List May Hang Up on Telemarketers' Jobs

Aug. 4, 2003 -- — You used to hang up on them. Then you stopped them from calling up altogether. Now you may have put them out of a job.

The telemarketing industry, targeted directly by the new national Do Not Call list, says it could soon see as many as half of its estimated 4.1 million workers unemployed.

Part of the reason is the unexpectedly fast start for the Do Not Call registry. Just one month into the new federal program, 28.7 million phone numbers have already been registered as of late July. Telemarketers have until Oct. 1 to remove those numbers from calling lists.

And with all the publicity surrounding the creation of the list, telemarketers are already feeling squeezed.

According to Jim Moylan, president of telemarket hiring outfit Call Center Jobs, people who used to politely put up with telemarketers have gotten more frustrated. "On a program where you used to get 12 people to answer the phone every hour, now you're getting eight," Moylan said.

The change is no small matter. Consumers spent more than $100 billion in 2002 via outbound telemarketing, according to the Direct Marketing Association in New York, and in the last 12 months, 66 million people have used it to purchase at least one product.

Another Hit for Job Market

With up to 65 million people expected to sign up for removal from most calling lists, revenues will drop dramatically, predicts Tim Searcy, executive director of the American Teleservices Association in Washington, D.C. When that happens, he says companies will have to make layoffs to reduce costs.

Moylan, whose company runs a job posting Web site for the telemarketing industry, says in the next 90 days he expects to see an increase in the number of job-seekers posting résumés. "So far we've seen a small increase, but I'd expect to see that go up to 15 percent [by October]," he said.

The timing of the implementation is especially harmful for the job market, said Roland Rust, chair in marketing at the University of Maryland's Robert H. Smith School of Business in College Park, Md. "If this were three or four years ago when the unemployment was really low, then it wouldn't have had much effect. But right now these folks don't have a lot of alternatives."

"In terms of pay scale, these folks are at the lower end," said James A. Narus, a professor of business marketing at Wake Forest University's Babcock Graduate School of Management in Winston-Salem, N.C. "They're the ones that need the jobs."

Industry Challenges the List

The industry has been expecting this legislation for a long time, acknowledged Moylan. "You've got so many bad guys, you've got to legislate against them, and it's only going to hurt people that do responsible marketing."

Yet industry organizations have filed suit against the Federal Trade Commission in Federal District Court in Colorado to stop the Do Not Call law from taking effect, and are waiting for the judge to schedule a hearing, which may rule on the legality of the law.

Searcy said companies are still in the process of adjusting to the guidelines by teaching people how to be in compliance. But the changes are likely to be so dramatic that many expect to see new strategies and focuses within the marketing industry.

"When companies can't do telemarketing, they're going to find other ways to do much the same thing," Rust said.

Both Narus and Rust agreed as revenue generated from telemarketing decreases, other forms of marketing will rise. Said Rust: "The amount of e-mail spam will increase at an even faster rate."

In fact, Rust predicted the U.S. will see a Do Not Call equivalent for spam. "After the amount of e-mail spam increases, then you're going to have a violent reaction to that," he said.

The Do Not Call list will not stop all calls. Groups such as charities, political organizations, surveyors or companies with whom there is an existing business relationship are still allowed to call those on the registry.

But even these telemarketers still allowed to make blind calls to anyone will soon have problems, predicted Moyland, as customers on the Do Not Call list demand to know under which provision the call is permitted. If businesses are required to have proof on hand of a prior relationship, calls could become impractical.

"[Telemarketers] are going to have to have this information in their database," he explained. "Perhaps what [the customer] bought and when they bought it. People will have their defenses up immediately."

No More ‘Carpet Bombing’

Narus argued telemarketing is not just harmful to consumers, but also to the companies that use it as a marketing tool. "If you're not interested in the product, then it is a waste of [the company's] time and effort to try and contact you."

He predicted the latest legislation will spark a move toward selective marketing, where companies request permission from potential customers before contacting them about product sales.

This would be a departure from what direct marketers currently use, the "carpet bombing" method of advertising, as he calls it, where companies blindly contact people in large quantities.

"Today, particularly with e-mail and spam, it is very easy to click a button and send a promotional message to millions of addresses because the cost is so low," Narus said. With selective marketing, "you only get a promotional message if you're interested in this particular product. This will only work if companies get permission or have an associated cost."

And Narus thinks given the opportunity, people will sign up. "To you it might be annoying to get a call about aluminum siding, but there are people out there who want aluminum siding."

It would also help the job market, because of the need for "people to assemble lists of customers that are interested in these things, shifting jobs, revenues and profits in another direction."

ATA's Searcy thinks the idea is unreasonable. "Selective marketing works in theory, but in practice, people don't know what they're interested in until they hear a specific offer."

He also said millions of dollars already go into list targeting. "It's an imperfect science, [but] we try to make the fewest calls [to] make the maximum number of sales."

List Won’t Stop Scams

The most significant benefit of this legislation for consumers seems simply to be their ability to choose whether or not to receive phone calls. It is unclear how effective it will be in stopping scam artists, according to Holly Cherico, spokesperson for the Better Business Bureau System.

"The concern of the BBB is that scam artists do not particularly adhere to self-regulation of any form," Cherico said. "I don't know that scam artists are going to be too eager to abide by the registry."

In particular, she is worried that the number of scam artists posing as charities will rise, since charities are among the organizations exempt from the Do Not Call legislation. "We still have a big educational job to do," Cherico said. "Consumers need to learn to make their donating decisions as wisely as they make purchasing decisions."

But she said the BBB is still in strong support of the legislation. "I think it's a wonderful tool for the consumer to utilize." And for companies, "Anytime you give customers an option on how to receive information, I think that's to [the businesses'] benefit."