Communication is the foundation of marketing. Companies of every size and type use communication to tell stories, to share information, and to showcase products and services. Telemarketing is one of the most popular communication tools in the marketer’s arsenal, offering cost-effective engagement with new audiences. Unfortunately, not all telemarketing service providers adhere to regulatory guidelines or industry best practices, putting this powerful marketing tool in an unflattering position. There are ethical and effective ways to leverage the power of telemarketing. In this guide, we will take a closer look at how some firms are abusing telemarketing, resulting in steep fines and penalties, then contrast them with one company who stands as the ethical leader in insurance telemarketing.
What is Telemarketing?
In simple terms, telemarketing is the practice of reaching out to prospective customers using telephone equipment. Salespeople and marketers have used this direct marketing practice for decades, and it can be an effective way of connecting with new customers. It can be used for sales of products or services, and can also be employed to create engagement with potential customers by scheduling face-to-face or virtual meetings during the initial sales call. Sometimes referred to as “inside sales” or “telesales”, telemarketing can take several forms:
- Inbound telemarketing – where sales personnel sell products or services to consumers calling in for other issues, such as information, responses to advertisements, or warranty claims.
- Outbound telemarketing – direct sales calls to prospective customers. Outbound calls can be cold calls or prearranged telephone conversations.
- Business-to-Business (B2B) telemarketing – used when businesses target other businesses for sales or to form business partnerships/collaborations.
- Business-to-Customer (B2C) telemarketing – communication with the end user of a given product or service, often including up-sales or cross-sales initiatives to advance the interests of the company.
Telemarketing tends to be far more cost-effective than traditional in-person sales. One industry estimate suggests that a sale completed through telemarketing costs about one-fifth of the amount for direct, in-person sales between a salesperson and consumer.
$225 Million in Fines: How Telemarketing Abuses Violated Consumer Trust
In June, 2020, the Federal Communications Commission (FCC) announced that it was proposing its largest-ever fine against two insurance telemarketing service providers for violating numerous federal laws governing the practice. In all, $225 million in fines is proposed against the companies. In addition to the FCC proposal, state attorneys general in seven states also filed lawsuits against the companies and their owners.
The two businesses used a range of illegal and immoral practices to spam consumers, ultimately generating more than one billion robocalls. The businesses faked phone numbers displayed on Caller ID systems, intentionally called consumers on the national Do Not Call list, and placed phone calls to consumers’ mobile phones without permission. Robocalls placed to consumers purported to offer insurance plans from some of the nation’s most recognizable insurers, but consumers were redirected to call centers not affiliated with those companies. The telemarketing violators intentionally faked their numbers to appear as if calls were coming from uninvolved companies, resulting in a severe backlash and numerous consumer lawsuits.
What is Being Done to Improve the Industry?
Although the $225 million in regulatory fines is only a proposal, and the companies accused of violating telemarketing laws have a chance to respond, this incident has already spurred calls for telemarketing reform. In the wrong hands, telemarketing can be used in fraudulent ways. The FCC has begun to pressure telephone service carriers to implement spoofed-call screening and call-blocking tools. New laws reinforcing existing telemarketing regulations are also being explored.
Ethical Telemarketing: The Neilson Marketing Services Difference
Telemarketing for the insurance industry has been shown to be efficient and cost-effective. By creating connections between insurance firms and consumers, sales growth can be dramatic. However, unethical practices can damage the reputation – not to mention the effectiveness – of this time-honored direct sales practice.
About Neilson Marketing Services
Neilson Marketing Services has long been recognized by the insurance industry as a telemarketing service provider of the highest caliber. Neilson’s team of sales professionals are highly-trained and experienced, giving clients a great return on investment. More importantly, the company adheres to regulatory standards and industry best practices. Ethical telemarketing is the principle that only people who are not opposed to sales calls and are not on the national Do Not Call registry are fair targets. Spam calling, misrepresentation, or outright fraudulent practices have no place in the ethical telemarketer’s toolkit. With Neilson, clients can be assured of ethical practices, cost-effective service, and a commitment to outstanding results that drive business growth.