By Tony Murray
There are many people in the industry who are looking for ways to increase profits and to expand. The quick and glib answer that they are getting these days is “Order Entry.”
Let’s take a serious look at what is referred to as order entry. This is a group of services handled differently from Telephone Answering Services (TAS) and in general need a different software package; more about this later. These new services do not always require an order to be taken, so I would like to start by renaming this group of products/services as Enhanced Telephone Services (ETS). This is a more descriptive name for the services which can be offered.
In broad terms, these services can include order taking, locator services, credit applications, insurance claim forms, customer services, sales lead generation and others. These are in general, information gathering services and are simple in that they only involve getting the caller to respond to scripted questions and saving the information.
If you are going to be involved in these services, then you need to grasp one vital point: you are selling time (actually, time share). When selling time, you need to know when and how much time you have available. In other words, your first step is to look at your operation and decide what time and facilities are under-utilized or could be expanded.
The difference in ETS calls over TAS calls is that ETS calls are generated by some form of advertising. The method of your client’s advertising lets you know if you can handle the project. For example, prime time TV will produce a high volume of calls in a very short period. Radio drive time and newspaper advertising will produce a reasonable response spread over the day. Magazine and direct mail advertising will be spread over weeks or months depending on the magazine.
Why, you may ask, is this important? If you have limited time or positions available. then you need to know how many, and more importantly when the calls will be incoming. There is no profit in having operators available when there are no calls or vice versa.
The next major difference over TAS calls is the length of the call. ETS calls are likely to be far longer. There is more information gathered and more discussion with the caller. You must make allowances for this.
Failure to acknowledge call length has been the downfall of many services. There is no point in landing a good new account that is going to adversely affect the quality of service to your existing accounts. This looks like common sense, but greed seems to over come all of us at some time or other. Sometimes it is just lack of knowledge about the client. I have come across many owners and managers who look at new businesses based on the number of calls and forget to look at the expected call length.
The final major difference between ETS and TAS businesses is that ETS clients may want real statistics regarding their calls. These will often relate to quality of services, or in other words,, ACD information. It may relate to where, or why the calls are coming, called call sourcing. It is important to know what statistics are required up front. Back tracking on statistics can be expensive and time consuming and sometimes you just don’t have the capability to get what the client wants. This bad communication can cause ill will and payment problems if it is not handled before the project starts.
I am continually asked, “How do I sell these products? Where do I advertise ? How do I get into the market place?”
There are many ways, but there is no general simple answer. It depends on your service, the products that you can or want to handle, the area that you are in, and how much money you are prepared to spend on marketing.
First of all you must know your product in detail and you need to understand the niche market that you have chosen to enter. It is also important that you have a good professional brochure that shows you have this knowledge. These services can be sold over the phone, but the potential clients want to get the feeling that you are a professional operation and your brochures and correspondence may be the only way to satisfy their apprehension. Professional brochures do not need to cost an arm and a leg to produce. Clean cut and simple brochures are often more effective than full-color glossies.
I said earlier that you need to know your capabilities and your objectives. If you want to start in a small way, then your marketing approach will be different than if you set up a new department just to handle ETS calls. The geographical area that you are in has a big say on how you are going to market your products. If your operation is in a major city, your approach will be different from an operation in a country town.
There is a wide misconception that small services in rural areas can not promote ETS products. It is my experience that these operations have more opportunities than their big city counter parts. In many cases, the small services offer a better quality of service. Remember with 800 and 888 numbers, the world is your oyster irrespective of where you’re based.
Spend on marketing relates to your expectations of the project. You do not need a large budget if you are not planning for an enormous expansion. I believe that money well spent on advertising always reaps a good return. Some advertising agencies and pseudo-marketers need to learn the meaning of well spent.
For example, an advertising spot on NBC during the Olympics in a major market could have cost in excess of $23,000, with some competing stations being less that $5000 for the same time. Why the difference? The expected size of the audience. During the same Olympic weeks but at a different time of day you could have bought local cable time for $1.50 to $2.50 per 30 second spot. Why the difference? Again, the audience.
Advertise where your users are going to see you. Yellow pages are not as effective in this market as in the TAS market. Depending on your products, your main sources for business may be from advertising agencies and fulfillment houses (companies that store and ship products for their customers). You advertise in magazines read by your potential clients, in this case, Advertising Age or Operations and Fulfillment Magazine. There are many good marketing consultants; use their services. Their costs can easily be justified by improved return on your advertising investment.
Pricing: The next major question that I am asked is, “How do I price these services?” The obvious answer is profitability. Here are some of the factors that you need to take into account.
First and most importantly, you need to get all the details from your client before you put any prices together. Surprisingly, the client is unlikely to have thought through the project. If you don’t ask the right questions, it is you who will be left with an unprofitable and possibly unpaid mess.
I said earlier that you are selling time share, i.e., you are selling your operator’s time. This cost must be covered in total, including all benefits, tax contributions, supervisors and management allocated costs. Then add your equipment, line costs and office expenses; you can easily work all of this out at a cost per hour. Finally, and most importantly, add your profit (75 to 100 percent).
All pricing needs to be based, but not charged, on an hourly/minute rate. The professional quality and large services are charging between $0.80 and $1.10 per minute. Come September, this will rise by about 12% for the Christmas rush; in January it will drop again.
