Progressive or Predictive Dialers – They Both Have Their Place

©2009 Callfinity, Inc. ® All Rights Reserved. | www.callfinity.com | Progressive or Predictive Dialers 1

Progressive or Predictive Dialers – They Both Have Their Place

1173 Pittsford-Victor Rd Suite 110Pittsford, NY 14534 USA1.877.897.29621.585.278.1940Fax: [email protected]

®

About the AuthorDick Bucci is Senior Consultant for The PELORUS Group (www.pelorus-group.com) where he specializes in contact center technologies. He has authored eight in-depth reports on workforce optimization applications and numerous articles and white papers. Dick is also manag-ing director of Technology Marketing Associates, a mar-keting consulting firm. He has over 30 years of experience in the telecommunications industry

About Callfinity®

Callfinity provides the easiest to use telecommunications software, systems, and services to contact centers, service providers, and enterprises. Since 1999, over 270 custom-ers in six countries around the world have selected Callfin-ity’s on-premise equipment and hosted services. For more information about Callfinity, please visit Callfinity’s web site, www.callfinity.com.

Copyright 2009 Callfinity, Inc. All rights reserved.

The contents of this document are Confidential Information. By receiving this document, you agree to be bound by the terms of a signed and executed non-disclosure agreement between you and Callfinity, Inc, or by the remaining terms in this paragraph if such an agree-ment has not been executed. Confidential Information shall remain the exclusive property of Callfinity, Inc., and you may not disclose any Confidential Information to any third party for any reason without the prior written consent of Callfinity, Inc. You agree to use commer-cially reasonable efforts to prevent the use or disclosure of the Confidential Information in contravention of this Agreement. In furtherance of such obligation, you agree to require your employees and third party contractors and consultants, as well as any affiliates, to agree in writing to keep confidential all received Confidential Information.

This product or document is protected by copyright and distributed under licenses restricting its use, copying, distribution, and decompilation. No part of this product or document may be reproduced in any form by any means without the prior written authorization of Callfinity, Inc. and its licensors, if any. Third party software, including font technology, is copyrighted and licensed from Callfinity, Inc. suppliers.

Callfinity, the Callfinity stylized logo, the Callfinity infinity logo, C3S, CR2, and our product names are trademarks, registered trademarks, or service marks of Callfinity, Inc. in the U.S.A and other countries.

RESTRICTED RIGHTS: Use, duplication, or disclosure by the U.S. Government is subject to restrictions of FAR52.227-14(g)(2)(6/87) and FAR52.227-19(6/87), or DFAR252.227-7015(b)(6/95) and DFAR227.7202-3(a).

DOCUMENTATION IS PROVIDED “AS IS” AND ALL EXPRESSED OR IMPLIED CONDITIONS, REPRESENTATIONS AND WAR-RANTIES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-IN-FRINGEMENT, ARE DISCLAIMED, EXCEPT TO THE EXTENT THAT SUCH DISCLAIMERS ARE HELD TO BE LEGALLY INVALID.


“This is James Smith. Sorry I can’t take your call at this time but if you will leave your name and number, I’ll get back with you as soon as possible.” That scenario probably sounds all too familiar. There’s a good reason for that and the odds are definitely not in your favor. Unless your business call has been pre-scheduled, the odds are only about one out of ten that you will con-nect with the right party on your first attempt. The probability improves to one out of four when calling a residence number, but that still means that 75% of the time you reach voicemail, an answering machine, a busy signal, or no answer at all. For employees that do a lot of outbound calling, this inability to connect wastes a lot of time. Employees may spend hours shuffling through phone numbers, placing calls, and leaving messages that don’t get returned.

Over the years, several innovations were developed to help deal with this problem. In the 70s we saw the first auto dialers. These devices called pre-programmed numbers by touching a single key. Auto dialers and speed dial were for individual use. In the late 80s and early 90s, a new generation of dialing devices emerged that were designed for contact centers. There are currently three classes of large scale automated dialers.

As illustrated in Table 1, all three types of dialers greatly increase the number of live contacts per hour. The effect is to cut labor costs by 50% or more and achieve higher sales rates.

