standing at six million.
Uncertain implications
The vagueness regarding the repercussions of the CTPS has done nothing to calm the fears of business-to-business marketers and call centre operators, many of whom have been outraged by the imposition of the service. Their fear is that the opt-out on telemarketing is a heavy-handed means of tackling a relatively minor problem in B2B, and threatens to wipe out a principal marketing channel.
Carole Fossey, MD of recruitment agency BeRecruitment, has been an outspoken early critic of the CTPS. “My first reaction was: ‘what on earth are they up to? Why are they doing this? Are they trying to close down the telemarketing industry?'”
Carol Meyers, head of marketing at software house Unica, is similarly concerned. “For businesses such as those without an outside sales force, who rely on telephoning potential prospects to drive new business and revenue, this change will have an enormous impact.”
SMEs are expected to be hit hard by the new rules. “Small businesses rely more than most on the telephone as their main means of generating business,” explains Julie Knight, MD of Marketscan. “They tend not to have the resources to devote to advertising campaigns or large-scale direct mail efforts which have a minimum buying level which is usually beyond them.”
Another group of B2B-focused companies that have been hit hard by the CTPS are those targeting the public sector. The CTPS acknowledges that a culture of mass opt-out has emerged from these institutions, with a number of hospitals registering over 1000 numbers. Version One sells paperless office technology to hospitals, local authorities and other public sector bodies, which it claims can save these institutions over £250,000 per year. Jonathan Edwards, telemarketing manager at Version One, claims the new regime is having a huge impact on its business. “We’ve discovered that some senior staff at these organisations are completely unaware that their main telephone number has been registered on the CTPS, possibly by a receptionist or other member of staff who determined that the whole organisation does not wish to receive unsolicited telephone calls. If we can’t talk to them, we can’t help them save money, and they’ll be wasting millions of pounds; this is taxpayers money.”
“This is absolutely crazy,” says Tony Bray, sales & marketing director at Version One. “There is no doubt that this will seriously impact the growth and profitability of many UK businesses.” He claims compliance in terms of checking lists updating CRM systems will cost Version One thousands of pounds a year. He adds that he knows of a number of companies who are refusing to comply on the grounds that the impact on their business would be too great, preferring to risk the £5000 fine.
Opportunities to influence
Yet the experience of Version One appears to be the exception rather than the rule, and other observers are less adamant about the repercussions of the CTPS. John Price, chair of the DMA’s Contact Centre Council and MD of telemarketing company Price Direct, says despite some initial hysteria and ongoing confusion regarding what is and what isn’t allowed under the new regime, the jury is still out on the CTPS. “It has not had a significant impact yet – registration numbers are still relatively low.”
Price explains that the service achieves its principal objective (which he describes as enabling incorporated SMEs who were not covered under the old Telephone Preference Service, to escape potential overexposure to telemarketing calls) and as such is a success. He adds that discussions with the ‘powers-that-be’ (in this case, the Department of Trade & Industry, communications regulator OffCom and Information Commissioner) are ongoing regarding how companies renew their opt-out for a second year, thereby offering the industry a chance to have its say in the development of the CTPS. “There is still influence which we can leverage,” he says.
At what point, volume of registrations makes the CTPS a problem, Price is uncertain, but he points out: “much of the work we do for our customers is with their existing clients,” which is unaffected, and will continue unabated. There is no threat to such opted-in telemarketing activity.
Whilst some telemarketers remain on the fence, others have actively changed their opinion, including Carole Fossey of BeRecruitment, who despite her early hostility now believes the CTPS may be beneficial to the industry. “It is an opportunity,” she explains. “Those companies which don’t want to be affected have to be more intelligent and creative about what they are saying and how they are saying it. It should prompt people to consider what they are doing. Particularly volume telemarketers must think about what the customer wants – there are other ways of getting business. Perhaps this is a wake-up call.” But she adds that she is not convinced of the need to legislate: self regulation would have been a better route.
John Price agrees this might cut some of the bad practice out of B2B telemarketing. “Companies are recognising the value of doing telemarketing properly. Over the last four years it had been commoditised. It had been going overseas because this was cheaper. Now people are recognising the importance of quality.”
Maggie Evans, head of marketing at outbound telemarketing specialists iSky Europe, also agrees. “Any company still using telemarketing needs to be more targeted and disciplined. The B2B marketer needs to focus – on more relevant offers, better selection, more intelligent pitches: the results will be more profitable for the organisation and more attractive to the recipients.”
Carol Meyers of Unica, comments, “marketers will also need to look at new technologies, such as campaign management and analytics to help manage cross-channel marketing and deliver ‘right-time’ messages that adhere to regulations and enable companies to keep customers and prospects’ permission for ongoing dialogue.”
Poor communication
Although some of the critics of the CTPS may be coming round to the principle of an opt-out on telemarketing, much of the B2B telemarketing sector remains resentful of the way the service was implemented. In particular, on the quality of communication from the CTPS regarding what was happening and what the repercussions would be. Carole Fossey of BeRecruitment is amongst them. “There are a lot of half truths and rumours flying about. The level of awareness is poor on all fronts.” Lack of awareness was also raised as an issue by respondents to B2B Marketing’s CTPS survey – see page 22.
Fossey believes the situation has been exacerbated by the CTPS’s policy of allowing third parties to license its data and then resell it to telemarketers on a commercial basis. She says some of these companies have sought to stimulate business by propagating myths regarding the circumstances in which the Information Commission will issue fines. “There is still lots of telemarketing activity that you can do,” she says. “You can still speculatively call a company; you can call an existing client. The database cleaners are saying you can’t. This is scaremongering. We took legal advice and were told that if we took reasonable precautions it was unlikely that we would be fined.”
Tessa Kelly of the CTPS, perhaps unsurprisingly, defends the communication programme that her organisation has undertaken, and the efforts of third party data cleaners to inform its audience. She denies that they are profiting from the misfortune of other companies, but points out that the data cleansers, “are commercial organisations, and it is a competitive market.” Kelly also notes that licensing of data has also enabled providers to innovate in terms of pricing policy and delivery format, and that consequent savings are passed on to the end-user.
Impact as yet unclear
As an entity which exists to restrict activity in a libertarian industry such as marketing, the CTPS was always going to have a battle on its hands, and it could be argued that it has done remarkably well in riding out criticism in the way that it has to date. This is largely because the impact on the business-to-business telemarketing is still far from clear (hot-spots such as the public sector aside) and looks likely to remain so for some months to come. CTPS will produce its first analysis in the New Year, which may provide the first hints of the shape of things to come.
Whether registrations continue to increase or whether organisations realise that actually it is in their interests to receive telemarketing calls – and decline the opportunity to renew their opt-out after a year – will be the critical factors. The worst fears may have gone unrealised as yet, but if registrations continue to rise exponentially as news of the service spreads by word-of-mouth and other mediums, the CTPS could still have catastrophic repercussions for B2B telemarketers.
