The public backlash against telemarketing abuses in recent years might have been expected to weaken companies' interest in the telephone as a marketing channel. But that has not happened. Instead, contact centre agencies are benefiting from a new willingness by clients to put quality before cost.
Individual fortunes are mixed, as ever. Vertex recorded a significant drop in revenues, but is still massively ahead of the pack with £346m. It is followed by Ventura on £204m, a seven per cent increase on the previous year, and Sitel remains unchanged on £116m.
For the market leader it has been a time for taking stock, after being acquired last year by VTX Bidco, a consortium of private equity firms. Vertex chief executive Richard Graham says the company is working to improve its operational efficiency, while re-assessing its current business and identifying preferred markets to target.
Ventura managing director Kate Marsden, meanwhile, sees the market for outsourced contact centres holding up strongly, despite some disillusion with offshore services. "The industry continues to grow, and companies willing to outsource outweigh those not willing to do so," she says.
The top three handle a substantial amount of business process outsourcing, so the competition among pure contact centre specialists arguably starts further down the table.
Teleperformance has held steady in fourth place, with a new £15m contract from sports TV channel Setanta being handled in its Northern Ireland centres. LBM, too, has had another good year, posting a 31 per cent gain, and there are strong results from MGt, Telegen and The Data Base Factory.
Unquestionably, though, the star performer has been The Listening Company, which posted a remarkable 40 per cent revenue increase after a similarly glittering turn last year. The agency boasts an impressive list of business wins, including a new customer services centre for South-Eastern Railways, marketing activity for Toyota Lexus, and a B2B contract with Orange.
Further down the table, both Senior Response and Eclipse have performed strongly, and a 10 per cent gain by The Telemarketing Company is testament to the level of activity in the B2B sector.
For a second year there has been a striking emphasis on changed attitudes. Until recently, suppliers were lamenting the dire effects of their clients' penny-pinching. Today the complainers are in the minority, and the talk is more about the importance companies attach to good customer service.
That seems largely to be a result of the offshore phenomenon, which has rebounded in ways hard to imagine when pundits were ringing the death knell of the UK contact centre business five years ago. The experience has brought home to firms what years of gripes by UK consumers hitherto had not: that poor service damages brands. With TV ads now offering a UK contact centre as a unique selling point, quality has taken centre stage.
"The pressure from negative media coverage and consumer dissatisfaction is starting to hit the boardroom. Clients still want cost-effectiveness but they have stopped asking for cheapness," says Rachel Robinson, group business development director at Teleperformance.
As a sign of their new attitude, clients are more willing to sign long-term contracts, Robinson adds, instead of chopping and changing in search of the cheapest deal. "With a two-year contract it takes a good six months to settle down, and then within another year we would have to start the tender all over again. That's no way to behave if you want to create a quality environment for the user," she says.
Brands have by no means lost interest in off-shore options altogether, although they increasingly see them as a means to reduce cost for some activities. That means overseas centres continue to be an important asset for big suppliers. Vertex, for instance, has moved some of its functions from the UK to its 1,800-strong centre in Gurgaon, India, which now services about a fifth of its customer contracts.
In addition to its newly opened 800-seat centre in South Shields, Garlands is planning a centre in Cape Town. However, chief executive Chey Garland insists no UK positions will be moved and the aim is simply to win contracts on which it might otherwise miss out.
"When you get to our size, clients are looking for mixed options," she says. Garland anticipates that the new centre will be handling mainly back-office activity, but also some of the more straightforward voice work for UK clients.
Telemarketing's bogeyman has been the shocking growth of the Telephone Preference Service register. That growth is now slowing, but the damage has been done, with the more profitable half of UK households now blocking commercial calls.
Perhaps surprisingly, though, few suppliers seem overly bothered by the loss of opportunities for cold calling. Instead they have willingly adopted new selling strategies, finding opportunities to call existing customers and using data creatively to identify potential sales among inbound calls. Technology has been a major factor here, for instance with the introduction of speech-recognition software that can analyse thousands of calls to help identify successful selling strategies (see box above).
To aid selling during inbound activity, many agencies now employ analysts to evaluate and interpret data. "We are having to be smarter about maximising customer contacts because there are fewer of them. It's about proactive welcome-calls, and understanding the product lifecycle," Garland says.
At 2Touch, managing director Stuart Gray says clients are starting to recognise that every interaction is precious and offers valuable insight into customers' lifestyles and habits, which they can use to strengthen relationships.
Gray also points to the growing willingness of clients to match customers' channel preferences. "Communication preferences evolve throughout the customer lifecycle, and companies need to be in a strong position to readily respond to their demands," he argues.
Several agencies report that multi-channel activity is starting to take off, with more voice activity being handled online. The Listening Company, for instance, is using SMS to encourage purchase, and has recently added video-email, which it says is of special interest to motoring clients.
The company is also experiencing a massive growth in the use of web chat, which now accounts for around 10 per cent of its turnover, because many consumers would much rather handle an interaction online than risk being pressured by a contact centre agent.
"Brands are beginning to realise that their websites don't have as good a conversion rate as traditional voice, and are looking for ways to complement the phone channel without canibalising it," explains The Listening Company's director of communications, Philip Shuldham-Legh.
Another trend is companies taking a more realistic approach to the measurement of service standards. "They often have a wrong perception of this; conventional indicators such as call-answering times may be showing green, but if you actually talk to their customers they complain that the service is poor," says David Payne, managing director of Maia Consulting.
Payne foresees more companies wanting to measure real customer experience - through mystery shopping and by contacting customers shortly after a call to ask them to rate the service.
