Confidential Telemarketing Operation Research Paper for ...

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Confidential Telemarketing Operation Research Paper for ...

  1. 1. 125 Confidential Telemarketing Operation Research Paper for Commercial Banks
  2. 2. Sales Growth Services for Banks T ELEMARKETING O PERATION R ESEARCH P APER 1 Outsourcing or developing an in-house Program? This question is constantly posed to us, as the arguments for outsourcing are very compelling indeed. However, over the past ten years, we have looked at every reasonable proposal available and still have not found a way to outsource appointment setting on a cost-effective basis while concurrently delivering acceptable bottom-line results. The arguments in favor of outsourcing the entire operation are compelling and the promised solution appears elegant. But the realities are far from perfect. Here’s why: • The telemarketers used by the outsourcing company have no vested interest in the outcome, they are never considered ‘part of the team’ and this element alone has the most dramatic impact on the quality of the appointments • There is a lack of communication between the telemarketer and the loan officer/BDO/calling officer. Without this communication, there is no collaborative effort to constantly improve the quality of the calls and the level of pre-qualification • There is insufficient daily supervision, feedback and coaching of the telemarketers (TMs) and the quality of the appointments soon reflects this reality • The TMs rarely understand the elements of the ideal prospective business candidate. Only when they’re getting constant, immediate feedback from the calling officers, can the TMs begin to improve on the quality of the filtering process they use to insure high-quality appointments. The reality of an outsourced TM operation is that the owner of the firm is compensated on his ability to earn a spread over the hourly wage he pays the TMs and the price he charges the bank for the service of the TMs. Therefore the outsourced firms are financially incented to provide you with the lowest - wage telemarketers that can set appointments. The outsourcing firms make money on the spread, this is their “margin.” By maintaining an in-house program, the Bank can keep the margin for themselves and reallocate those funds toward a much higher quality telemarketer. Paying more for a telemarketer will not only provide a more successful and professional employee, but will also add to the program’s stability. This stability is essential in maintaining the ongoing dialogue with the prospects and is rarely, if ever, maintained with the outsourcing firms. We have had success in maintaining successful telemarketers for over five to seven years. This kind of a stable relationship naturally leads to a stronger connection with the business owner/prospect. In nearly all cases, we recommend developing an in-house telemarketing capability. Some of the problems with outsourcing: • Initially, developing an in house telemarketing capability is far more costly than simply outsourcing to one of the dozens of telemarketing firms around the country. However, what we've discovered is that there is no outsourcing firm that really understands the credit process for commercial banks. Copyright © IdeaBridge 1999 - 2002 • 562.986.1223 Phone • 562.986.5813 Fax • www.IdeaBridge.com
  3. 3. Sales Growth Services for Banks T ELEMARKETING O PERATION R ESEARCH P APER , C ONTINUED 2 • Most outsourcing firms are so sales oriented that they can’t understand why a bank wouldn’t want to meet with everyone. The reality is that selling appointments for bank loans is much different than selling newspaper subscriptions, but most outsourcing firms simply cannot differentiate between the two! For example, outsourcing firms routinely claim that they can convert 20-30% of all dials into qualified appointments. Time and again we’ve met with them to discuss why this doesn’t work. The reality is that the conversion rate in your market is about 2.5% - 4.0% at best. If you want qualified appointments with million dollar borrowers, then don’t expect or plan for anymore than about 10 – 15 appointments each month from each telemarketer. • One of the biggest concerns with outsourcing is not just the cost, but the lack of flexibility and control. Even when a TM can’t secure an appointment, you still need them to gather valuable prospect data that can be used to update your database for your integrated direct mail and promotional activities. Outsourcing companies are not as keen nor are they incented, to maintain, update and improve your database for direct marketing programs. • You also lose the ability to quickly respond to changes in your markets. For example, if it’s announced that a mid-sized bank is being acquired by a mega bank, we’d immediately access the database to create lists of all the impacted business owners. We’d be the first bank calling them to arrange for a transfer from their bank to your Bank. This