Telemarketing

Organizations engage in various forms of direct marketing to sell their products and services, solicit money, or nurture client relationships. Telemarketing is one such direct marketing technique that can target either individual consumers or other organizations. Groups that engage in telemarketing include nonprofit organizations, institutions, and political interest groups. A telemarketing call could come from a charity soliciting a small donation, an alumni group from a university, or a political party seeking support for a candidate. However, the prototypical use of telemarketing is for purposes of private enterprise. For businesses, telemarketing is a common form of direct selling, which originated with the advent of the telecommunications industry. Though it had been used with varying degrees of success for decades, it was not until the 1970s that the telephone became a standard tool of mass marketing. Cold calling, the unsolicited calling of large groups of people, is just one form of profit-seeking telemarketing. It should be recognized that although many firms do engage in cold calling, the two primary technological advances that popularized telemarketing practice are not closely tied to this practice.

By the late 1970s, AT&T widely disseminated toll-free numbers, which allowed for customers to call into a business to gather more product information, receive specific services, and place long-distance orders free of a telephone line usage fee. The second technology that can be credited with the rise of telemarketing is the electronic management of database information. As computers increased in capability and declined in price, businesses capitalized on the ability to marry customer information and phone numbers, with their own product catalogs. Consequently, while cold calling is a “shot in the dark” for businesses, the [Page 879]use of the phone can take on more strategically focused forms. For example, telemarketers can manage customer accounts or screen the person on the phone for characteristics that would qualify him or her for different sales techniques. Product information, such as marketable innovations, can be relayed to past customers. Further, market surveys are completed over the telephone. For instance, at the point of sale a retail consumer can be provided with a toll-free number and a unique identification code that he or she can use to access an automated phone survey system using interactive voice response software.

Telemarketing is not without its faults and criticisms, and it is often perceived to carry a worse reputation with the public than mail- or Internet-based contact methods. Because of its personal yet faceless nature, telemarketing has been used fraudulently and unethically. One example of this is with unscrupulous magazine selling, which can trap consumers into sales agreements that stretch on for years at above-market prices. This happens, in part, because laws in a number of states require nothing more than verbal consent for a consumer to be legally bound to paying for a magazine subscription. Another pitfall in magazine sales, and otherwise, is the intentional incomplete disclosure of sales terms and prices over the telephone while the salesperson continues to seek a commitment from the possible buyer. However, it is the claimed invasion of privacy into the household that most frequently draws the ire of the phone-owning masses. In response to this, the Federal Trade Commission manages the National Do Not Call Registry, which allows people to submit their phone number for exclusion from most types of unsolicited sales calls.

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