marketing direct n° 60501 - 01/05/2006 - 309

N° and issue date : 60501 - 01/05/2006Circulation : 13000Periodicity : Monthly Page : 53MarkDirecuk_60501_53_309.pdf Size : 85 %Web Site: http://www.mxdirect.co.uk

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1 / 6

Sitel

Service

Vertex

But

Act

Vertex

3m Its Vertex

Vertex

Marlborough Stirling

Vertex

PrologBroadsystem

Broadsystem

a

Tielemarketingle

çi

e2006

The rapid growth of the Tel phone Preference Service in the past yearhas had a dramatic effect on outbound telemarketing activity .

However,

the contact centre industry remains optimistic . Rob McLuhan reports

-u710

MARKETINGDIRECT

The telemarketing industry has had its fair share of

turmoil in the past year but demand for outsourcedcontact centres has helped boost the sector' s

fortunes,

according tothis year' s Marketing DirectTelemarketing

League Table.The combined income of participating

agencies in the past 12 months is 945.6m ,

12 per cent upon last year' s performance .

A few agencies have made big gains , notably Vertex,

RHL,

Garlands Call Centres and LBM,

while elsewhere the

story is mainly one of steady if unspectacular growth . Butmost players will happily seule for that

, given the

continued pressures from oversupply ,

offshore

comp; ition and the decision by ever increasing numbersof consumera to opt out of receiving sales calls .

The ability tomake precise measurements has been

hampered by the US Sarbanes-Oxley Act,

which means

Sitel and CPM,

both significant players ,

are unable to

publish their turnover figures .

Leag ue Table It

is also difficult for many of the larger suppliers to

sponsored by separate contact centre work from their other activities .

STL This particularly applies to Vertex,

which has gone intothe business process outsourcing (

BPO)

market in a big

way over the past three years , offering back-office services

such as payroll ,

recruitment and billing .

This makes up a significant chunk of the7 per cent it

has added to its business,

aconsiderable sum given its

41 3m turnover . Its BPO work partly explains why Vertex

is so far aheadat

the top ofthe table .

Inthe interests of efficiency ,

Vertex has now divided its

activities into four separate divisions . One of the fastest

growing is financial services,

boosted last year by the

acquisition of Marlborough Stirling .

Mixed portfolio of servicesThe company has added Hertfordshire County Council to

the clients of its public sector division . Vertex s other twodivisions cover utilities and the private sector .

Some other large suppliers have equally mixed

portfolios . Prolog and 2Touch handle fulfilment as well as

telephone work,

while LBM and Broadsystem carry outa

range of data-driven marketing activities .Indeed

,

Broadsystem has decided not to take part in this year' s

survey because ofthe difficulty of quantifying its

contact centre earnings .

CONVERSO

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2 / 6

SITEL

beCogent

Navigator

Converso

Sitel

Rank

VertexVentura

Prolog

The Listening Company

Kingston Communications

BCC

Gartner

BSkyB Bank

Royal Bank of Scotland

Brown

Hughes

British Gas

Hughes

Abbey

Insight

TELEMARKETING LEAGUE TABLE 2006Àd&

Rank Company UK turnover(

m

) Activity2004

(

as %% of turnover)

in out web ffJ othermail

Telephone Web

2005

1 Vertex2 Ventura3 MM Teleperformance

4= RHL

4= SITEL UK

5 LBM

6 Inkfish7 Garlands Cail Centres

8 Prolog9 Merchants

10 beCogent11 The Listening Company

12= 2Touch

12= CPM(

United Kingdom)

