Pending Telemarketing Regulations

By Cheryl Baylor, Vice President of Marketing
     Mike Kopitz, Chief Financial Officer

August 11, 2003 -- [Following nearly a year long proceeding the Federal Communication Commission ("FCC") amended its rules implementing the Telephone Consumer Protection Act. The new rules fall into several broad categories: 1) national do not call list; (2) predictive dialers; (3) prerecorded messages; (4) caller ID and (5) unsolicited faxes. This paper is not intended as a compliance guide but rather is designed to acquaint various industry participants with the fact that new rules have been adopted, to identify certain operational issues which may need to be addressed.]

The countdown for the implementation of the new federal telemarketing regulations is on. These regulations will change direct marketing as we know it, and the ability to move swiftly, both in understanding the new regulations and in creating new strategies and tactics designed to comply, will separate the winning direct marketing firms from the losers.

Now is the time to update and clarify your direct marketing strategy and start implementing new ways of doing business that will make your firm a winner. Here are some of the most critical issues to consider as you prepare to comply with the new regulations:

• Ignorance is no excuse. Make sure you understand the new federal regulations as adopted by the Federal Trade Commission (FTC) and most recently by the Federal Communications Commission (FCC) and have procedures in place to monitor how each state may consider the impact of the new federal regulations on their existing rules. Be prepared, make sure your vendors are prepared, and verify that you have a full system in place that is compliant with all applicable federal and state regulations in addition to the new FTC and FCC do not call registry and other new regulations.
• Before the regulations take effect, continue to use telemarketing to solidify as many firm business relationships with consumers in your target market as you can. Remember, you have up until September 30 to contact consumers while being sure to comply with the existing telemarketing rules. And once you have established "an existing business relationship" with a consumer, as defined by the new rules, you may continue to use telemarketing that is otherwise in compliance with the other new and existing rules, to contact that consumer even after the new regulations are in place.
• Get your direct mail and e-mail house in order. You will likely have to spend more of your marketing budget on direct mail and other direct marketing channels to generate leads. Make sure your creative is ready and approved by both the legal and business sides of your firm. You should be prepared with a variety of messages and offers and the corresponding direct mail creative to support those offers, such as letters, post cards, bill inserts, and the like.
• Your marketing database, and your ability to segment your targets, is critical to sending the right offer to the right customer at the right time. Although having a segmented database has always been important, this time of preparation for the new regulations presents a perfect opportunity to re-visit your segmentation strategies.
• Get your inbound system ready to respond. You may not be able to acquire as many new customers over the phone - but they can call you. Be ready with prepared scripts and trained inbound agents who are able to cross sell all your products and services and act as more than just order takers. The ability of your agents to cross sell can significantly improve your profitability.
• You'll need plenty of technical and tracking resources to handle the additional volume generated by your direct mail campaigns. Your tracking systems should be able to tell you why your targets are calling you. Are they responding to a specific direct mail piece or advertisement? You'll be able to determine which types of campaigns you should continue or expand, and which you should modify or eliminate based on this information. You should also look at refining your Business Reply Permits, email addresses, jump pages, and links to websites. Your tracking system should provide you with the ability to track the number of abandoned calls [FCC will require callers to abandon no more than 3% of answered calls in a 30 day period whereas FTC will require callers to abandon no more than 3% per day per campaign]. The FTC will require this information, so now is the time to be prepared. This data is also useful for your own planning and efficiency analyses.
• If you use outside vendors for telemarketing, compliance requirements of the new regulations make it even more important that your vendors are reputable and accountable. Verify their understanding of the new regulations and talk to their other customers. Double check their scrubbing procedures, and ask them about their data hygiene timing and how they get their lists. Find out their guidelines for agent behavior and get a copy of their agent training materials. Compliance is king in this environment of expanded regulations and you will be held responsible if your vendor violates the regulations. Make sure your vendors understand how to strategically use all the direct marketing distribution channels at your disposal. It's best to work with vendors that offer a variety of direct marketing vehicles so you can vary your media as needed. It also helps if your vendor is affiliated with larger direct marketing players such as Equifax. This enables them to leverage resources and provide you with better value.
• You'll need to maintain your own do not call list of residential telephone numbers registered by consumers who have specifically requested those residential telephone numbers not to be called by your firm. Remember, fines for non-compliance of an inhouse list can be as high at $11,000 per customer contact occurrence, even if the consumer does not appear on the federal registry. Make sure outside vendors can transmit information about consumers who do not want to be contacted to your inhouse do not call list. The new rules consider a call abandoned if it is not transferred to a live operator within 2 seconds of the called party's completed greeting. When such an operator is not available the seller or telemarketer must play a prerecorded message with the seller/telemarketer's name and telephone number and a notification that the call is for telemarketing purposes. If you are not in compliance:
• Plan your telemarketing budget to include the cost of the fees to access the federal do not call registry list. You'll need to pay to update this list every three months.