The popularity of the federal do-not-call list, aimed at curbing telemarketing calls to homes, is undeniable, with more than 30 million households registering since the list was started in June.
Also undeniable is the squeeze on businesses that use telemarketing to sell products and services.
From banks and phone companies to mortgage brokers and newspapers, businesses in Rhode Island and nationally are girding for Oct. 1, when it officially becomes illegal to call any number on the nationwide registry. Violators can be punished with a $11,000 fine for one offense.
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Companies with internal telemarketing departments – and those who contract out their telemarketing campaigns – are grappling with a host of thorny questions: How will we target the customers who are now off-limits? What will the alternatives cost? Who will be liable for violations – the telemarketing contractor or us?
Gary Lawrence, publisher of the Woonsocket Call, said the do-not-call list is sure to drive up the daily newspaper’s marketing costs – and could nix its telemarketing efforts altogether. The Call now contracts with a national company that provides telemarketing services for newspapers across the country.
Lawrence said that the paper is in negotiations with the telemarketer over which party will assume responsibility for monitoring and updating the do-not-call list. It’s a critical decision, Lawrence said, because it will determine who assumes liability for the fines that could be imposed for failing to comply.
If the contractor assumes that responsibility, it almost surely will drive up the “cost-per-order,” or the commission the paper pays to the telemarketing service for each subscription sale, Lawrence said. On the other hand, if the paper agrees to maintain the list, it might be forced to add an employee, he said.
“Either way, you can be rest assured that there will be substantial costs associated with it,” Lawrence said.
It’s still too early to tell what the full impact will be on banks, said Tracey Mills, a spokeswoman for the American Bankers Association, based in Washington, D.C. The association, however, is concerned that complying with state and national lists will be difficult for banks and confusing to consumers who wish to sign up for one or the other.
In a recent ABA survey, the majority of banks said they had more incoming customer calls to their call centers than outgoing telemarketing calls, Mills said, adding that most banks don’t depend primarily on telemarketing for advertisement.
“Banks use so many different ways to market themselves,” she said. Whether or not the legislation impacts some more than others would depend on their target market, she said. Older, wealthier consumers are expected to enroll in the do-not-call list more than younger customers, she said. Despite any drawbacks, Mills said this is what consumers want.
“This is consumers directly communicating with banks as to how they prefer to be contacted, and that’s always a good thing,” she said.
Contractors wary
For telemarketing shops, the world as they know it might be about to end. The Federal Trade Commission estimates that 60 million of the country’s 166 million households eventually will register for protection from unsolicited calls.
A manager at the DialAmerica Marketing Inc. office in East Providence – a telemarketing service with 10 full-time employees and 75 part-timers – referred questions about the do-not-call list’s impact to a spokeswoman at the company’s headquarters in Mahwah, N.J.
Nancy Katz, marketing director for the 8,000-employee, $200 million company, declined to comment on the registry, saying only that the company will withhold comments until after Oct. 1 “when everything settles.” The company makes marketing calls for businesses in a range of industries, including phone and cable companies, financial-services firms, magazines and book publishers.
In a July interview with the Bergen County Record in New Jersey, the president of the 46-year-old company, Arthur Conway, said the registry will disrupt a cost-effective marketing tool for millions of small businesses.
“There’s not going to be anyone left to call,” Conway told the newspaper, in his only public comments regarding the list, according to Katz. Conway also is a board member of the Direct Marketing Association. “There is going to be a trickle-down effect, and it is going to be felt most by small businesses.”
The American Teleservices Association, a national trade group for telemarketers that has sued the Federal Trade Commission over the do-not-call list, estimates that the registry could effectively eliminate 2 million telemarketing jobs because of the drop in call volume.
There are 1,710 telemarketers in Rhode Island, people who are employed to “solicit orders for goods and services over the phone,” according to the state Department of Labor and Training.
Companies downplay impact
A few local companies, whose marketing efforts include some telemarketing, say that the list will have a negligible effect on business.
A key provision in the law exempts calls to existing or recent customers, even if they’re on the national registry. The clause is important to cable and phone companies, for example, which often target their own customers to sell upgraded features.
“The bulk of what we do from a telemarketing standpoint is checking in with our existing customers to see if they want enhanced services,” said Leigh Ann Woisard, a spokeswoman for Cox Communications in Rhode Island. “So it might not be all that significant in that respect.”
Cox has six full-time telemarketers in Rhode Island, who also handle incoming calls, Woisard said. The company outsources its telemarketing for promotional campaigns.
Woisard said Cox expects to be compliant with the law once it takes effect Oct. 1. She said the company already has its own do-not-call list, and will check that against the national list every three months, as the law requires.
Lillian McGee, a spokeswoman for Verizon Communications Inc. in Rhode Island, said Verizon does not expect the national registry to affect the company’s business, even though it uses telemarketing to sell long-distance services.
“Our stance is that it’s bad business to call people who don’t want to be called,” McGee said. McGee said Verizon does very little telemarketing anyway, preferring to use direct mail and print ads instead. The only situation in which it relies heavily on telemarketing is to solicit former customers – something it still would be allowed to do under the new law.
The law says that a company can call anyone with whom it has had a business relationship for up to 18 months after the customer’s last purchase. So, a customer who left Verizon last year and signed up with AT&T, for example, would be fair game for Verizon, even if that residence is on the list.
Some analysts have theorized that the list will hurt phone companies’ revenue – not from a marketing standpoint but from fewer calls. The Baby Bells collect small charges on both interstate and intrastate phone calls, and eliminating hundreds of millions of calls a year could hurt revenue, analysts have said.
Laura Ricketson contributed to this story.
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