13 Peul & Bales

14 Ant Marketing15 Ion Group16 Telegen UK

17 TRG Europe18 Spark Response19 Navigator Customer Mngt

20 Kingston CommunicationsContact Centres

21 Message Pad

22 Converso Contact Centres23 Direct Dialog24 The Telemarketing

Company25 The Data Base Factory 3.0026 BCC Marketing Services 2.10

27 Europa 1.40

28 Confero 0.7529 Senior Response 0.7530 Stormark 0.57

391.36 369.68 705 2

149.00 131.80 84 122

53.40 53.00 65 25 5 5

46.00 32.12 55 40 4 1

. 41.20 65 30 5

39.50 29.80 40 6038.30 28.40 75 24 1

36.40 28.20 70 236

35.10 35.40 60 3 37

28.01 28.40 80 9 6

21.00 17.10 75 12 2 1

17.40 13.40 45 50 5

15.00 13.00 41 10

. 13.40*

42 41

10.20 8.304 85

9.50 8.25 10 888.30 7.70 35 30 10

8.01 9.015 93

6.20 6.80 66 20 5

5.60 4.10 78 18 4

5.45 5.16 65 25

5.40 3.90 65 10

5.00 5.10 908 2

4.20 2.40 45 55

4.20 3.90 55 35 5

3.07 2.85 100

2.40 75 25

1.70 15 851.20 80

0.94 30 55

0.62 2 98

0.60 1 79

/ Already provided Will provide within 12 monthst Will provide in 12 + months * * 2003 figuresFF = Fulfilment Mngt = Management Techs = Technologies

Nevertheless,

itis clear from this year' s League Table

that telephone activity is relatively buoyant , confirmingthe predictions of industry analysts such as Gartner

,

whoforecast continued steady growth in the industry. A sertesof consolidations in 2004 has reduced some of thepressure on the competition and the mood among someof the larger companies in particular is upbeat ,

withseveral having made significant new-business wins .

One example is MM Teleperformance ,

which has

picked up a range of new clients such as Learn Direct,

BSkyB and Vanquis Bank and has bumped up an existingcontract with Royal Bank of Scotland to the tune

of

several million pounds .

Sitel managing director Mark Brown says heis positive

about the state of the industry andis seeing a lot of

interest from large potential clients . It has also beena

good year for CPM managing director Mike Hughes ,

whose company gained im of new business and has

23 1000 +

2 1000 +

1000 +

1000 +

1000 +

1000 +

1000 +

1 1000 +

401-5005 1000 +

10 1000 +

701-100044

5 501-7005 11 1 301-350

1 55 201-250

2 1000 +

25 201-250

2 201-2509 501-700

301-35010 1000 +

5 20 201-250

5

15 3 51-100

101-150

10 10 51-100

4 11 51-100

<5020 <50

Number of

workstations

c

y

j

a

"

r

c

yyebi . gm C

{ .L

ym r

! o

C` N

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yQmV

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0

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a ,

ym4

.:

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!

R

w

G

3 .i FmO

Fm ti m: hmU

V

F nV V

1000 +

/

1000 +

/

1000 +

/

1000 +

/

201-250/

1000 +

/

1000 +

/

351-400/

1000 +

/

301-350/

701-1000/

501-700/

301-350/

201-250/

201-250 /

201-250/

201-250 /

-

/

301-350/

1000 +

/

<50/

151-200 151-200 /

151-200 151-200 /

151-200 151-200/

151-200 151-200/

51-100/

<50/

<5051-100

/

<50 /

0

t

9

Fil

n

t

Unableto supply figures due

to Sarbanes-Oxley

Dt

2

several pitches in the pipeline . The agency is expanding a

major contract with British Gas and is now operating at

maximum capacity , Hughes says .

One reason for the optimism is that the threatof a

significant haemorrhage of UK clients to offshore

companies seems tohave receded

. Some agencies are

encouraged by anecdotal evidence thatat

least some

organisations , originally tempted by massive potentialsavings in India

,

are having second thoughts .

For example ,

late last year Abbey announced theclosure

of its Indian operation after its customers

complained of poor service and language difficulties .

However,

some industry observers believe claims of

mass defections needto

be taken witha pinch of salt

.

" The evidence is mixed and there are many examples of

organisations stepping up their foreign activities,

"

s: ys Penny Bousfield,

directorof outsourcing at

consultancy CM Insight .