quick-response action cannot be duplicated with an outsourced firm. An in-house TM program will dramatically change the environment within the Bank • BDOs will spend more time face-to-face selling because they’ll have pre-qualified appointments set on their behalf. The effectiveness of your BDOs will be at least double what it was prior to the TM program. • A new and consistent source of referrals will be generated for many of your specialized business units (cash management, international, real estate, etc.) • The bank will have developed a consistent, year round, predictable flow of new loan packages and business referrals for all Bank departments. The keys here are: consistency, flexibility, predictability and year-round activity. • Life will be busier. Once your program is up and running, you won’t have much “down-time." People will be busy looking at new loan packages and consistently going on new business appointments. This means more work at all levels within the bank. One of the areas people tend to forget is the strain that this new level of activity will be putting on your support groups such as loan documentation, collateral control, appraisal, etc. The initial program set-up and the expected timing to start seeing results: There’s no such thing as a “quick fix” with a telemarketing operation. In fact, the impact of a new telemarketing operation will not be felt for many months. This delay must be managed internally and should be clearly communicated to all those who are counting upon the telemarketing leads. Copyright © IdeaBridge 1999 - 2002 • 562.986.1223 Phone • 562.986.5813 Fax • www.IdeaBridge.com
  4. 4. Sales Growth Services for Banks T ELEMARKETING O PERATION R ESEARCH P APER , C ONTINUED 3 The impact on Your Bank’s BDOs will not be felt for at least 30 – 60 days from formal launch of the operation. Some of the timing factors which lead to this drag on initial productivity are as follows: 1. Employment ads must be placed to encourage prospective telemarketers to apply 2. A TM manager or Project Manager must be selected to carry out the entire project plan or operation set-up 3. A dedicated phone line must be installed to record the responses of the phone-in job applicants 4. A telemarketing compensation plan must be approved by your HR Department (we can provide many different samples) 5. The job description for various levels of TMs must be approved by the TM manager and HR Department. 6. The TM manager must develop a policy manual for the operation (This is critical to avoid problems down the road with TM turnover, absenteeism and other issues) 7. Space must be identified and allocated for the TMs to conduct their daily calling. 8. New phone numbers, phone lines and equipment must be ordered and installed 9. Computers with CRM software and Internet access (for company research) must be ordered and installed 10. Calling lists must be obtained, screened, divided and distributed among the TMs and must be cross-referenced with any BDO calling activity and existing clients of the bank. 11. Detailed and comprehensive training of all TMs must take place regarding Bank products, TM policy issues, performance requirements, etc. 12. Telemarketing Scripts and product information cards (for cross product referrals) must be developed to leverage Your Bank’s key strengths in the market 13. The BDOs and RVPs need to meet the TMs and must begin to develop a level of rapport. There must be a collaborative feel to the process and there must be a level of mutual trust and respect in order to maximize productivity and results. The Hiring and Screening process for Telemarketers: All phone reps are first invited to apply over the phone. If they can’t convince us to call them back based on their 2-3 minute phone response, then they surely can’t convince a business owner to meet with the bank. This screening process has evolved over nearly a decade and proves to save an enormous amount of time; it’s the best possible way to screen telemarketers while saving time. If someone passes the phone test, we invite them to come in for a face-to-face interview. The interview process is rigorous. We are always looking for the ‘impact players’ the people that our experience Copyright © IdeaBridge 1999 - 2002 • 562.986.1223 Phone • 562.986.5813 Fax • www.IdeaBridge.com
