This article was published by Telemarketing Magazine (203-852-6800), March 1995, with slightly modified wording. Call them for any telemarketing information you may need, and ask about their annual convention.
Everybody has an ax to grind. In this case, since we operate a telemarketing service agency, ours is to suggest that outsourcing your telemarketing program may be a viable alternative for you.
Yes, we know that an agency's hourly fee is higher than you would pay an employee. And yes, we know that many programs can only be done in-house, for whatever reason.
However, when you calculate all the “hard” (money) issues, and consider all the “soft” (people and productivity) issues, there is a strong argument for outsourcing.
“Hard” Money Issues
When calculating payroll expense you must include all the payroll taxes, benefits, vacation, and possible new medical coverage, etc. The extra cost over the dollar-per-hour rate you pay employees can range from 10% to 50%.
Supervision of employees must be included as additional payroll expense. This task may be buried in the other tasks assigned to supervision, but it is still not cost-free. Plus, the absence of direct supervision of the telemarketing personnel will likely reduce productivity.
Add the cost of advertising, interviewing, and training every time someone has to be hired. How often do you go through this process? This series of steps is expensive and not much fun as you realize it is repetitive, not productive, and done too frequently.
Telephone line charges, line availability, as well as equipment, furniture and floor space may be needed. If you already have these components, maybe you can eliminate them, reducing operating expenses. Also, a service agency probably has a lower telephone charge than you based on their volume discount.
Out-of-pocket expenses, like those noted above, are fairly easy to identify, but they do not represent the total cost. The differential between measurable cost and a service agency fee should include costs buried in the next items.
“Soft” People and Productivity Issues
Although you pay employees for their full time on the clock, are they working on your program all that time? Not likely. Don't you just love paying them while they compare pictures of their latest grandchild?
What happens when you want to terminate an employee? This sometimes becomes a nightmare come true. And you have already paid to hire and train this person. You can always ask your service agency to take someone off your project if you are dissatisfied.
Perhaps you have an employee you can assign to do the calling. However, if they do not want to be a “telemarketer” you can bet the program will fail. By the way, if you want to get rid of an employee, just assign them this task, and they are likely to be gone on their own.
How do you quickly staff up, or down, as your requirements change? What happens when your employee does not show up for work on Friday or Monday, and your sales force is expecting leads? A service agency should be staffed for these situations.
Do you have to pay your employee for calling on the day before or after a three-day weekend? Tell your service agency not to call on those days as they are typically not peak periods of productivity.
Does your employee have the same vested interest in your program's success as the agency does in keeping your business? You can fire an agency at almost any time, while your employees have a vested interest in keeping their job. Bonus money may help, but it does not matter unless it is a significant amount.
With the depth of experience an agency should have, you are getting the benefit of a consultant to help develop, implement and improve your program. Maybe their management team doesn't wear beards, thick glasses, and fly in from out of town, but they really are consultants since all they do is telemarket.
Just starting a new program? Want to pilot it before bringing it in-house? Outsiders can help establish a baseline for productivity, test the calling list, scripting, etc. The service agency has access to many list brokers, providing you greater leverage and flexibility during a pilot.
Your program may need evening and/or weekend coverage. How do you staff and supervise that spread of hours? This gets extremely complicated as the requirements change.
Quick-hit, or start-right-now programs can usually be handled by a service agency, as they have a pool of trained people. Trying to staff and train in-house is not always effective or easy.
As you increase the hours outsourced, the fee per hour usually goes down. Does that happen with an in-house operation? Probably not, as increased requirements usually mean increased problems.
Summary
When considering outsourcing, as a total or partial alternative to in-house telemarketing, be sure to evaluate all the issues. The “soft” ones may be more difficult to quantify, but they are meaningful.
The Best Reason!
Perhaps the best reason to outsource is that you sleep better. Why? Because your problem becomes their problem — and that's got to be worth something!
About the Author
Malynda Hawes Madzel is president of Custom Telemarketing Services, Columbia, MD, (410-964-3350), and president of the Howard County (MD) Chamber of Commerce (1994–1995).