Progressive or Predictive Dialers - They Both Have Their Place by Nucleiz


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									                                                                  Progressive or
                                                                  Predictive Dialers –
                                                                  They Both Have
                                                                  Their Place


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                                                                  Pittsford, NY 14534 USA
                                                                  Fax: 1.585.486.1082

©2009 Callfinity, Inc. ® All Rights Reserved.   |       |       Progressive or Predictive Dialers       1
                                                                               About the Author
                                                                               Dick Bucci is Senior Consultant for The PELORUS
                                                                               Group ( 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®
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“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              Preview dialers – Agents initiate the call by clicking on
get back with you as soon as possible.” That scenario              a phone number that has been programmed into the
probably sounds all too familiar. There’s a good reason            dialer. This method assures that an agent will be avail-
for that and the odds are definitely not in your favor.            able if a connection is made.
Unless your business call has been pre-scheduled, the
odds are only about one out of ten that you will con-              Progressive dialers – The dialer monitors agent
nect with the right party on your first attempt. The               status then initiates outbound calls only when an agent
probability improves to one out of four when calling a             is available to take the call. Like preview dialers, this
residence number, but that still means that 75% of the             method also assures that an agent will be available
time you reach voicemail, an answering machine, a busy             when a connection is made, but the timing of the call
signal, or no answer at all. For employees that do a lot of        attempt is determined by the device, not the agent.
outbound calling, this inability to connect wastes a lot
of time. Employees may spend hours shuffling through               Predictive dialers – These systems use sophisticated
phone numbers, placing calls, and leaving messages that            algorithms to match agent availability to live connec-
don’t get returned.                                                tions. Most systems “learn” from actual experience and
                                                                   adjust the call pacing to match agent availability. Since
Over the years, several innovations were developed to help         agent availability depends on the algorithm there will
deal with this problem. In the 70s we saw the first auto           unavoidably be many instances when a live contact is
dialers. These devices called pre-programmed numbers               ready to accept the call but an agent is not.
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.
                                                        Table 1: Productivity of Alternative Dialing Modes
As illustrated in Table 1, all three types of             Dialer Type         Attempts       Live contacts           Ratio of
dialers greatly increase the number of live                                   per hour       per hour per            contacts
contacts per hour. The effect is to cut labor                                 per agent      agent                   to attempts
costs by 50% or more and achieve higher
sales rates.
                                                          Predictive               48              14.5                   30%

Applications for dialers                                  Progressive              35              10.5                   30%
There are four primary applications for invest-
ing in automated dialing devices:
                                                          Preview                  31              11.1                   36%
Sales calls to new customers – There are                No dialer               20                 5.2                 26%
two types of outbound sales generation
                                                      Source: The U.S. Contact Center Operational Review – 2008, ContactBabel
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, #2
which take calls generated by advertising. Cold Pro-active customer care - Progressive organizations are using dialers
calling for appointments is a necessary though not to thank customers for their recent purchases or to advise of important
always welcome task of all successful field sales rep- information such as a delivery delay or a new software fix. The intent
resentatives. If the sales rep is trying to set appoint- is to help retain customers and maintain accurate call lists. If the call is
ments with business owners or professionals he or answered the dialer transfers the call to a live agent. If unanswered, the
she may spend an entire day on the phone to gener- dialer leaves a message on the called party’s answering system or repeats
ate a half-dozen appointments.                             the call attempt at predetermined intervals.

©2009 Callfinity, Inc. ® All Rights Reserved.       |        |    Progressive or Predictive Dialers     3
#3                                                                         Table 2: Call Type as a Proportion of Outbound Activity
Cross-selling or up-selling to existing customers - Increas-
ingly, outbound calls to existing customers for up-sells, cross-            Calls to
sells and renewals are replacing cold calls. There are fewer re-            customers
strictions on contacts with existing customers.
                                                                            Other                                             19%
Collections - Third-party collection agencies are usually paid a
percentage of the debt collected. Obviously, the more time agents                                                          17%
                                                                            customer care
are talking to consumers rather than dialing telephone numbers
or listening to busy tones, the more money earned by the agency
and the collector.                                                          Cross-selling
                                                                            or up-selling
In addition, dialing devices are used for fund raising, political
campaigns, market research surveys, and emergency notifications.            Renewals
Table 2 illustrates the type of calls as a proportion of outbound           (existing                               12%
activity.                                                                   customers)