The best way to charge for your service is by operator time (this should not include hold time). If your system does not have this capability, or if this is unacceptable to your clients, then charging by item/transaction is an alternative.
You can charge by transaction but the cost of each transaction must relate to the time of that transaction. For example, if you are taking a full credit card application call, it is likely to be at least a three-minute call. Let’s set your charge at $0.90 per minute so the unit cost for this call would be 3 times $0.90. Your charge would be $2.70 per completed application.
Here is another pitfall. You must understand exactly what type of calls you’re going to receive from any project. For instance, you are approached by a catalogue house to take orders for them. They demand a unit price.
All calls will not be orders. Before you can quote you need answers to the following questions: Are you going to receive request for catalogues, or customer service calls? These calls will be priced differently from the order call. What is the average number of items ordered by each caller? Is this the same throughout the year? (Often rises at Christmas time). Do they allow ship to addresses? If so, what percentages of orders require the gathering of ship to addresses? Do they have an SKU Stock Keeping Unit number for each item in the catalogue? Do you have to ask for size or color or is this included in the SKU? Do they have items that need to be personalized? Do they send out personalized labels? If so, how long a message do they allow?
All of this information will affect your pricing. In short, you need to price each project individually based on the expected length of each type of call within the project. Never allow a flat rate for all calls. I strongly suggest that having set your prices that you test them with a stopwatch.
Finally, set up charges and deposits or up front payments. Set up charges should a ways be charged and should be based on the time taken to set up the account. This includes not only the programming but all of the administrative work that may have to be done. This should be priced at $30 to $60 per hour with a minimum of $75. Deposits or up front payments should be asked for in all cases where you do not know the client. I suggest that you ask the client what their expected response rate is going to be. Then halve that figure and multiply it by your call price. This you hold as a deposit and set against the last payments.
Finally, a monthly minimum charge should be made. This covers you when the client’s campaign is a flop. It happens. I would set this by using 30% of the client’s expected monthly call volume times your quoted call price.
I have not mentioned the transfer of the information to the client and this can be done in many ways: computer transfer, fax, Internet, hard copy mailed, but never, never read over the phone. However you do it, be sure to charge for it profitably.
Written Agreements: You should always have an agreement in writing. This should be updated each time you add to the service for that client. This agreement should clearly define the work that you are going to do, the reports that you are going to produce, the method and regularity of delivery of information, the cost of the service, and the payment terms.
Payment terms are very important. You must not allow yourself to get into a position so that when the project is over the client has gathered all their money and you are sitting with a large receivable. If you have a particularly large account, it is not unreasonable to bill them every 15 days and give them 15 days to pay. Never extend credit longer than seven days beyond your terms. I have had more than one client who has lost thousands of dollars due to sloppy collections.
I mentioned earlier that it is likely you will need a different software package to handle these calls because your TAS software is not designed to me the ETS market. For example, you need to be able to access more databases. You also will need to do the cost calculations on orders to let the line caller know the break down and total cost of the debit as it will appear on their credit card. You need a zip code check to ensure accurate addresses. You need the ability to present scripts to the operator during the call to speed the call and to ensure that the caller gets accurate information. There are many other benefits in the order entry or ETS software packages.
What is available? The best known packages in the TAS related industry are Amtelco’s Call-Scripter, the Doyle Logan system, and Professional Inbound. These three systems stand alone working on a network in conjunction with your TAS system.
If Startel users want to test the waters, they have a very simple package that works within Startel. It does not have the refinements of the others and if you are successful an upgrade will be essential. Amtelco users can test the market with their Infinity system with the same effect.
The revenue for ETS projects will be far greater than for most of your TAS accounts and so more care has to be taken on collections. This is an enormous market and handled correctly can be extremely profitable.
Drive Time (audio) Advertising term related to time that ads run normally between 7am and 9am and 4:30pm and 6:30 pm local time. This is the most expensive time to advertise.
Order Taking: A service where clients’ customers call into an 800 number to place orders normally includes gathering credit card numbers and other information as well as the order.
Locator Services Informing callers where their nearest supplier of specific service or product is located normally promoted by the publication of an 800 number. This can be turned into a customer survey call; while the caller is on the line they are asked a series of marketing questions.
Sale Lead Generation This involves the gathering of name, address, and telephone number from callers who are calling in reply to an advertisement for literature or free products.
Credit Applications This involves the gathering of credit information from callers. This information can vary from a few lines to 15 to 20 questions.
Market Research The caller is normally responding to an advertisement for a free product or information. In return the caller is asked a number of questions to assist the manufacturer to assess their acceptance in the market place or for many other reasons.
Personnel Pre-Screening The call is responding to a situation vacant advertisement. The caller is asked a number of questions to assist the recruiter in assessing the qualifications of an applicant without wading through a large number of written applications.
Customer Service Calls The caller needs help; this can range from, “When will my product be delivered,” to “I have your software and I can’t make it work.” The length of these calls can vary from one minute to infinity. These should be handled on a price-per-minute basis
Source Codes or Sourcing The gathering of specific information related to where the caller saw or heard about an advertisement (the next most important information to the caller’s name and address).
SKU Stock keeping unit
[From Connection Magazine, September 1996]