2

2

0

0

Fil

â

0

0

I

t

0I

0

D

12

0

0

D

Source: Marketing Direct Teiemarketing Survey 2006

CONVERSO




3 / 6

Orange

Sitel Nectar

Sitel

Sitel

r3

YES

TPS

Brown

Ventura

Asda Warehouse

Dove

Dove

Ventura

But

TPS

Dove

TELEMARKETINGTRENDS

Do you outsource yourtraining?

NO YES

62 38

What contributes most to

staff retention?

42

17

Power pointsLarger suppliers

are reaping thebenefits of offering

a diverse rangeof services

The threat to theUK industry fromoverseas cal[

centres appearsto be receding

TPS registrationshave put a

dampener onoutbound activitybut this is likely to

rebound as clientsfocus on existingcustomers

8 Inspiring company loyaity0 Offering career development

Building team spirit'

Employing skilled workers

Source: Marketing Direct Telemarketing Survey 2006

She points to the fact that Orange is increasing thenumber of its Indian agents ,

while insurance companyAvivais publicly enthusiastic about the quality of itsservice operation in India

,

which it is planning to expandfrom

5

,000 to

7,000 seats .

There is a strengthening consensus that offshore

capability is ideal for functional activities such as

ordering brochures,

while the quality, brand-buildingwork is better entrusted to UK outsourcers . Some of the

bigger suppliers are increasingly able to offer both,

having invested in offshore facilities of their own .

The advantage of such operators is that they can get theservice up and running in the UK before exporting it

offshore . This is what Sitel has done for Nectar,

whichneeded an economical way to service its rapidly growingcustomer base that did not involve automation .

The

agency set up a model office in the UK to pilot some ofthe

more complex activities before migrating it to Mumbai .

" This enables us to bed in some of the processes ,

suchas the way the calls are handled

,

to ensure they are

scripted properly ,

"

says Sitel '

s Brown . He sees this as

offshoring' ssecond generation ,

based on a soundbusiness premise designed and approved in the UK .

And Ventura launched ar ,5oo-seat operation in Pune

,

India,

last year to complement its centre in Mumbai .

Offshore does not only mean India . Merchants' SouthAfrican business has doubled in size

,

thanks to domesticbusiness and significant new-business wins in the UKsuch as Asda and thé arphone Warehouse .

South Africa offers several advantages over India andother Asian locations

, says Martin Dove, global sales and

marketing director at Merchants.

"

Agents have a moreneutral accent

,

a good cultural affinity with the UKmarket and the time zone is the same as ours . That makes

running an operation there very similar to managing onein the UK

,

" he says . For this reason,

Dove thinks SouthAfrica is increasingly on the radar of UK contact centres .

In the UK,

some suppliers are continuing to helpclients set up their own contact centre facilities

, installingthe infrastructure and training agents before eventuallypassing on the operation to the client to manage itself .

Such' insourcing' arrangements have been on theincrease

,

notes Phil Telfer,

sales and marketing director at

Ventura,

and he believes they will take off this year .

Minimising risks for clientsAn advantage of this approach is that organisations can

benefit from an outsourcer' s expertise ,

while retainingkey staff and knowledge and minimising some of therisks . But Telfer adds: "

Atthe same time

,

it may restrictfuture flexibility or service development .

So an

organisation must always take a balanced view based

on its strategic goals."

The dwindling of the prospect pool as a result of the

rapid growth of the Telephone Preference Se .

'

ce register(

TPS)

has put a serious dampener on outbound activity .

Several large suppliers ,

such as Sitel and Merchants,

have more or less dropped sales calls from their portfolioof services and smaller agencies are also carrying out less

of this activity . Ion,

for instance, says it is increasingly

moving away from prospecting-type activity and moretowards customer development .

However,

outbound activity is expected to reboundover the next few years as clients seek to

extract valuefrom existing customers

(

see box p44 )

.

On the plus side,

a notable trend isthe growing

willingness of organisations to treat contact centre

activity as a way to create value . Industry observers and

agencies alike have commented on clients' increasinginterest in quality solutions as well as cost savings .

