Health, Sports & Psychology

Freezing out the cold callers

Updated Monday 22nd October 2007

 

They wake us up in the morning, they interrupt our dinner at night, they force the sick and elderly out of bed, they hound us until we want to rip the telephone right out of the wall.”

This is what US Senator Earnest Hollings said to US Congress while introducing Automated Telephone Consumer Protection Act, in 1991. Are we any better today after 16 years? Telemarketers, direct mailing companies and others want our attention to sell us range of products and services or to ‘help’ us change the suppliers of utilities to save £100s by ‘easy switching’ options!

A broken mobile phone Copyrighted image Icon Copyrighted image Copyright: Jupiterimages

Some cold callers' tactics can cause people to suffer undue stress

[Image: Jupiterimages]

The main reason for the increase in telephone and internet marketing directly to consumers is the cost of reaching the consumers directly has reduced drastically. This reduction is due to lower call charges, the reduced cost of call centres due to offshoring and the relative ease of obtaining personal details such as address and telephone numbers. The internal cost of all this to companies is quite low. But there are external costs to consumers and to society at large like wasted time, irritation, and in many cases entering into expensive contracts. This externality makes aggressive telemarketing cheaper for companies. Combine this with any unethical/illegal practices such as agents taking consumers for ride by telling lies compounds the problem.Here I try to make economic sense of this market behaviour and to suggest how the irritation caused to consumers might be reduced.

What can consumers do about this? Well one response would be to de-list their telephone number. Another would be to register with an agency such as the Telephone Preference Service, that allows individuals to record their wish to opt out of receiving unsolicited telephone sales calls. This service is free to consumers. However, is there ever such a thing as a free lunch? Having studied economics for many years, I would say not! So who finances the Telephone Preference Service then? Well it is the Direct Marketing Industry, so in the end it is consumers that pay for this service.

What can regulators do? Ofcom for example can take action against companies mis-using electronic communication technologies that causes unnecessary annoyance, inconvenience or anxiety to consumers under Communications Act and Enterprise Act. However, the maximum penalty that Ofcom can impose is £50,000, which may not be enough of a deterrent.

Now consider an alternative view of the situation - and a possible solution - from Ian Ayres and Mathew Funk. Remember that external costs i.e., consumer time and irritation are not factored in the companies’ decision. So one way to ensure these costs are internalised by companies is to put price on consumer’s time (it may be difficult to put value on ‘irritation’). We all know about ‘caller pays the receiver’ numbers like 0845 or 090 numbers where the receiver’s account is credited with £1 or even more in the case of some services. Reverse this logic and combine it with the price put on private time. If then there were a regulation which said that all consumers willing to ‘listen’ or ‘entertain’ direct marketing calls need to be compensated by the calling company - say at £1 per minute - this will ensure that the costs of contacting potential consumers will be internalised by companies which will result in lowering of direct marketing calls as companies become more selective in who they call.

Find out more

 

For further information, take a look at our frequently asked questions which may give you the support you need.

Have a question?

Other content you may like

Money & Management 

Marketing communications as a strategic function

Marketing communications help to define an organisation's relationship with its customers. This free course, Marketing communications as a strategic function, emphasises the strategic importance of such communication and its long-term effect on consumers. Communication models can act as a predictive guide, but in the end it is important to recognise the autonomy and unpredictability of consumers.

Free course
6 hrs

Money & Management 

Will green marketing save the planet?

Anja Schaefer considers the feasibility of green marketing.

Article

Health, Sports & Psychology 

A reader's guide to Germinal

Emile Zola's novel Germinal, set in 1866-67, follows a community of coal miners and looks at the need for social change in the years following the French Revolution.

Article

Health, Sports & Psychology 

Free as in freedom, not as in price

Linux champion Jon "Maddog" Hall loves the exchange of ideas - and the pace - of Campus Party. He tells Gareth Mitchell why 'free' is so important.

Audio
5 mins

Health, Sports & Psychology 

Leslie Budd on... rising from the ashes

New doesn't always mean better. Leslie Budd explores the businesses who create new from old, and why this isn't always the best idea

Video
5 mins

Health, Sports & Psychology 

OU on the BBC: African School - About The Series

Introducing a documentary programme about a school in Africa.

Article

Health, Sports & Psychology 

A reader's guide to Never Let Me Go

Let us be your guide to the story of strange events in the English countryside, as we introduce Kazuo Ishiguro’s novel.

Article

Health, Sports & Psychology 

Enduring Love

In this collection of audio and video podcasts, we ask how some couples manage to stay together for years, sometimes forever

Audio
5 mins

Health, Sports & Psychology 

Miles Roberts on trust and teamwork

Trust and teamwork can help overcome negative perceptions of the role of civil engineers in the business world, says Miles Roberts.

Video
5 mins