Meanwhile, B2B specialists have been thriving as companies recognise the effectiveness of the telephone as a way to reach out to prospects. The Telemarketing Company claims this year's turnover increase could be up to twice as much as that for 2007; Microsoft is a major new win, and it has grown its work with American Express and Aeon.
Like its consumer counterpart, the introduction of the Corporate Telephone Preference service caused howls of anguish four years ago, but unlike the consumer version has not been a real cause for concern. Some 1.4 million numbers have been registered, but many belong to firms with multiple lines.
"If there is a tipping point, we are nowhere near it yet," comments The Telemarketing Company managing director Niall Habba. "All it has done is remove businesses unlikely to respond, making the existing pool that much more productive."
Blue Donkey, another B2B specialist, is also upbeat. "Clients are coming to us through word of mouth, which is quite unusual," says managing director Sureya Landini. "They are looking for dormant or lapsed customers. They realise that the right kind of telephone call can re-engage interest, and reckon we can be more targeted and precise than their own sales people."
Landini has also noticed a much greater concern among clients about legislation. While the chances of serious penalties for wrongdoing arguably remain small, last year saw talk by regulators of tougher action, and this is starting to get companies' attention. "Before you had to poke them in the eye with it, but clients are talking about it more and more," Landini says.
Agencies with large public sector contracts, such as Teleperformance, expect to be affected by last year's Varney Report urging improvement of customer services. The report highlighted failings such as individuals having to ring 10 different departments to inform organisations of a relative's death, and has shamed a number of local councils into taking action. "The call for joined-up government is going to make quite a lot of difference to us over the next five to 10 years," Robinson predicts.
Recruitment and staffing continue to prove a headache for some suppliers, especially with regard to the special skills required for selling activity. Several have also flagged up the growing involvement of procurement departments, which is imposing additional burdens. "We are having to demonstrate our competencies at an even higher level than before, which adds time and cost to the new-business process," says Sue Randall, head of sales at Orbital Response and Fulfilment.
But again, such worries are somewhat less prevalent this year than they have been in the past. The overwhelming conclusion from this year's league table is that best practice is at last starting to be taken seriously, not just by a committed few but across the board.
That is good news, not just for the long-suffering public but also for outsourcing suppliers, which find themselves being treated as respected partners - and being given the budgets to make their expertise work.
GOOD TO TALK - HOW CLIENTS CAN USE A TELEPHONE TO SURVIVE RECESSION
Becky Green, business development manager CRM, Mondial Assistance "In a recession everyone starts screaming for sales. And what's the easiest, quickest and most profitable way of doing that? Using the telephone to generate qualified leads for an expensive sales force to convert - it reduces the sales cycle and increases efficiency."
David Ewing, chief operating officer, Telecom Service Centres "Holding on to customers is key to underpinning revenues and margins in a slowdown. If well handled, calls regarding billing enquiries and other 'defensive' contacts can create a good impression, helping to increase conversion rates for up- and cross-sell opportunities."
Kevin Byrne, group client service manager, CPM "In a recession, companies need to get ready for when people start buying again. The telephone is ideal for gaining customer insight, as well as knowledge of competitor products they may be thinking of buying. We can tell clients what the trends are, and what they need to be doing."
Dino Forte, director, Converso Contact Centres "Every business needs to continually develop new leads, but what about re-igniting those that have bought in the past? Using tools such as data analytics can give a better idea of a customer's propensity to buy, making it possible to improve retention, reduce churn, build brand loyalty and generate new lines of revenue."
David Wallace, chief executive, Response "Personal contact is an important driver of customer loyalty, and a telephone-based sales and customer service strategy is the most cost-effective means to giving customers a way to interact with your organisation. This personalised approach to customers' needs provides opportunities for 'warm selling' as part of a service call."
PREDICTIONS - WHAT'S THE 'NEXT BIG THING' FOR CONTACT CENTRES?
- Paul Kennedy, head of professional services, Broadsystem
"Mobile marketing will become big over the next 18 months. Unlike landline users, mobile users have a unique number, which means companies can be certain who is calling them. We expect that users will browse a website on their handsets and then click on a link that allows them to contact a supplier using Skype. It makes that cross-channel step much easier to make."
- Richard Ray, director of operational consultancy, Verint Consulting
"Conversation analytics are taking off. It's only by listening to conversations that companies can understand what their customers want and identify weaknesses in their service. New tools combine psychological, behavioural and analytical processes with speech analytics to analyse and interpret recorded conversations. That gives organisations new insight into what customers are thinking, what they expect and how their loyalty can be secured."
- Jim Hennigan, executive director, Eckoh
"Large-scale adoption of self-service will bring more advanced personalisation and joined-up, multi-channel service. The responses a customer receives from an automatic speech-recognition service can be tailored to an earlier interaction they may have made by SMS or email. These integrated services are becoming much easier to provide thanks to the adoption of open standards that facilitate the transfer and presentation of data."
HOW TO INTEGRATE INBOUND WITH OTHER CHANNELS
- Ian Hamerton, head of national contact centre, NHS Blood and Transplant:
"The National Blood Service has found that mobile messages are ideal in conjunction with telephone. These days there are fewer donors while the demand for blood is as great as ever. So to ensure that we get the most out of our campaigns, over the past four years calls handled by Teleperformance have been supplemented by messages reminding people to attend the session they have booked.
"This use of multi-channel communications has helped meet both our needs and the needs of donors."
- Jeff Lynne, customer information centre manager, BMW Financial Services:
"We supply our email address on our website, and more customers now contact us that way. But you have to be careful, as a poorly written message risks damaging the brand. Also, although some issues are quick to resolve by email, such as a query about what oil to use, complex ones are more easily dealt with on the phone.
"So even though our policy in general is to reply on the same channel that the customer uses, a telephone call can sometimes bring a quicker resolution."
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