  5. 5. Sales Growth Services for Banks T ELEMARKETING O PERATION R ESEARCH P APER , C ONTINUED 4 suggests have what it takes to be consistent producers. These superstars can be identified by the following traits: • They are not easily flustered and they don’t bristle at rejection. • They have a clear speaking voice, • They pay attention to detail such as voice inflection, verbal cues and they listen for opportunities • They have the ability to initiate and carry on a friendly business conversation • They have the ability to think quickly and clearly, even when flustered by rapid fire questions or under stress that’s created in the interview process • They have the unique ability to sense when a prospect is disingenuous • They have the proven track record to meet sales targets and production goals • They have a record of stability in employment (This is very hard to find at the low end of the TM pay range and why we willingly pay more for more stable employees.) What you can and should expect from the standard telemarketing staff: As stated in a prior section, a myriad of potential staffing problems can be avoided by a thorough training program and by developing a tight policy manual that outlines performance expectations, norms and acceptable/unacceptable behavior. However, there is simply no way to avoid some of the problems such as: • Much higher turnover than with salaried employees • More lates, tardies and absenteeism • Many are challenged when it comes to grooming practices • Transportation problems will exist. They will have car problems, bus transfer problems, etc. • It will be tough to attract the mid-range telemarketers to the central city due to transportation costs The way we avoid the typical problems that plague other telemarketing operations is by calling on those telemarketers where we have had personal experiences with their work practices and success. While these telemarketers will cost slightly more than average, the financial benefits of closing more business with a proven performer will far outweigh their slightly higher costs. The strategy of finding proven performers that have direct commercial banking telemarketing experience is an important element to generating quick success in the telemarketing operation. What one can expect in terms of production ratios and productivity: Here are two vital stats that took many years to fully develop: 1. Over a moderate period of time, on average, you’ll end up spending about $200 - $300 per qualified appointment with a decision maker who has a commercial banking relationship in excess of $1 Million. But this will only work with volume. For example, you’ll have some level of fixed costs and overhead charges that will add to the total cost of each appointment. Naturally, as more telemarketing appointments are set, those fixed costs are spread over a larger appointment base so that your CCP (Cost Per Appointment) will decline. Copyright © IdeaBridge 1999 - 2002 • 562.986.1223 Phone • 562.986.5813 Fax • www.IdeaBridge.com
  6. 6. Sales Growth Services for Banks T ELEMARKETING O PERATION R ESEARCH P APER , C ONTINUED 5 2. Over time, you can expect that the average TM will set approximately 10 -15 pre-qualified appointments each month with middle market business owners that have borrowing needs in excess of $1 Million. Please understand that additional access to our information, programs, compensation plans, tracking forms, proprietary models, protective clauses, scripts and expected conversion rates will all be commensurate to the level of involvement we have in the project. Should we be retained on an exclusive basis for the entire project scope, you could expect access to 100% of our proven forms, tools, reports and methods. IdeaBridge maintains extensive data on all the standard conversion rates throughout the entire commercial banking business development sales funnel. Your Bank can leverage this data to quickly design a program to optimize your results in a minimal amount of time. This data includes vital industry learnings and knowledge for such facts as: • Percentage of “good” names within a given database • Percentage of good names that will convert to a conversation with a decision maker • Percent of Decision Makers (DMs) that will agree to an appointment • Percent of appointments that convert to loan packages • Percent of Packages that will convert to proposals • Percent of proposals that will be accepted • Percent of accepted proposals that will actually make it through funding We also have industry data for California to support: • The # of dials it will take to result in a qualified appointment with a DM • The # of TM appointments that each BDO can reasonably and effectively maintain on a monthly basis • The # of additional follow-up calls that are necessary in order to bring a prospect full-circle to becoming a new bank client • The number of loan packages that a loan officer can reasonably manage while still doing an excellent job at customer retention, credit risk management and new business development • The actual amount of time that the average loan officer takes to review a new loan package But why Telemarketing? Telemarketing is the single most cost effective strategy for consistently creating new commercial loan opportunities for middle market banks. Period. For the cost, there is NO other strategy that will consistently outperform a well-managed telemarketing program. I know. Programs under my leadership have developed in excess of $500 Million in new loan commitments at a fraction of the cost of traditional advertising and business development methods. In fact, one TM alone was responsible for over $75 Million in new commercial loans. Telemarketing will double the effectiveness of your BDOs because you will consistently put them face-to- face with pre-qualified prospects. If you elect to eliminate the telephone cold calling component from the BDOs job, then they will be consistently seeing at least twice as many companies each month. If you follow the sales funnel through a complete cycle, more packages, more proposals and ultimately, more funded loans will result from this strategy. Copyright © IdeaBridge 1999 - 2002 • 562.986.1223 Phone • 562.986.5813 Fax • www.IdeaBridge.com