Applications for dialersThere are four primary applications for invest-ing in automated dialing devices: #1Sales calls to new customers – There are two types of outbound sales generation calls; traditional telemarketing and lead generation. Telemarketing companies and individuals earn revenue by closing sales over the telephone. These are typically outbound agents but may include inbound agents as well, which take calls generated by advertising. Cold calling for appointments is a necessary though not always welcome task of all successful field sales rep-resentatives. If the sales rep is trying to set appoint-ments with business owners or professionals he or she may spend an entire day on the phone to gener-ate a half-dozen appointments.

Preview dialers – Agents initiate the call by clicking on a phone number that has been programmed into the dialer. This method assures that an agent will be avail-able if a connection is made.

Progressive dialers – The dialer monitors agent status then initiates outbound calls only when an agent is available to take the call. Like preview dialers, this method also assures that an agent will be available when a connection is made, but the timing of the call attempt is determined by the device, not the agent.

Predictive dialers – These systems use sophisticated algorithms to match agent availability to live connec-tions. Most systems “learn” from actual experience and adjust the call pacing to match agent availability. Since agent availability depends on the algorithm there will unavoidably be many instances when a live contact is ready to accept the call but an agent is not.

Table 1: Productivity of Alternative Dialing Modes

Dialer Type Attempts per hour per agent

Live contacts per hour per agent

Ratio of contacts to attempts

Predictive 48 14.5 30%

Progressive 35 10.5 30%

Preview 31 11.1 36%

No dialer 20 5.2 26%

Source: The U.S. Contact Center Operational Review – 2008, ContactBabel

#2Pro-active customer care - Progressive organizations are using dialers to thank customers for their recent purchases or to advise of important information such as a delivery delay or a new software fix. The intent is to help retain customers and maintain accurate call lists. If the call is answered the dialer transfers the call to a live agent. If unanswered, the dialer leaves a message on the called party’s answering system or repeats the call attempt at predetermined intervals.


#3Cross-selling or up-selling to existing customers - Increas-ingly, outbound calls to existing customers for up-sells, cross-sells and renewals are replacing cold calls. There are fewer re-strictions on contacts with existing customers.

#4Collections - Third-party collection agencies are usually paid a percentage of the debt collected. Obviously, the more time agents are talking to consumers rather than dialing telephone numbers or listening to busy tones, the more money earned by the agency and the collector. In addition, dialing devices are used for fund raising, political campaigns, market research surveys, and emergency notifications. Table 2 illustrates the type of calls as a proportion of outbound activity.

Progressive dialers vs. predictive dialers Predictive dialers are the most sophisticated solution. They au-tomatically place calls from call lists, detect a live answer, and then direct the call to an available agent. Predictive dialers use advanced heuristic algorithms to predict when an agent is avail-able to take a call. The object is to consistently get an answered call to an available agent, thus maximizing agent productivity and cutting costs by as much as 300% by reducing headcount and achieving better utilization of network services.

The key difference between predictive dialers and progressive dialers is the level of certainty that a live call will actually be connected to an available agent. Predictive dialers rely on past history and data inputs like the number of agents on staff and average time to process each call. In collections environments, handle time is notoriously variable. The calls may be very short “Sorry, I don’t have any money now. Call me next month (slam)”. Or they can be very lengthy as the consumer attempts to negotiate a repayment plan which then involves consulta-tions with supervisors and the collection of highly detailed per-sonal financial information.

Further, agent availability is highly variable. Unless some program-ming action is taken or the dialer is tightly integrated with an ad-vanced workforce management system, the device does not know if some agents called in sick that day, were late getting to work, or are off on vacation. The predictive dialer will continue to place calls at the same pace it did the day before until it “learns” that agent availability is significantly lower and adjusts the calling pattern. In the meantime mistakes are made and there is little room for error. The Federal Trade Commission requires that no more than 3% of outbound telemarketing calls can take longer than two seconds to connect an agent to a consumer that has answered the call.

With progressive dialers, the device does not originate call placement until it knows that a line and an agent are available. Before the call is placed, the agent is presented background in-formation on the called party. The advantages are that the agent will be available and prepared when the call is connected.

