Is it time to join the 800 network? - toll-free telephone numbers

Nation's Business, Dec, 1994 by Peter Weaver

Small businesses that have great products but no chance of landing nationwide retail shelf space shouldn't be discouraged. They can still sell coast to coast with their own "electronic" shelf space on toll-free 800 numbers.

"It's at the point now that if you don't have an 800 number, it's like not having a fax machine," says David Kissell, sales director for Alert Communications, a Los Angeles-based telephone-marketing service company.

A major plus of an 800 number is access. It gives a small company the market presence and customer-service clout of a big corporation. That's important because it's difficult to introduce a new product or service unless there's quick, customer-friendly access to it.

Adding an 800 number will raise your total phone costs, of course, although basic rates have come down significantly. But effective use of an 800 number also requires that you make your number known throughout the country, that you prepare for a large volume of incoming calls, and that you get ready to fill promptly an increased number of orders.

If you join the 800 network, you won't be alone. According to industry statistics, some 2.5 million 800 numbers are in use, and there could be close to 4 million by this time next year.

Telephone companies say the biggest growth in 800 numbers is among small businesses. One reason, they explain, is the cost. Although use of various added features can add up, basic 800-number service can be inexpensive. (See the chart, Page 38.)

"It costs a lot less than it used to--as little as $5 a month [plus the cost of calls!--and there's no special equipment required. You can be set up within 24 hours," says Monty Hoyt, media-relations manager for AT&T.

Others agree, while citing additional reasons for the popularity of 800 lines. "A number of small businesses have been started by people who used to work for big businesses, and they brought the 800-number marketing tool with them," says Larry Banks, product marketing manager for Sprint. Once they find out 800 numbers won't cost them too much, they sign up, he adds.

Neil Hediger, MCI's senior manager for brand marketing, says the boom in small-business 800 numbers can also be traced to the fact that the phone companies finally tapped a fertile market. "Our company and others a couple of years ago started actively marketing 800-number services to small businesses," he says, and the result has been "a tremendous increase in acceptance and use of the 800 number by small businesses."

Another reason for the spread of 800 numbers is portability. In the past, when you wanted to change telephone companies--for better rates or different services, perhaps--you had to get a new 800 number. Now, as a result of a Federal Communications Commission ruling, effective last year, you can take your number with you from one carrier to another, avoiding the expense of printing new stationery, business cards, and invoices.

Until 1987, only AT&T offered 800 numbers. Now, there's intense competition among more than 400 companies, ranging from the big-three long-distance companies--AT&T, MCI, and Sprint--down to mom-and-pop answering and order-taking services.

Although the basic service is usually inexpensive, adding features can run up the cost. Among those features are routing of calls within your business, automated menus, call-forwarding, and afterhours service. It also costs more to add lines so there can be separate numbers for, say, customers, or suppliers, or employees calling in from the road.

As you go about getting your 800 number, you should also prepare for what you hope that number will bring: increased revenue that will flow to your bank account through credit-card sales.

"One of the biggest mistakes small businesses make is not getting credit-card merchant accounts set up well in advance of sales campaigns," says Michelle Willard, specialty-market service manager for DMGT, a credit-card processor in Nashua, N.H. The merchant account number is used by banks to transfer to your account the net cash from credit-card sales after the bank deducts its fees. "It may take a month or longer to set up your merchant's account," says Willard, "and you can't start taking orders until all the paperwork is done."

To get the word out to prospective buyers about your 800 number also requires planning. First, "you put your 800 number on your letterhead, invoices, calling cards, fax messages--everywhere you can," says Shelley Miller, president of Information Technology Consultants, in New York City. "It's like planting seeds."

Another important step: Make sure the number is in the national 800-number directory accessed via information-assistance calls. Consider the Yellow Pages in other cities where you think your product or service will sell. Check out niche publications that appeal to people who might be especially interested in your product or service. Libraries have directories that list hundreds of local, regional, and national publications.

"To get our 800 number out, we cross-advertise in all of our 10 publications," says Cheryl Beyer, office-services specialist with Kalmbach Publishing Co., in Waukesha, Wis. Last year Kalmbach, which publishes primarily hobby magazines such as Model Railroader and Astronomy, received more than 260,000 toll-free calls, says Beyer.