How to build a telemarketing group.

* HOW TO BUILD A TELEMARKETING GROUP Forget the obnoxious boiler-room image of telephone sales, says marketing consultant Bob Brown. The reality is that outbound telemarketing represents one of the software industry's most profitable--and underutilized--sales tools. "The return on investment for a telemarketing group is simply phenomenal," says Brown, who has helped set up telemarketing programs for Borland, Sitka, Shiva, Network General, and Quadram. "A typical phone rep can generate $40,000 in direct sales a month," he estimates, "without cannibalizing sales from existing resellers."

The payoff from telemarketing is especially high for small startups, Brown adds, because these companies usually lack a strong dealer network to handle leads from advertising, public relations, and trade show activity. "The close rate on good telemarketing leads is usually between 15% and 45%. That's a lot better than you're ever likely to get from the average dealer."

Brown recently offered this advice to would-be telemarketers:

* Start with appropriate products. Telemarketing works best when a prospective buyer already knows a little about the product category or the company's reputation, Brown notes. "We sometimes say the ideal telemarketing product provides a 'two-minute grok'--that is, instant understanding that goes to the core of your being." Products that require long sales cycles or complex technical explanations are usually too difficult to sell over the phone, he says--"though it's sometimes possible, if you can get through to exactly the right buyer."

* Build a real telemarketing team. "Selling is always an emotionally intensive process," Brown points out. Isolated sales reps tend to be less productive than salespeople who work in teams with lots of mutual support. Thus, he suggests that a company should always start by hiring at least two telemarketing reps, and should look for ways to develop "buddy systems" within the company, particularly with tech support staffers. Also, a telemarketing group should be encouraged to develop an aggressive team spirit that helps its members stay enthusiastic and competitive. "At Borland, the telemarketing reps literally swagger around the halls."

* Hire real sales professionals. It's usually "disastrous" to expect customer service reps (who handle inbound inquiries) to become effective outbound telemarketers. Brown recommends hiring career sales professionals, especially "those who think $35,000 or $40,000 a year is a big deal." Technical knowledge is rarely important, he adds; a competent rep should be up to speed on a product within 60 days--"about the same amount of time that it takes a tech support person to be fully qualified." Be sure to interview candidates over the phone: "For some reason, good telemarketing reps generally don't present well in person."

* Focus on high-volume customers. A good telemarketing rep can make perhaps 700 sales calls a month, Brown says. It's "totally absurd" to waste these calls on unqualified leads; instead, the sales effort should be directed at accounts that are likely to place multiple-copy orders. "Call big people, not small people," he says. Another way to gain leverage: Encourage referrals. For example, one recent campaign offered customers a $100 Egghead gift certificate for every referral sale within their company.

* Don't get stuck in a rut. To avoid burnout and boredom among telemarketing reps, Brown suggests that a company should "keep the ground moving" by constantly offering special prizes, contests, and "fun" incentives. For the same reason, it's usually a good idea to introduce three or four new sales campaigns each year. One campaign might focus on a special offer to reduce inventory, another on a new product or upgrade rollout, and another on follow-up calls to dealers to support a distributor's promotional effort.