Reaching the potential customer and building long-term customer loyalty

Robin Whittle 	http://www.ozemail.com.au/~firstpr/tm/    strategy.doc	January 1997

The following tables were prepared in 1994 as input to the AUSTEL Mobile Churn committee, but have general relevance to telemarketing and direct mail in comparison to other methods of promoting and selling. 
Three black and white diagrams accompanied these tables.  The first has been converted to a colour .gif file and the other two remain in black and white for the moment.  They are on the main page at http://www.ozemail.com.au/~firstpr/tm.  

Phone companies cannot profit in the long term from these exploitative techniques - because they are in business forever and these techniques create long term distrust in the minds of millions of potential customers.  The mobile phone industry has suffered greatly because competitive pressures, devolution of responsibility and a lack of any code of practice have led phone companies and their representatives into an ugly war of aggressive unsolicited customer contact.  Most people hate this approach and cannot understand why the phone companies are so blind to the damage they cause to their own reputation.  There several possible reasons why they have been so blind :

1 - 	Outbound telemarketing fits the aggressive "hunting" instincts we have for making things happen as we wish.  It gives a feeling of control - of being able to go out and create new business.
2 - 	It produces some immediate positive results which can be clearly seen and reported to management.
3 - 	Its negative results - distrust amongst people who might otherwise be customers - are not immediately visible.  Disillusioned people try to avoid the company - so the company never hears from them.  

Aggressive unsolicited marketing techniques flourish in the short term because their benefits are immediately obvious and the damage they do is hidden (or can be hidden) from upper management and shareholders.  A telemarketing campaign may have a 10% success rate, but its 90% failure rate is more significant in the long-term.  The disillusionment makes it harder to win these people by normal means such as advertising.  

There are many techniques for promoting products and services which are not as intrusive as outbound telemarketing or door-to-door sales:

	Direct mail - lots of detailed information delivered with personal customisation to the consumers the company most wants to woo.

	Letterbox drops - lots of detailed information delivered en-masse to whole suburbs.  Cheaper than direct mail if the target is the general community and no personalised forms etc. are needed.
	
	Newspaper and magazine advertising.  Can carry lots of information, and enhance brand and product awareness.  Like the two techniques above, material can be kept for future reference and to compare with competitors claims.

	TV and radio advertising.  Mainly to raise brand and product awareness.  Especially good for introducing new products such as voice mail - which can be described in print, but really demonstrated by TV and radio.

	Billboard and public transport ads.  Can't be cut out or contain much information, but they reach virtually all consumers. 

Every one of these can stimulate customer interest and provide a toll-free number for the interested consumer to take things further when they want to buy or learn more.

Table 1 - Reaching potential customers by unsolicited personally targeted means
	Visit by sales rep. (Door to door sales)	Voice phone call - outbound telemarketing	Fax	Electronic mail	Direct mail	Comments	
Cost	Very expensive indeed.	Very expensive.	Low if automated.	Very low if automated	Low if done in large quantities		
Persuasive or manipulative?	Potentially - if the rep. gets a foot in the door.
Element of surprise helps manipulate some people. 	Potentially - if the consumer does not hang up in disgust.
Element of surprise helps manipulate some people.  	Not much.	Not much.	Glossy brochures and lots of printed content can be persuasive, but manipulative for only some people.	Where outbound telemarketing is cost effective, it is because it is effective with certain people.  Direct mail is cheaper and better for a wider range of people.	
Time/space and other restrictions.	Only works at a home/office location when the targeted person is there.  Address must be known.	People can be targeted any time, at home or work, when they are there, via answering machine or via mobile phone.  	Fax can be sent any time.  Fax number must be known, and many consumers do not have a fax.	Can be sent anytime if the consumer has an email account and it is known.  Early days yet.	Can be sent any time if the home/office address is known.		
How many people respond positively?	Not many, even if the offer is good because they seldom get to hear it.	Not many and getting less - even if the offer is good.  They seldom wait to hear the offer, upset at the form of the approach and concerned that telemarketing is usually used for sub-standard and/or over priced goods.	Not many.	?	Depends  on quality of offer and presentation. They are relatively cheap, so a low response rate is fine.	Direct mail, or for mass markets, letter box drops can be respectful, informative and inviting introductions to new products.  
People know that door-to-door and outbound telemarketing is expensive and wasteful, so they expect the product to be over-priced to pay for this style of marketing.	
How objectionable is it for those who don't like it?  So how much damage is done to the phone company's public standing?	Highly objectionable to be interrupted and have to close the door on someone or usher them out.
Wastes people's time.	Highly objectionable.  

Enormous damage is done to a phone company's reputation.

