The Nuts And Bolts Of Choosing A Telemarketer

Folio: The Magazine for Magazine Management, April 1, 2000 by Bob Moseley

A CHECKLIST FOR EVALUATING TELEMARKETING SERVICE BUREAUS TO HELP ENSURE THAT YOUR NEXT CAMPAIGN WILL BE YOUR BEST EVER.

For many publishers faced with increasing direct mail costs (a problem that will only get worse if postal rates for third-class mail increase next year, which is likely), telemarketing is re-emerging as an appealing alternate method for drumming up renewals and requalifications in a hurry. Indeed, in a recent survey conducted by Jupiter Communications, 32 percent of 200 consumer-magazine executives polled named telemarketing as one of the top two renewal sources, along, of course, with direct mail.

"Telemarketing still makes financial sense because all acquisition and renewal costs have gone up," says Ann Barker, renewals manager for National Geographic. Even though telemarketing costs can be about $10 per order, compared to just 25 cents per order on direct mail, telemarketing has a better response rate--generally between 10 and 15 percent on consumer titles and 10 to 25 percent on controlled-circulation magazines. Some telemarketers say they can get response rates well in excess of 50 percent with three calls, which clearly outshines the usual low to mid single-digit response rates for direct mail. Beyond that, the cost of making a phone call has gone down in recent years.

But how do you choose the telemarketing service bureau that's right for you? There are about 35 companies that handle magazine-publishing business, and they all have different strengths. Here's a primer publishers can follow when selecting a telemarketer.

1. CHOOSE A BUREAU WHOSE STRENGTHS MATCH YOUR GOALS.

Are you looking for renewals? Controlled-circulation requalifications? Do you need to beef up a certain segment of the audience? Do you need 10,000 renewals within 60 days? The selection of a telemarketer will be based mainly on the answers to these questions.

Different publishers have different needs. And some telemarketing service bureaus (TSBs) meet those needs better than others. Services range from receiving in-bound calls to prospecting for new business with outbound calls, to market research, list cleaning and boosting registrants for seminars.

Today, the types of requests publishers make of telemarketers are changing. For example, one TSB was asked to deliver a promotional pitch to prospects asking them to visit a magazine's web site and sign up to be eligible for a discounted subscription. Success in this venture was measured by web-site traffic, not subscriptions sold. Still, by and large, publishers are after subscriptions in one form or another. So choose a telemarketer that can best handle your specific job.

2. FIND THE BILLING STRUCTURE THAT WORKS BEST FOR YOU.

After your goals are defined, locate a TSB that offers a billing structure you're comfortable with, whether it's commission-based, remit or on a per-hour basis.

With commission-based telemarketing, the publisher bills the customer and then pays the TSB a percentage or flat fee per order. In a remit structure, the service bureau bills the customer and remits back a negotiated percentage of gross dollars, based on response and average order. In per-hour arrangements, the publisher pays the telemarketer on an hourly basis for service provided--whether three calls are completed or 10.

The latter structure sounds risky, but has its proponents. One feature that magazine executives like about per-hour is that they don't have to put out any money upfront. Monitoring reports will tell you whether you're getting your money's worth. "Even on an hourly rate, the magazine knows how many qualified subscribers were reached," says Gail Stone, president of PTM Communications, a New York-based telemarketing program management firm. "Let's say the report says you got eight calls in for $33 an hour. That's about $4 per subscriber. There aren't any hidden costs."

Hourly rates for consumer and controlled publications range from about $25 (if the publisher does the billing) to $35 (if the TSB does the billing). Remit and commission costs vary depending on the magazine's subscription price.

Lissa Love, division executive of publisher services for DialAmerica, says remit is especially popular with the several hundred publishers her company serves. "Eighty percent of our customers prefer that because we do the billing for them. They're getting cash with order. It's revenue for them instead of expense out front." Love says DialAmerica steers away from per-hour pricing because the TSB is performance-based: "The better we do, the better the client does," she says.

Some circulators are flexible about pricing structures. "I usually ask first, 'How do you prefer to be paid?'" says Bridget Wells, director of agency and modeling services for Hearst Magazines. "We negotiate remit from that. I pretty much know what their profits are. I'm not out to break anyone. We're all in this together. I let them tell me what their preferences are."

3. CONSIDER THE ADVANTAGES OF AUTOMATION.

Stone recommends that larger-circulation consumer magazines seek out a TSB with predictive dialing and automatic call distribution. "It saves a lot of time for the service representatives, and you get many more calls in per hour," she says.