Progressive dialers vs.                                                     Collection
predictive dialers                                                          calls
Predictive dialers are the most sophisticated solution. They au-
tomatically place calls from call lists, detect a live answer, and          Customer
then direct the call to an available agent. Predictive dialers use          satisfaction                  5%
advanced heuristic algorithms to predict when an agent is avail-            surveys
able to take a call. The object is to consistently get an answered
call to an available agent, thus maximizing agent productivity                                      0% 5% 10% 15% 20% 25% 30%
and cutting costs by as much as 300% by reducing headcount                 Source: The U.S. Contact Center Operational Review – 2008,
and achieving better utilization of network services.                      ContactBabel

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           Table 3: Applications for Progressive and Predictive Dialing
history and data inputs like the number of agents on staff and
average time to process each call. In collections environments,             Progressive dialer               Predictive dialer
handle time is notoriously variable. The calls may be very short
“Sorry, I don’t have any money now. Call me next month                      High cost, high skill            Low cost, low skill agent
(slam)”. Or they can be very lengthy as the consumer attempts               agent
to negotiate a repayment plan which then involves consulta-
tions with supervisors and the collection of highly detailed per-           Existing account                 New account
sonal financial information.

Further, agent availability is highly variable. Unless some program-        High value outcome               Low value outcome
ming action is taken or the dialer is tightly integrated with an ad-
vanced workforce management system, the device does not know                Business-to-business             Business-to-consumer
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   With progressive dialers, the device does not originate call
the meantime mistakes are made and there is little room for error.        placement until it knows that a line and an agent are available.
The Federal Trade Commission requires that no more than 3% of             Before the call is placed, the agent is presented background in-
outbound telemarketing calls can take longer than two seconds to          formation on the called party. The advantages are that the agent
connect an agent to a consumer that has answered the call.                will be available and prepared when the call is connected.

©2009 Callfinity, Inc. ® All Rights Reserved.         |         |        Progressive or Predictive Dialers     4
In business-to-business telemarketing or sales lead generation             Table 4: Outbound Job Classifications
predictive dialers are often not practicable. The call list will likely
have only the main number of a business, not the direct line of             Job Title                        Annual Salary
the desired party. With a progressive dialer, the sales rep can in-
tercept the call at the auto attendant and enter the correct exten-         Telemarketer                     $24,770
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           Collection agent                 $32,180
changed. There will still be time spent listening to call progress
tones and failing to connect with the right party. Table 3 shows            Sales rep - Advertising          $53,170
the situations where each technology is most appropriate.
                                                                            Sales rep - Insurance            $60,440
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
                                                                            Sales rep - Securities           $92,050
to use a progressive dialer. For example, newly recruited life insur-
ance sales agents may be required to come to a regional office once        Source: U.S. Department of Labor Statistics, May 2008
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.                                     Table 5: Best Practices to Improve Outbound Performance

Similarly, a collector for a credit card company is not highly com-         List management
pensated and the potential value of a missed opportunity is small.
The main goal is to maximize call productivity. In that case, the           Call blending
predictive dialer is the preferable solution.
                                                                            Segmenting and prioritizing accounts
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             same database. Advanced predictive dialers have list management
most out their outbound dialing system.                                   features that automatically update all records when new informa-
                                                                          tion is entered into the CRM or collections management system.
List management
Americans are mobile. According to the U.S. Census Bureau, be-            Maintaining accurate and up-to-date call lists increases produc-
tween 16% and 21% of us change addresses each year. If you have           tivity by reducing the number of unsuccessful contact attempts.
1000 addresses on your call list, then every year as many as 250          It’s important to contact all accounts periodically – even if sales
could be incorrect unless you have been proactive in maintain-            are consistent and payment patterns are improving. This pro-
ing the list. Phone numbers change even more frequently than              active customer care not only helps keep your mailing lists up
addresses. People add or drop additional lines, change numbers            to date but strengthens client relations.
as they move, or even discontinue home telephone service alto-
gether in favor of wireless phones. Additionally, over 30 percent         Call blending
of American consumers have unlisted telephone numbers.                    During periods of slow inbound traffic, agents can be tasked with
                                                                          originating outbound calls. If the calls are to existing customers
One simple step is to always request “Address Service Request-            there are no do-not-call restrictions. Automated dialing software
ed” on all outgoing mail. The post office will then research the          such as the ContextDialer from Callfinity can be integrated with
new address and return the envelope with the new address.                 the workforce management software to help assure that agents
There is a small fee for the service.                                     can make outbound calls without unduly jeopardizing inbound
                                                                          service levels. When paired with Callfinity ContextACD, in-
Very importantly, new information should be entered into the da-          bound calls can be routed to the available agent best qualified to
tabase as soon as it’s available. All agents should have access to the    handle the call, based on business rules.