Wastes people's time and really upsets them.	People hate junk faxes.  Wastes a small amount of time, wastes fax paper and ties up the fax machine.	People may grow to hate junk email  It will be rather similar to receiving normal mail - but for plain text only and without the waste of paper. 	Some people hate junk mail, but others find it an excellent source of product information. One advantage is that you can often tell from the envelope what it is about and so prioritise the opening of mail to minimise wasted time.	Unsolicited visits, phone calls and faxes are inherently disrespectful, so there are strong negative consequences.

If direct mail material is presented in a respectful manner, then there will be little negative reaction.   	
Can consumers defend themselves?	Yes - a "No Hawkers!" sign may work, but many people are reluctant to display such a sign on the front door of their home or office.	There is no defence.  Answering machines are useless - telemarketers leave messages.	There is no defence.	There is no defence.	ADMA opt-out list for direct mail should be respected by a company with long term interests - such as a phone company.		

Table 1 continued - Reaching potential customers by unsolicited personally targeted means
	Visit by sales rep. (Door to door sales)	Voice phone call - outbound telemarketing	Fax	Electronic mail	Direct mail	Comments	
How informative can it be?	Can be informative, but only if the person is willing to talk at that time. Otherwise the rep. just leaves brochures -  which could have been mailed for a much lower cost.	Less informative than a personal visit, except that the telemarketer can be accessing the consumer's details via a  computer.  Like a personal visit, customer queries can be answered.
	Can be informative - depends on length and style of presentation.	Can be informative - just text, but there could be a lot of it for virtually no cost.	Can be extremely informative.  Text, graphics, pictures, forms etc.  A huge amount of info can be sent for a dollar or so
	Direct mail is informative and cheap and personally directed.
There is no advantage to the consumer in outbound telemarketing over other less intrusive ways of promotion - such as ads and toll free numbers. 	
Can the consumer keep material for future reference?	Only if brochures are left behind.	No. There is no printed or text information for the potential customer to consider. 	Yes, but black and white faxes on thin fax paper are unattractive and do not store well.	Yes - and email it to others.	Yes, and give it to others, or photocopy it.	If a direct mailing is potentially interesting, the potential customer may keep it until they are ready to take the matter further.	
Can it include a Service Transfer Form?	Yes.	No.	Yes.	Probably not. 	Yes, with an envelope and all relevant explanations.		
Any other benefits to consumer?	No.	No.	No.	No.	No.		
Is this the least intrusive way of being exposed to similar or greater information about services?	No - any form of advertising followed by consumer calling a toll free number for further assistance or mailed info.	No - any form of advertising followed by consumer calling a toll free number for further assistance.	No - any form of advertising followed by the consumer calling for faxed further information.	No - any form of advertising followed by the consumer requesting emailed  info.	No - any form of advertising followed by the consumer requesting mailed info.  	An advert with a large amount of detail is very expensive, so direct mail is particularly suited to informing niche market consumers about complex products.	
Is it incongruous for a phone company to approach a customer in this way?	Yes - all these waste the consumer's time, annoy them and disrupt their activities.  They show no respect for the consumer's privacy or for their wish to choose when to request information.  Phone companies are expected to support the consumer's activities and be trustworthy with their personal information.			Probably not.  Both of these waste only a few seconds of the consumer's time if they are not interested, but both can be very informative, can be stored for future reference and given to other people who may be interested.		Phone company telemarketing and insensitive direct marketing does enormous long-term damage to their public standing - but this is hard to measure immediately.  	
Information privacy issues when targeting mobile phone users.	"How did the company get my address?"	"How did this phone company, which I do not use, get my mobile number - when it is not published anywhere?"  If they call a normal phone - "Where did they get my phone number from?"	"How did they get my fax number?"	"Where did they get my email address from?"	"Where did they get my mail address from?	Phone companies are supposed to be trustworthy and non-intrusive.  All these personally targeted means of reaching a potential customer make them wonder what would happen if they became a customer - "What further intrusions or misuse of my personal data will occur?"	

Table 2 - Reaching potential customers by advertising
	Letterbox drops  
Similar to direct mail, but without the personal addressing and person-specific details in the package.	Ads in newspapers & magazines	TV adverts	Radio adverts	Billboard and public transport ads	Comments	
Cost	The cost of all advertising closely matches its effectiveness at reaching the general population - in proportion to their spending power.  Adverts directed at up-market demographics - like businessmen - may be more expensive.  						
Persuasive or manipulative?	Glossy brochures and lots of printed content can be persuasive, but probably not  manipulative because there are no personal details or personally directed sales pitches.	Potentially persuasive.  Cannot be manipulative like a telemarketer.  