" Clients are waking up to

the fact they must achievemaximum spend fromexisting customers "

Che r3

k

erchants' recent global benchmarking report shows a

clear shift in client attitudes . Price is becoming less of a

priority than improved service and increased efficiency ,

whereas three years ago it was valued higher than both .

In 2003 , 75 per cent viewed their telephone operations as

cost centres as opposed to profit centres,

but now the

proportions are equal .

This is a major psychological shift,

Dove says .

"

It is notthat the organisation is insisting the call centre mustmake a profit but it

is asking how it can contribute to theoverall finance of the business. "

At Garlands, managing director Chey Garland describes

this as a sea change .

" Clients' lust for winning newcustomers has diminished and they are waking up to

thefact that achieving maximum spend with existing ones

is just as important ,

" she comments .

4

CONVERSO




4 / 6

Investment

More than

I

NEED TO Issues facing theKNOW telemarketing sector

Downward pricing pressure

Recruiting staff that meetyour skills requirement

Retaining staff

Competition from other firmsto be outsource partners

Combating negative perceptionsof the call centre environment

Changing methods of

remuneratlon

Client uncertainty because of

economic outlook

Threat from offshore callcentres

Getting payback fromtechnology Investment

Client unwillingness to outsourcetheir contact centre activity

Poor client understanding

0%%

Source: Marketing Direct Teiemarketing Survey2006

s11111111101

5%% 10%% 15%% 20 %%

Garlandis particularly struck by the amount of time

some of her clients are prepared to spend on training . Theinduction process for new agents has increased from fourto seven weeks in some cases .

" That' s a huge investment,

and it is really paying off in the quality of the call, giving

agents more confidence and the customer abetter

experience ,

" she says .

Reversing apathySimilarly, Ray McDiarmid

,

sales director at Inkfish,

notesa greater willingness by agencies to invest in the softskills that make the différence between a good call and a

poor one .

" More than ever,

the industry recognises ithas a

role to play in reversing contact centre apathy ,

" he says .

Inkfish has a team of neuro-linguistic programmingtrainers

,

who help agents resolve the customer contact

efficiently and,

in doing so, promote retention

, repeatpurchasing and referrals .

On the human resources side,

a potentially significantchange is expected to follow the new Transfer of

Undertakings (

TUPE) regulations that came into affect in

April .In future

,

a contact centre that wins a large contractfrom a competitor may fend itself obliged to take on therival company' s existing team of agents . These employeescould include the team leaders

, managers ,

trainers andaccount staff. This highly controversial measure is

designed to protect staff but could impose a heavy burdenon contact centres .

Itcould also limit the value of

switching suppliers ,

as far as clients are concerned .

However,

there isa silver lining , according to Rachel

Robinson, group business development director at MM

Teleperformance ,

who believes the new cules could put a

stop toclient promiscuity . The legislation is already

affecting purchasing behaviour,

she says ,

with clients

avoiding the regular re-tendering that plagues the

industry and agreeing to longer-terra commitments .

"

Longer contracts are very good news for us and

hopefully the industry as a whole,

" she says . In themeantime

,

TUPE legislation does not hinder clients from

appointing agencies for smaller tactical campaigns .

In the past , many agencies were keen to steal

competitive advantage by adopting costly new-

CONVERSO




5 / 6

Sony

BIG

Service TPS

Ofcom

Direct Marketing Association

But

Datamonitor

Ofcom

SMS

NHSService

THE BIG Does outbound callingISSUE have

a future?Around half

of all UK households are nowregistered with the Telephone PreferenceService

(

TPS)

and the numberis rising

rapidly . The industry consensusis such

that cold calling prospects will cease to

be viable within two or three years .

Telemarketers are obliged to limit thenumber of abandoned calls caused by theuse of predictive diallers to 5 per cent .

Ofcom,

the media regulator ,

now plans to

reduce the level to3 per cent in an

attempt to reduce the numberof

consumer complainte .

However,

the Direct Marketing Associationbelieves this will raise

expectations without producing anynoticeable gain , causing yet moredisillusionment . A real difference can only

cross- and upsales on inbound servicecalls . But that does not mean agents willwait for consumers to call them .