  7. 7. Sales Growth Services for Banks T ELEMARKETING O PERATION R ESEARCH P APER , C ONTINUED 6 Telemarketing is not some theoretical exercise, it has been proven time and again throughout the California middle-market banking arena for over ten straight years. It is not an experiment. Why existing call center staff are not good candidates for a direct, outbound program? Existing call center staff are 180 degrees opposite of what a full-charge telemarketer is all about. There are numerous reasons why existing call center staff will produce sub-optimal results in an appointment setting role: 1. They are not experienced in dealing with outright rejection. The role of a telemarketer puts them in the position where they will be rejected 96 – 98 times out of every 100 phone calls. This is an incredible amount of rejection for someone whose primary job has been to keep customers happy that have been calling into the bank. 2. The customer service call center staff generally receive calls, they are not experienced in the outbound environment which requires one to be extremely good at navigating their way past experienced gatekeepers. 3. Telemarketers are paid largely on a commission basis and only a small base. This is vastly different from call center compensation programs and many people are highly-reluctant to make the switch to a results-based compensation plan. 4. There are many more reasons why this avenue is unproductive, however, the specifics are reserved for IdeaBridge clients. Can the outbound operation be housed in an existing customer service center? Yes, it’s possible, but certain accommodations must be made. For example, under NO circumstances should appointment-generating telemarketers be managed by a call center manager who does not have specific experience in outbound appointment setting for commercial loans! Also, one would be well- advised to physically separate the appointment setters from the general call center staff. As mentioned earlier in this report, many telemarketers have vastly different motivations, personalities and grooming habits. Candidly, many of the customer service center staff will find the appointment setting telemarketers to be somewhat objectionable; complaints are sure to surface. And be forewarned, one is ill-advised to try and “fit” an appointment-setting telemarketer into the same mold as the standard bank customer service rep. Please understand: Customer Service Reps and outbound appointment-setting telemarketers have vastly different personalities and management challenges. The two breeds are radically different; they are NOT one in the same and it is truly the isolated case where one has ever successfully made the transition from one side to the other. Copyright © IdeaBridge 1999 - 2002 • 562.986.1223 Phone • 562.986.5813 Fax • www.IdeaBridge.com
  8. 8. Sales Growth Services for Banks T ELEMARKETING O PERATION R ESEARCH P APER , C ONTINUED 7 How we can assist Your Bank in setting up a Telemarketing Operation? Much of our business depends largely on our vast experience dealing specifically with telemarketing and sales effectiveness for commercial banks. This information is of great value in the marketplace and is respectfully reserved for clients. Should Your Bank elect to retain us, you could expect to save an enormous amount of time and avoid the mistakes of those who are not familiar with commercial banking business development programs. Our formal proposal outlines several steps we recommend to insure optimal results and mitigate a substantial amount of the risk. However, if you are interested only in setting up appointments through a telemarketing operation, here are a couple of additional options: • We can supply a full time, onsite telemarketing manager that will hire your telemarketers, get the program set up, put all the systems in place and ultimately find his replacement within a 4-6 month period. This approach will give Your Bank a complete turn-key, in-house telemarketing operation. We have three such candidates we’ve worked with before, each person offering a different skillset, personality and compensation range. • We can help you identify the potential manager, guide that manager, oversee the entire set-up process and then turn the whole operation over to that person within the first four to six months. Copyright © IdeaBridge 1999 - 2002 • 562.986.1223 Phone • 562.986.5813 Fax • www.IdeaBridge.com

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