Table 2: Call Type as a Proportion of Outbound Activity

Calls to customers

Other

Pro-active customer care

Cross-selling or up-selling

Renewals (existing customers)

Collection calls

Customer satisfaction surveys

0% 5% 10% 15% 20% 25% 30%

Source: The U.S. Contact Center Operational Review – 2008, ContactBabel

27%

19%

17%

14%

12%

5%

5%

Table 3: Applications for Progressive and Predictive Dialing

Progressive dialer Predictive dialer

High cost, high skill agent

Low cost, low skill agent

Existing account New account

High value outcome Low value outcome

Business-to-business Business-to-consumer


In business-to-business telemarketing or sales lead generation predictive dialers are often not practicable. The call list will likely have only the main number of a business, not the direct line of the desired party. With a progressive dialer, the sales rep can in-tercept the call at the auto attendant and enter the correct exten-sion number. If the sales rep reaches voicemail then he or she can leave a personalized message. The downside of progressive dialers is that the likelihood of connecting to the desired party has not changed. There will still be time spent listening to call progress tones and failing to connect with the right party. Table 3 shows the situations where each technology is most appropriate.

In general, the higher the cost of the agent and the higher the op-portunity cost from failing to connect, the more advantageous it is to use a progressive dialer. For example, newly recruited life insur-ance sales agents may be required to come to a regional office once a week to make cold calls for setting appointments. The cost of the agent is high, as is the sales value and commission from each sale. The extra time it takes to use a progressive dialer is not worth the potential loss of a sales opportunity.

Similarly, a collector for a credit card company is not highly com-pensated and the potential value of a missed opportunity is small. The main goal is to maximize call productivity. In that case, the predictive dialer is the preferable solution.

Table 4 shows the annual salary for employees that are heavily engaged in outbound calling.

Getting the most out of your automated dialing system Table 5 lists effective actions companies can take to get the most out their outbound dialing system.

List managementAmericans are mobile. According to the U.S. Census Bureau, be-tween 16% and 21% of us change addresses each year. If you have 1000 addresses on your call list, then every year as many as 250 could be incorrect unless you have been proactive in maintain-ing the list. Phone numbers change even more frequently than addresses. People add or drop additional lines, change numbers as they move, or even discontinue home telephone service alto-gether in favor of wireless phones. Additionally, over 30 percent of American consumers have unlisted telephone numbers.

One simple step is to always request “Address Service Request-ed” on all outgoing mail. The post office will then research the new address and return the envelope with the new address. There is a small fee for the service.

Very importantly, new information should be entered into the da-tabase as soon as it’s available. All agents should have access to the

Table 4: Outbound Job Classifications

Job Title Annual Salary

Telemarketer $24,770

Collection agent $32,180

Sales rep - Advertising $53,170

Sales rep - Insurance $60,440

Sales rep - Securities $92,050

Source: U.S. Department of Labor Statistics, May 2008

Table 5: Best Practices to Improve Outbound Performance

List management

Call blending

Segmenting and prioritizing accounts

Compliance

same database. Advanced predictive dialers have list management features that automatically update all records when new informa-tion is entered into the CRM or collections management system.

Maintaining accurate and up-to-date call lists increases produc-tivity by reducing the number of unsuccessful contact attempts. It’s important to contact all accounts periodically – even if sales are consistent and payment patterns are improving. This pro-active customer care not only helps keep your mailing lists up to date but strengthens client relations.

Call blendingDuring periods of slow inbound traffic, agents can be tasked with originating outbound calls. If the calls are to existing customers there are no do-not-call restrictions. Automated dialing software such as the ContextDialer from Callfinity can be integrated with the workforce management software to help assure that agents can make outbound calls without unduly jeopardizing inbound service levels. When paired with Callfinity ContextACD, in-bound calls can be routed to the available agent best qualified to handle the call, based on business rules.


Segmenting and prioritizing accountsBest-in-class outbound contact centers develop and implement specific strategies designed to maximize results. In collection envi-ronments, the starting point is organizing the collections list by at-tributes such as number of days delinquent, debt amount, amount past due, credit score, number of debts in collections, debtor in-come, payment history, and any special knowledge you may have about the debtor. A simple but effective way to categorize the con-tacts is by risk level. Higher risk accounts obviously require differ-ent treatment than low risk accounts. For example, junior agents may be assigned to the low-risk, low-value accounts while more senior personnel concentrate on the more challenging accounts. The next step is to develop a collections strategy and tactics. These include who will handle each contact, how they will be handled, and how frequently. Loans with a high probability of payment and modest balances can be handled through low-cost methods such as self-service, mailings, or assigned to junior collectors.

ComplianceTelemarketing and collections are regulated by numerous state and federal statutes. The general intent of these laws is to help prevent fraud and abuse and to respect individual privacy. Table 6 summarizes the most pertinent federal laws.

