The Telephone Answering Service Industry E-Book

Peter Lyle DeHaan

• Herausgeber: Rock Rooster Books
• Kategorie: Bildung
• Sprache: Englisch

Veröffentlichungsjahr: 2023

Beschreibung

WARNING: this book is a master’s thesis (1998) and contains academic research. It’s made available primarily to aid others who are conducting their own industry research. If this is what you seek, here’s an overview: 

The telephone answering service industry is facing uncertainty due to misconceptions, rising costs, and company closures. This book presents extensive research on the industry, including a SWOT analysis and input from industry professionals. It identifies six core items for survival and success: flexibility, customer-focus, management skills, service quality, staffing practices, and employment attractiveness. 

The book recommends conducting company-specific SWOT analyses and developing strategic plans, as well as increasing rates, improving sales and marketing efforts, and capitalizing on 24/7 staffing. 

Readers must assess their specific circumstances to determine if these strategies are applicable. This book equips industry insiders with valuable insights and recommendations to shape the future of their businesses. By being proactive and prepared, the industry can overcome its challenges and flourish in the ever-changing telecommunications world. 

Leseprobe

The Telephone Answering Service Industry: Preparing for the Future

Copyright © 1998, 2023 by Peter Lyle DeHaan.

All rights reserved: No part of this book may be reproduced, disseminated, or transmitted in any form, by any means, or for any purpose without the express written consent of the author or his legal representatives. The only exception is short excerpts and the cover image for reviews or academic research.

ISBN:

979-8-88809-060-2 (e-book)

979-8-88809-061-9 (paperback)

Published by Rock Rooster Books, Grand Rapids, Michigan

Abstract of Thesis

THE TELEPHONE ANSWERING SERVICE INDUSTRY:

PREPARING FOR THE FUTURE

by

Peter L. DeHaan

Kennedy-Western University

THE PROBLEM

The telephone answering service industry is maturing and aging; it suffers from public misconceptions and image problems; and it faces pressures from competitive industries, increasing labor and technology costs, as well as a rapidly evolving telecommunications infrastructure. Many within the industry are concerned about what the future holds, wondering if and how they will be part of it. Around the country answering services are being put up for sale, while others are simply closing their doors.

Alternately, some telephone answering services are embarking on acquisition sprees and outsiders are entering the industry in increasing numbers. This contradictory trend only serves to heighten apprehension and make for more questions. What does this all mean? How will the industry survive; how can it grow and flourish?

This document, and the research behind it, will attempt to answer these questions and make recommendations to survive and succeed.

METHOD

One aspect of planning is performing a SWOT analysis. SWOT is an acronym for Strengths Weaknesses, Opportunities, and Threats. A simple survey obtained input from those in the industry, compiling its strengths, weaknesses, opportunities, and threats. These results along with options uncovered in the literature search are combined to form a list of alternatives to be considered and analyzed.

FINDINGS

The final recommendations of the research are numerous, but unified. First a group of six core items, uncovered from the survey, form a baseline starting point. These six are: strive for flexibility, be customer focused, improve management skills, enhance service, enlighten staffing, and increase employment attractiveness. Next, are two recommendations to form the foundation for future planning; these being to perform a company SWOT analysis (as opposed to the industry SWOT mentioned above) and develop a strategic plan.

Three additional, nearly universal, recommendations are added to this foundation: increase rates, improve sales and marketing efforts, and capitalize on twenty-four-hour staffing.

Now, with these in place, the main recommendations can be brought forth. They are to diversify into telephone order-taking, pursue internet opportunities, and invest in technology. An optional parallel path is to pursue growth via acquisition.

These recommendations have been made to allow industry participants to prepare for the future. The final step is up to the reader to determine if the recommendations are applicable to one’s specific circumstances and then to react accordingly.

THE TELEPHONE ANSWERING SERVICE INDUSTRY:

PREPARING FOR THE FUTURE

A Thesis

Presented to the

Faculty of the

School of Business Administration

Kennedy-Western University

In Partial Fulfillment

of the Requirements for the Degree of

Master of Science in

Business Administration

by

Peter L. DeHaan

Mattawan, Michigan

© 1998

Peter L. DeHaan

All Rights Reserved

TABLE OF CONTENTS

Abstract of Thesis

Chapter 1: The Telephone Answering Service Industry

Chapter 2: Review of the Literature

Chapter 3: Methodology

Chapter 4: Data Analysis

Chapter 5: Summary

Appendix A: Summary of Industry History

Appendix B: Definition of Terms

Appendix C: Author’s Connection to This Research

Appendix D: Email Solicitation for Survey Participation

Appendix E: Email Survey

Appendix F: Second Request for Survey Completion

Appendix G: Number of Individuals Contacted for Survey Participation

Appendix H: Details of Industry Strengths

Appendix I: Details of Industry Weaknesses

Appendix J: Details of Industry Opportunities

Appendix K: Details of Industry Threats

Appendix L: Reclassification of Threats

Appendix M: Detail of Recommended Options

Appendix N: Key Alternatives

Bibliography

Chapter 1: The Telephone Answering Service Industry

Preparing for the Future

Introduction

The telephone answering service industry is maturing and aging; it suffers from public misconceptions and image problems; and it faces pressures from competitive industries, increasing labor and technology costs, as well as a rapidly evolving telecommunications infrastructure. Many within the industry are concerned about what the future holds, wondering if and how they will be part of it. Around the country answering services are being put up for sale, while others are simply closing their doors.

