Telephone: The most valuable tool for B-to-B direct marketers By Ruth P. Stevens B-to-B direct marketers spent $28 billion on telephone marketing in 2006, says The DMA in its 2006-07 Power of Direct Marketing study. Big bucks, bigger even than direct mail, which logged in at $21.4 billion in investment. And certainly bigger than Internet marketing, which soaked up $10.9 billion. The bulk of the phone spending, $17.5 billion, was used to generate sales leads. Another $8.6 billion went to driving direct order business. Looking at the sales that resulted, the DMA study reports that the phone generated $143.1 billion in revenue from phone-based lead generation and $64.4 billion in direct merchandise sales in B-to-B. Wow, this thing is a dynamo! Why is the phone such a powerhouse for B-to-B marketers? Well, in short, it s brilliant. The phone is the most versatile, flexible and consistently reliable tool in the B-to-B toolbox. It is the closest thing to face-to-face selling, but without the expense of a physical sales call. Best of all, it can be applied at nearly every stage of the sales and marketing process. To help you take advantage of the breadth of marketing applications for the telephone, here s a list of some of the ways business marketers can use it best. Market research. The Internet has become a leading medium for survey and even focus group research, but the phone still has its uses. Phone allows more reactive intelligence to be applied to the Q&A process, and, in the right hands, allows you to probe and gain unusual insight into customer needs and motivations. Inquiry qualification. Traditionally, the phone was the primary medium for outbound contact to assess the quality of a campaign inquiry. Email has come up quickly as a useful alternative, but a combination of the two is probably ideal. Lead nurturing. A judicious combination of media can be used to stay in touch with unqualified leads, keeping them warm until they are 1
ready to see a salesperson. Smart marketers combine phone touches with a wide variety of other tools: email, direct mail, events, webinars, and newsletters. Telemarketing, meaning soliciting and closing orders via an outbound call. Certain product categories in B-to-B work well for classical 1- touch telemarketing. According to Rich Simms, co-author of The DialAmerica Teleservices Handbook, these include: o Trade publication subscriptions o Training products, like books and videos o Regulatory compliance products o Engineering/scientific reference materials o Career development products o Computer software o Consumable supplies, like paper and toner o Gas and electric utility services o Financial products and services, including insurance o Telecommunications products and services o Seminars and conferences o Fund-raising o Educational products for schools and libraries o Checks and business forms. Rich Simms also notes that products sold to both consumer and business markets via phone will likely enjoy a higher response rate from the business sector, other factors being equal. Telecoverage, meaning sales account management over the phone. Compared with field sales, covering accounts by phone is extremely efficient. Many companies assign field reps to cover their top accounts, phone reps to their mid-tier, and use direct mail and email to cover their small account population. Telesales, meaning order taking and salesmanship via phone, usually inbound, in connection with a catalog or e-commerce. An excellent way to sell products like replacement parts and other low-value, lowinvolvement, so-called tele-sellable categories. Inside sales, meaning teaming up a phone rep with one or more field reps and managing a set of accounts more efficiently. Setting sales appointments. The top of the lead-generation food chain, appointment setting is a perfect phone application, because the phone is really the only tool that supports the sophisticated level of 2
interaction needed to both qualify a prospect and gain their agreement to take a meeting. High-end relationship management, or lead development. This application uses phone-based but highly skilled and experienced professionals, often retired executives, to conduct top-quality conversations with senior targets. Data hygiene. The phone is perfect for calling into key accounts to confirm titles, phone numbers, etc., and probe on other matters, to identify opportunity. Guided voice mail" support. Pioneered by companies like Box Pilot, this process involves a live phone call to probe around and identify the right voicemail box, and then drop in a canned voice message. The reps also report back on what they ve learned about the players and their contact information, which becomes valuable fodder for the database. Pre-testing of lists or offers. B-to-B mail universes tend to be small, which limits traditional split testing in the mail or on the phone. So a pre-test using either phone or email can help narrow down your campaign options. Campaign enhancement. Just as with consumer campaigns, phone follow-up to direct mail and phone-mail-phone strategies work well in B-to-B. Data-driven cross-selling. The phone is great for delivering an outbound offer developed via database modeling. IBM s database analysts, for example, routinely produce reason to call lists for their telecoverage reps, which use modeling to identify opportunity in the client base and give the reps something relevant to say when they call. Another popular B-to-B application is data modeling to suggest the "next logical product" they might offer to each account, based on past customer purchase patterns. Live Internet chat. When visitors to your website have questions, it s helpful to offer a call back from a live phone rep, to answer questions while the iron is hot. New customer assimilation. According to Neil Sexton of Telegreet, a simple phone call to welcome new customers can pay off big in customer retention and lifetime value. Customers are amazed and appreciative at the initiative of your company. The phone helps convert a customer into a raving fan, says Sexton. 3
Customer winback. When a customer goes dormant, an inquiry by phone is an excellent tool to identify the problem and perhaps prevent defection altogether. New data from The DMA The DMA recently published a new research report on B-to-B direct marketing practices (B-to-B Direct Marketing Benchmarks: From Lead Generation to Customer Retention) that contains some fascinating information on telephone usage. Some highlights: 43% of B-to-B marketing budgets are spent on direct marketing, versus brand building, events, sales incentives, PR and everything else. When broken out by company size, small companies (1-10 employees) report devoting an even higher proportion to direct: 52%. To me, these findings just reinforce what the copywriting guru and prolific author Bob Bly has been saying for years: In B-to-B, all marketing is direct marketing. On the telephone front, however, the data in this study diverges substantially from what The DMA found in its Power of Direct Marketing report, in that here telemarketing represented only 12.1% of media allocation. Direct mail took the lion s share, with 27.5%, and Internet marketing came in second at 18.8%. In commenting on the divergence, Yoram Wurmser, PhD, the DMA research manager who supervised the B-to-B Direct Marketing Benchmarks study, said, When we asked people how much of their DM budget went to telephone, they may have read this narrowly as outbound call campaigns. Also, while internal and external sales forces rely on the telephone, their costs may lie outside DM budgets. In other words, telemarketing as a cost disappears into other line items such as sales, or operations. Other uses of the phone appeared here and there throughout the research report. For example, telephone was reported to be the #2 medium for inbound campaign response capture, after the website, suggesting that it does play a larger role. Phone was also the #2 tool, along with the sales force, used for determining the buying roles among various contacts in the marketing database. When looking at communications across the customer lifecycle, the phone was everywhere, surpassing mail and running about equal with email, as reported by companies using direct marketing for lead generation (versus direct order companies). Between 40% and 60% 4
of respondents said they used phone for communicating with suspects, inquirers, current customers, and former customers. Phone was the #2 medium for qualifying inquiries (used by 57%), after email (used by 60%). For lead nurturing, the phone was #1, used by 62% of respondents. The phone was reported as the most common way for salespeople to follow up, either with a phone call only, or combined with a sales call. Finally, the phone was the #2 medium reported for retention marketing (used by 60%) after email (used by 71%), and it tied with direct mail for the #2 spot after email for customer winback campaign usage. My conclusion: the phone is everywhere in B-to-B. Take advantage! 5