Case Study: Selecting a Teleservices Vendor: Looking Beyond Cost-Per-Hour
As broadband Internet connectivity rapidly spread across the U.S., a large Internet service provider actively sought to upgrade its customers from dial-up to high-speed service. The company decided to embark on a comprehensive teleservices campaign that offered current subscribers the opportunity to upgrade to broadband for an additional $1.05 per month (from $23.90 to $24.95)
The company's goal was to maximize sales nationwide with a fixed marketing budget. To achieve this objective, it engaged four teleservices vendors at varying hourly costs and closely tracked their performance to see which company converted the most customers. The surprising results dispelled conventional wisdom regarding the costs of teleservices campaigns. After nine months, the vendor with the highest cost-per-hour DialAmerica actually delivered the lowest cost-per-sale!
As the chart above illustrates, DialAmerica achieved the highest sales-per-hour (0.89) with the lowest cost-per-sale ($31.61) despite the fact that its hourly rate ($28.00) was $2.50 higher than the next best performing vendor ($25.50).
"Cost-per-hour can be a misleading factor in evaluating teleservices companies," said Art Conway, President, Chief Executive Officer of DialAmerica. "The real ‘bottom line' is cost-per-sale. To understand which vendor is most capable of delivering that metric, you have to look closely at every aspect of their operations."