©2009 Callfinity, Inc. ® All Rights Reserved.         |         |        Progressive or Predictive Dialers      5
Segmenting and prioritizing accounts                                      Table 6: Prominent U.S. Federal Law and Regulations
Best-in-class outbound contact centers develop and implement                        that Impact Outbound Calling
specific strategies designed to maximize results. In collection envi-
ronments, the starting point is organizing the collections list by at-                             Fraud        Abuse          Privacy
tributes such as number of days delinquent, debt amount, amount
past due, credit score, number of debts in collections, debtor in-         Telemarketing                                          
come, payment history, and any special knowledge you may have              Sales Rule
about the debtor. A simple but effective way to categorize the con-
tacts is by risk level. Higher risk accounts obviously require differ-     Truth in Lending                                        
ent treatment than low risk accounts. For example, junior agents           Act
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      Fair Debt                                              
include who will handle each contact, how they will be handled,            Collections
and how frequently. Loans with a high probability of payment and           Practices Act
modest balances can be handled through low-cost methods such as
self-service, mailings, or assigned to junior collectors.                  Consent to                                               
Telemarketing and collections are regulated by numerous                    Health Insurance                                         
state and federal statutes. The general intent of these laws is to         Portability and
help prevent fraud and abuse and to respect individual privacy.            Protection Act
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                    here is a safe harbor provision
and to establish compliance. The Do-Not-Call registry is includ-                    for users of automated dialing
ed in the amended TSR. There are now over 150 million names                  equipment which requires that 97%
and phone numbers on this list. Telemarketers are subject to a
civil penalty of $11,000 per violation for calling names on the
                                                                             of all answered calls must be connected
registry. Call lists should be periodically cleansed to assure that          to an agent within two seconds.
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.

©2009 Callfinity, Inc. ® All Rights Reserved.        |       |       Progressive or Predictive Dialers        6
Conclusion                                                             it is to connect to the called party, the more advantageous it is
Automated dialing systems are highly cost-effective investment         to go the progressive dialing route.
decisions for environments that involve large volumes of out-
bound calling. Relieved of the need to look up phone numbers,          Fortunately, organizations do not have to make a choice. The
place calls, then reach the right party only 10% – 25% of the          ContextDialer from Callfinity is available in three modes, and
time, predictive dialing can double or triple agent occupation         the difference between those modes is important.
with live callers. This saves labor costs by reducing the number of
                                                                           •	 Preview mode allows an agent to see the record first
agents required to complete the same number of calls. Paybacks
                                                                              then dial when the agent clicks a button.
of less than a year are not uncommon.
                                                                           •	 Predictive mode dials automatically and predicts both
However, predictive dialers are not ideal for every environment.              agent availability and optionally does answering ma-
Despite sophisticated algorithms there is always the possibility              chine detection. This results in a delay between the time
of call abandonments because the agent was not promptly con-                  the called party answers the call and when it’s transferred
nected to the called party. Few business practices are more annoy-            to an available agent.
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            •	 Progressive mode is a happy medium between preview
extended period until the agent is ready to talk to you. This is not          mode and predictive dialing. Calls are placed automati-
good business etiquette and in some cases it’s against the law. Pro-          cally, but only after an agent is “reserved” for the call (the
gressive dialing differs from predictive dialing in that calls are            agent is shown who is being called while the dial occurs)
not dialed until an agent is known to be immediately available                and the agent determines if the person answering is a
to take the call. For business-to-business calls, progressive dial-           human or not. There is no delay. Both parties are im-
ing is the only practical option. In general, the more important              mediately connected.

©2009 Callfinity, Inc. ® All Rights Reserved.       |         |        Progressive or Predictive Dialers        7
                                                                   There 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

                                                                   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. 

©2009 Callfinity, Inc. ® All Rights Reserved.   |         |          Progressive or Predictive Dialers           8

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