The Telemarketing Sales Rule (TSR) is the most comprehensive legislation governing telemarketing practices. There are many provisions for mandatory disclosures. Outbound call centers should invest in call recording technology for training purposes and to establish compliance. The Do-Not-Call registry is includ-ed in the amended TSR. There are now over 150 million names and phone numbers on this list. Telemarketers are subject to a civil penalty of $11,000 per violation for calling names on the registry. Call lists should be periodically cleansed to assure that registrants are not called.

Users of automated dialing devices must understand the time of day restrictions (no calls to individual homes before 8:00 a.m. or after 9:00 p.m.) and the call abandonment rules. Under the Rule’s definition, a call is “abandoned” if a person answers the call and the call is not connected to an agent within two seconds. There is a safe harbor provision for users of automated dialing equipment which requires that 97% of all answered calls must be connected to an agent within two seconds. Further, the phone must be allowed to ring at least four times or for 15 seconds to provide sufficient time for the called party to answer. While predictive dialers can be pro-grammed to help meet these requirements, ultimately compliance depends on staffing levels. Both the collections and telemarketing businesses are noted for high turnover and absenteeism, which can adversely effect compliance with the two-second rule. The only fail-safe method is progressive dialing – which assures that an agent is always there to immediately connect with the called party.

Table 6: Prominent U.S. Federal Law and Regulations that Impact Outbound Calling

Fraud Abuse Privacy

Telemarketing Sales Rule

Truth in Lending Act

Fair Debt Collections Practices Act

Consent to Record

Health Insurance Portability and Protection Act

T here is a safe harbor provision for users of automated dialing

equipment which requires that 97% of all answered calls must be connected to an agent within two seconds.


ConclusionAutomated dialing systems are highly cost-effective investment decisions for environments that involve large volumes of out-bound calling. Relieved of the need to look up phone numbers, place calls, then reach the right party only 10% – 25% of the time, predictive dialing can double or triple agent occupation with live callers. This saves labor costs by reducing the number of agents required to complete the same number of calls. Paybacks of less than a year are not uncommon.

However, predictive dialers are not ideal for every environment. Despite sophisticated algorithms there is always the possibility of call abandonments because the agent was not promptly con-nected to the called party. Few business practices are more annoy-ing to consumers than being called by someone you don’t know for reasons you don’t understand and then placed on hold for an extended period until the agent is ready to talk to you. This is not good business etiquette and in some cases it’s against the law. Pro-gressive dialing differs from predictive dialing in that calls are not dialed until an agent is known to be immediately available to take the call. For business-to-business calls, progressive dial-ing is the only practical option. In general, the more important

it is to connect to the called party, the more advantageous it is to go the progressive dialing route. Fortunately, organizations do not have to make a choice. The ContextDialer from Callfinity is available in three modes, and the difference between those modes is important.

• Preview mode allows an agent to see the record first then dial when the agent clicks a button.

• Predictive mode dials automatically and predicts both agent availability and optionally does answering ma-chine detection. This results in a delay between the time the called party answers the call and when it’s transferred to an available agent.

• Progressive mode is a happy medium between preview mode and predictive dialing. Calls are placed automati-cally, but only after an agent is “reserved” for the call (the agent is shown who is being called while the dial occurs) and the agent determines if the person answering is a human or not. There is no delay. Both parties are im-mediately connected.


SummaryThere are four primary applications for investing in auto-mated dialing devices: sales calls to new customers, pro-active customer care, cross-selling or up-selling to existing customers, and collections.

There are three types of dialers: Preview dialers, progressive dialers, and predictive dialers. Progressive dialers moni-tor agent status then initiates outbound calls only when an agent is available to take the call. With a preview dialer, an agent initiates the call by clicking on a phone number that has been programmed into the dialer. Predictive dialers use sophisticated algorithms to match agent availability to live connections.

The key difference between predictive dialers and progres-sive dialers is the level of certainty that a live call will actually be connected to an available agent. Predictive dialers are the most sophisticated solution. They automatically place calls from call lists, detect a live answer, and then direct the call to an available agent. However, predictive dialers are not ideal for every environment. For business-to-business calls, pro-gressive dialing is the only practical option. In general, the more important it is to connect to the called party, the more advantageous it is to go the progressive dialing route.

Progressive or Predictive Dialers – They Both Have Their Place

Documents