Outbound calls can legally be made to

existing customers and there is value to

be gained from nurturing relationships in

this way . For instance,

a car manufacturercan ring a customer to check that thedealer handled the sale properly ,

and calla year later to book the first annualservice . A customer who is treated wellwill be much more receptive to an offerwhen a suitable opportunity arises .

Such activity is likely to reverse thedecline of outbound calling ,

whichDatamonitor expects will comprise 45 percent of total contact centre activity in

three years . It stood at 38 per centin 2004 .

Silent calls: Ofcom is tackiing offenders

be achieved by clamping clown oncompanies that exceed the existing limit

,

the association believes .

The problem has prompted manyclients to scale back their outbound workand instead step up their efforts to win

technologies , only to find themselves mired in problems .

Now the watchword is caution: let others iron out the

bugs and move in when the technology has proved itself.

This means companies are being relatively slow to take

advantage of potentially valuable new developmentssuch as voice over internet protocol and speechrecognition . However

,

the chances are that these willeventually start to affect the industry (

see box p46 )

. In

contrast,

there is a growing uptake of new media

channels . MM Teleperformance has launched an SMS

texting product ,

which Sony Entertainment is using to

give customers information on new products and games .

MMis also texting on behalf of the NHS Blood and

Transfer Service to send out reminders about blood donorappointments ,

and similarly for the Army to confirm newappointments with recruitment officers .

Many contact centres installed costly multichannelfacilities five years ago ,

but the expected demand never4

CONVERSO




6 / 6

CRM

William Hill

NEED TO Technology transformationKNOWDevelopments in technology are likely to

bring big changes to the contact centreindustry over the next few years . One is

the emergence of voice over internet protocol(

VoIP)

,

which enables calls to behandled over the inter-et

, greatlyreducing costs .

Garlands Call Centres is using VoIP in

three locations and founder Chey Garlandis enthusiastic about the flexibility it

provides . It offers effective disasterrecovery ,

for example . If one centre fails,

agents can be switched to another and beback on the lines within minutes .

Garland also predicts VoIP will have a

long-term impact on working practicesbecause it enables staff to work fromhome . That means contact centre jobopportunities can be extended to peoplewith disabilities

,

which in turn helps

e

VoIP: uses the web to reduce costs

alleviate recruitment difficulties . The

agency plans to create' hub and spoke'operations ,

with staff signing on fromhome for three or four hours' work .

Speech recognition technology has alsobeen making inroads . It is being used bycinemas and for simple operations suchas ordering literature and getting bank

materialised . Now there are signs that many clients are

starting to make effective use of email and other types of

online interaction .

This is particularly evident at Garlands,

which investedin a CRM capability in 2001 only to watch it gather dust .

"

In the next r8 months we are going to see thisproposition really coming to fruition

,

"

says Garland .

account details . After sonne teethingproblems ,

the technology is now matureenough to support high-volume use

,

according to suppliers .

Eckoh Technologies is providing a traininformation service for National Rail

Enquiries ,

which provides the humantouch missing from conventionalautomatic systems . It can recognisecustomers who called earlier in the day

and offer them train times for their returnjourney without waiting to be asked .

" This gives companies a powerful newtool to reduce operating costs whileboosting service quality and customerchoice

,

" declares Jim Hennigan , managingdirector of Eckoh Technologies . The

company is also giving Irish punters live

horse-racing commentary and results onbehalf of William Hill .

It seems UK outsourcers turned a corner in 2005 after a

nerve-wracking few years . Demand is relatively strongand the offshore phenomenon is not the dragon thatmany feared . Clients' growing interest in qualitysolutions is a welcome development that many agencieshave been longing for and looks set to give them plenty of

opportunities to put their expertise to good effect .a

CONVERSO


marketing direct n° 60501 - 01/05/2006 - 309

Documents

contact centre industry

web site

year performances

public sector division

telemarketing league

interests efficiency

telemarketing industry

past yearofe