All printed matter must withstand scrutiny over a long period of time.  	Most likely to be persuasive and perhaps manipulative.  Likely to focus on brand awareness and corporate image, because the ad is short and the only impression which remains is in the viewer's mind.  	Like TV ads, but less powerful.	Product and brand awareness and corporate image.  May be persuasive.  Cannot be manipulative because it is a mute printed image which has to withstand scrutiny.	Advertising can be persuasive and communicate the positive benefits of new services - such as mobile phone paging services.  TV and radio can never contain "fine print" details - but printed ads can be both persuasive and informative.	
Time/space and other restrictions.	Consumers choose when to peruse the contents of their letterbox, newspapers and magazines, so they see the material when they feel like reading it.
		These ads are an interruption to a program and cannot usually be stored.  The consumer is subject to them at times they do not choose.  They typically cannot go back to the ad to hear it again.		Typically seen many times a day, so there is often an opportunity to write down something like a toll free number.		
How many people respond positively?	Hard to generalise about this.  Most people rely on advertising to tell them about products and services.  They expect to be able to find things in their letter box and printed publications which tell them what services are available.  In general, people respond positively to constructive advertising about useful products, but not all at once.  					This long-term positive effect of good advertising is what the phone companies should  be interested in - because they are in business for ever.	
How objectionable is it for those who don't like it?  So how much damage is done to the phone company's public standing?	People who don't like junk mail may get upset - but their upset is diluted over the dozens of other things which arrive each week.  Unlikely to be a problem for phone companies. 	Depends on the style, and content.  However, profligate advertising by phone companies is often resented, because it must be paid for by consumers. 

				Advertising is not objectionable per-se, but disrespectful, manipulative, uninformative or boring ads cause consumer to think negatively about the advertiser.	
Can consumers defend themselves?	Yes - a "No Junk Mail!" sign usually works.
	Print media advertising is extremely easy to skip - even a double page ad takes only a second or two of the reader's time.	By avoiding commercial and SBS TV or by recording programs on a VCR. 	By avoiding commercial radio.	Only blind people and the house-bound escape these.  	Advertising is part of life.  People expect to hear about phone company products and prices through general advertising.	

Table 2 continued - Reaching potential customers by advertising
	Letterbox drops  
	Ads in newspapers & magazines	TV adverts	Radio adverts	Billboard and public transport ads	Comments	
How informative can it be?	Can be extremely informative.  Text, graphics, pictures, forms etc.  A large amount of information can be put in consumer's letterboxes or mass circulation printed publications.  		Can't give price lists, or any complex concepts.	Like TV except much weaker because of lack of images.	Typically carries very little information because they are meant to be seen in a glance.	All adverts can alert a consumer to an offer and include a toll-free number to enable them to enquire further.	
Can the consumer keep material for future reference?	Yes.  Brochures and parts of adverts can be cut out and saved, or shown to others and perhaps photocopied.
		Not usually.	No.	No.	Print advertising can have a long-lasting effect, because it can so easily be kept for when a strong interest in the product develops.	
Can it include a Service Transfer Form?	Yes - with all the required information to fill it in properly.	Maybe - but unlikely.	No.	No.	No.		
Any other benefits to consumer?	No.	Yes - pays for most of what we read.	Yes - pays for most TV programs.	Yes - pays for commercial radio programs.	Minimal - may reduce public transport ticket prices.	Print and electronic media adverts may be expensive, but there are significant benefits for many consumers.	
Is this the least intrusive way of being exposed to similar or greater information about services?	No - other kinds of advertising which do not clutter up the letter box -  followed by the consumer phoning for more printed information when they want it.  	Yes.	Yes.  However World Wide Web provides text and graphics exactly when the consumer wants it - with hard copy too.  Around 2000 similar flexibility will exist for video product information.	Yes.
	Yes - although intrusion is more into the aesthetics of public spaces than into individual's lives.	Advertising is not intrusive like the directly targeted methods in Table 1.

Letterbox drops or large print ads are the ideal way of introducing a complex product to the public.	
Is it incongruous for a phone company to approach a customer in this way?	No.  People expect to hear about phone company offering via advertising.  They expect the ads to be helpful and accurate - or perhaps amusing.  Consumers are not happy with profligate expenditure, and misleading adverts - because they expect phone companies to be responsible and cost conscious.  Phone companies are seen as providing an essential public service and are expected to fulfil their part of the social contact with the people (government) in return for the concessions made to them, such as carrier rights for land access, and protection from open competition. 

So advertising as such is totally in keeping with a phone company's role, but the content of the adverts must help satisfy consumers' desires - rather than being based on marketing hype.						
Information privacy issues when targeting mobile phone users.	There are no information privacy problems with advertising - because it is not directed at individuals.  

However adverts which request the consumer to respond in some way - such as calling a toll free number or writing for more information, should be specific about how their personal details (name, address, phone number, current telecommunications usage) etc. are to be used.  People are very wary about winding up on mailing lists - or worst of all, telemarketing lists.

Phone companies should specify what uses this information will be put to.  If the uses are responsible, this should allay the fears of consumers who are wary about inquiring or talking to a representative.  An up-front statement about use of personal information (such as what Optus sent to everyone just after they started) would help to convince customers that the phone company wanted to protect their privacy and respected the desires of individual consumers.