Letters to the Editor.
Congratulations! You hit the nail directly on the head [with your editorial entitled, "Marketing Blunders Continue: When Will They Ever Learn?", September 2001, http://www.tmcnet.com/cis/0901/901po.htm]. I, too, have long been amazed at how little understanding of the advertising and marketing process exists in most telemarketing companies...especially since they went public. Until I read your editorial, I've felt like a lone voice in the wilderness. Thank you for addressing this issue. And I hope you continue to expose the wrong-headed thinking, wasted budgets and pure balderdash that passes for marketing efforts in today's environment.
Justin David Direct
Dear Mr. Tehrani:
I enjoyed reading your editorial on "Marketing Blunders" in the teleservices industry. As a Wall Street analyst and private investor who has been following the industry for a brief stretch of time now, I have enough knowledge to be dangerous! Nevertheless with that disclosure out of the way, I thought I would offer a couple of points of amplification on your assessment of the outsourced teleservices industry (now favored on Wall Street with the term "Outsourced CRM Services," since call center operators now handle more than just voice calls and are often involved in providing additional capabilities such as cross-sell, upsell, direct marketing, fulfillment, etc.).
1) True, Wall Street does exert pressure on all companies to grow sales and earnings rapidly, but this is often a consequence of having to justify a valuation that is extremely high on the IPO, as was the case back in the frenzied days of the mid-nineties when these companies came public. This industry experienced its dot-com bubble and bust about two years ahead of the Internet guys.
2) To your point that the original founders sold a lot of stock and therefore had little incentive to stick around, I believe that in some cases the founders were perceived to not have the man to bring the company to "the next level." For the most part, entrepreneurial involvement is good; however, beyond a certain level, it must yield to professional management. Many of the founders retained large positions in their companies, too, and are now having to reassert themselves in the business. As to the complexity of the industry, you couldn't be more right! This is a VERY TOUGH business and it is hard to scale easily since it is basically about people management.
3) I must differ a bit on your final point regarding the problems these companies had as primarily boiling down to mediocre marketing. The overcapacity created by the flood of IPO dollars coupled with a pullback in demand by several big customers, notably AT&T and UPS, had as much to do with the industry's problems as it did with marketing. In most cases, these companies have surprisingly small sales forces given their revenue size. That is because of the large value of contracts and the concentrated group of buyers, at least as it applies to the big outsourcers. To a great degree, these companies (at least the big ones) know who their buyers are. Advertising is less helpful to them. On the other hand, the flood of small and mid-size outsourcers that have
no brand equity -- they are the ones most likely to benefit from advertising, I would think.
In any event, keep up the good work with your publication.
Brian D. Boyer, CFA
First Analysis Corporation
I read your article, "Marketing Blunders," with the utmost appreciation. Our company is situated within the Telecom Corridor in Richardson, Texas and I have had the opportunity to meet with many of the surrounding companies on many occasions. The unfortunate mantra it seems these days is to cut back drastically in the advertising and marketing areas. A recent seminar held here in Dallas turned into more of a job search for many than a way to generate leads. Even at that the turnout was poor. My belief is for those companies willing to invest NOW they will be ahead of the pack as the market begins to turn -- they will have obtained a greater mindshare for the same price. However, as cutbacks are announced, sales and marketing positions are eliminated within the first round.
Thank you very much for your article and I plan on forwarding it to many of the people I have had these discussions with over the past few months.
Dear Mr. Tehrani:
No, I would not be surprised at the number of companies -- large and small -- that do not rake advantage of free listings. We offer 3Com NBX Dealers worldwide free directory listings and though there are over 500 eligible dealers in the U.S., only 200 or so take advantage of our online directory.
Yes, many firms are cutting back or flat out refusing to purchase advertising -- and rightly so -- they don't even have a business plan, or if they ever did, it's never been revisited, reviewed, re-evaluated or retold to the employees. I just completed reading Form 10-K of a certain telecommunications firm and you wouldn't believe the 56 million dollar blunder (one of many) that they made in purchasing a firm in hopes of selling a Web-based product that went nowhere! Good grief, what's wrong with these people?
Your article should be in the Harvard Business Review and every manager with any management sense should be reading it and passing it on.
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|Publication:||Customer Interaction Solutions|
|Article Type:||Letter to the Editor|
|Date:||Nov 1, 2001|
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