ABSTRACT
When most of us think of a ‘telechannel,’ the first thought that comes to mind is those uninvited telemarketers who call just as we’re sitting down to dinner. Cold-calling into consumers’ homes, though, is just a small part of how companies use telechannels. In 1997, for example, US business-to-business sales over the phone totalled over $158 billion dollars and represented well over half of all telephone-based transaction volume 1 . Today, telechannels handle a diverse range of responsibilities such as technical support, customer service, catalogue sales order processing, lead generation for other channels, outbound sales campaigns, and various customer loyalty/retention programs. Far from being just another low-cost channel with limited sales and service capabilities, the telechannel is a versatile and potent way to do business, and offers its own unique brand of competitive advantage. Consider the following:
Marriott, the worldwide leader in lodging, has over the past twenty years built a world-class call centre to book room reservations, corporate events and major conferences. While many regional hotel chains and smaller national players still book these reservations at the individual-property level, Marriott's call centre provides centralized handling of over 50,000 calls per day by over 2000 telereps to book reservations across its entire lodging network.
In addition to being a significant source of the company's rapid expansion and growth, this call centre has enabled Marriott to launch whole new businesses quickly and cost effectively. For example, when Marriott launched two hotel chains for the lower-cost travel niche, Courtyard by Marriott (for business travellers) and Fairfield Inns (leisure travellers), these were marketed through its existing call centre, resulting in dramatically lower start-up costs as a result of the shared call centre infrastructure. In addition, in both cases Marriott used its call centre to begin booking reservations as soon as new properties in each chain were ready for occupancy, resulting in faster times-to-market than had ever been achieved in a lodging start-up.
GEICO, originally a sleepy regional insurance company for government employees, in the late 1980s and 1990s sprinted to market leadership with a campaign proclaiming ‘Give us 15 minutes and we could save you hundreds of dollars’. Breaking with tradition in the insurance industry – the face-to-face agent channel – GEICO built eight call centres to field inbound calls across forty-six states within the US 2 .
131These call centres enable GEICO to sell insurance at substantially lower prices than its competitors. One source of these lower prices is the considerably lower cost of doing business over the phone. Another is the ability of its telereps to view driving records and actuarial data 3 on-line while talking to new customers – enabling them to offer service only to the most insurable and lowest-risk drivers. In addition to providing a quick, efficient and less-expensive way to sell insurance, GEICO's call centre has enabled the company to develop one of the industry's most sophisticated and complete customer databases.
Dell Computer has rapidly become one of the top personal computer manufacturers (as mentioned earlier in this book) and it has done so largely through its telechannel. By selling directly to customers and bypassing the more traditional retail and distributor channels, Dell has rapidly gained market share – while achieving a dramatically lower-cost structure. Indeed, Dell's selling costs are estimated to be thirty per cent lower than the average retail- or distribution based competitor 4 . In addition, because customers order Dell's products directly from the manufacturer, it has achieved inventory turns of over 30× per year – more than twice the industry average.
