Telemarketing is the use of the telephone and call center to attract prospects, sell to existing customers, and provide service by taking orders and answering questions. Telemarketing helps companies increase revenue, reduce selling costs, and improve customer satisfaction. Companies use call centers for inbound telemarketing (receiving calls from customers) and outbound telemarketing (initiating calls to prospects and customers). In fact, companies carry out four types of telemarketing:

1. Telesales: Taking orders from catalogs or ads and also doing outbound calling. They can cross-sell the company’s other products, upgrade orders, introduce new products, open new accounts and reactivate former accounts.

2. Tele-coverage: Calling customers to maintain and nurture key account relationship and give more attention to neglected accounts.

3. Tele-prospecting: Generating and qualifying new leads for closure by another sales channel.

4. Customer service and technical support: Answering service and technical questions.

Although telemarketing has become a major marketing tool, it is sometimes intrusive nature led to the establishment by the Federal Trade Commission of a National Do not Call Registry in October 2003 so that consumers could indicate if they did not want telemarketers to call them at home. Only political organizations, charities, telephone surveyors, or companies with existing relationships with consumers were exempt.

Telemarketing is increasingly used in business as well as consumer marketing. Raleigh Bicycles uses telemarketing to reduce the amount of personal selling needed for contacting its dealers. In the first year, sales forces travel costs were reduced by 50% and sales in a single quarter went 34%. Telemarketing, as it improves with the use of video phones will increasingly replace, though never eliminate, more expensive field sales calls. An increasing number of salespeople have made five and six figures sales without ever meeting the customer face-to-face. Effective telemarketing depends on choosing the right telemarketers, training them well, and providing performance incentives. Here is an example of successful telemarketing.

USAA, located in San Antonio, Texas, proves that a company can successfully conduct its entire insurance business over the phone without ever meeting customer face-to-face. From its beginnings, USAA focused on selling auto insurance, and later other insurance products, to those with military service. It increased its share of each customer’s business by launching a consumer bank, issuing credit cards, opening a discount brokerage, and offering a selection of no-load mutual funds. In spite of transactions taking place on the phone, USAA boasts one of the highest customers’ satisfaction ratings of any company in the United States.