Alternately, some telephone answering services are embarking on acquisition sprees and outsiders are entering the industry in increasing numbers. This contradictory trend only serves to heighten apprehension and make for more questions. What does this all mean? How will the industry survive; how can it grow and flourish?

This document and the research behind it will attempt to answer these questions and suggest possible methodologies for survival and success.

Industry History

The telephone was invented in 1876 by Alexander Graham Bell, with the help of his assistant, Thomas A. Watson. This new device was quickly embraced by the business community but was much slower to gain acceptance as a residential necessity. Additional developments were soon to follow. In 1877 a basic switching device was constructed to connect five bank branches to an alarm monitoring company. The next decade saw the first long distance lines connecting New York City and Boston. By 1910 enough long-distance lines had been deployed to allow for the first transcontinental phone call to be placed (TAS History, 1989, p. 30).

In was shortly after this that various entrepreneurs spotted a need and began to explore the idea of a business which would answer telephones for doctors when they were out of the office and unavailable. In 1917, one such entrepreneur, Genevieve Kidd, who is generally recognized as the "mother" of telephone answering service, opened the first answering service. Called "Doctor's Exchange Service," Kidd opened her Portland business for "doctors, dentists, and professional nurses." Its sole purpose was to answer after-hours calls. Seven years later, in 1926, she expanded the concept to include local business and those wishing to expand into Portland by opening branch offices. Coincident to and independent from Kidd's efforts, Pearl Forester began a similar service in 1918 in Dallas Texas (TAS History, 1989, p. 30).

The year 1921 saw Physicians & Surgeons Exchange open in Philadelphia by Clark Boyton. Boyton is credited with conceiving the idea for the first switch board (a "stop" board, as it was then known). He convinced the local telephone company to build it for him at the then significant price of $4,600 (TAS History, 1989). This device was to serve as the model for telephone answering service equipment for the next 50 years.

In 1932 Richmond, Virginia saw its first answering service. It served 50 doctors at the astoundingly low rate of $2.50 a month. This year was also when Forester expanded her Dallas operation to include the business community when she added her first commercial account. The next ten years were a time when answering services began sprouting up all over the country. Although they were all independently owned and operated, they shared common methodologies and approaches (TAS History, 1989, p. 32).

The first services employed the elegantly simple technique referred to, "if no answer, call ... “ (TAS History, 1989, p. 30). Doctors would tell their patients to, and footnote their advertisements with, instructions of a secondary number to call when their office phone number was not answered. This alternate number was in fact that of their answering service. Since all the service's clients used a common number for this purpose, those accustomed to dealing with the medical profession after business hours quickly learned the answering service's number, calling it regardless of which doctor they needed to reach. The answering service quickly and effectively became the focal point for all information about and communication with doctors outside of their regular office hours.

There were unfortunately two shortcomings with this approach. The first was that as the service grew it would become increasingly difficult and cumbersome to determine which doctor was being called, causing patients to be increasingly routed to the wrong practice. The other limitation was that patients would need to keep two numbers handy and know when to call each one.

To combat these limitations, innovative answering services began having the phone company install an "off-premise extension" of each doctor's line at the answering service. It was and is the same as an extension of the line in today’s homes. When the number was called both phones ring; the call could be answered at either phone and someone at the other extension could even listen in (which was at times a source of frustration for both the answering service staff and the doctor). This was a step forward but required a separate phone for each client and each line. Soon services would grow to have hundreds of phones in their offices; they would sometimes use lights to show which phones were ringing. Sometimes astute staff would even learn the unique ring characteristics of a particular account and could tell which phone to answer just by how the ring sounded.

To deal with the problem of too many phones, the next iteration of the industry began using phones with multiple buttons, one for each line. Phones with 30 buttons were common, while some had as many as 100. Other services dealt with the multiple phone problem by installing a cord board, which was a modified telephone company PBX switchboard. A young entrepreneur, named Jay Freke-Hayes, who had grown tired of the multitude of phones, wires, and associated confusion, persuaded the phone company to make the requisite modifications and install the switchboard in his office (TAS History, 1989). Nicknamed the cord board, because of its numerous cords used to connect and answer calls, it handled up to 100 lines. Multiple cord boards could be interconnected to manage a greater number of lines. The cord board quickly became the mainstay of the industry and remained so for fifty years. Some services still use the venerable cord board to this day. In fact, all the above-mentioned methods still enjoy some, although limited, use.

The first innovation beyond the cord board was actually invented in the 1950s by William Curtin. Unfortunately, because of the monopoly status of the phone company (primarily AT&T) and the allied support of the FCC, Curtin had difficulty gaining the right to connect his devices to the telephone network. In 1968, the FCC's Carterfone decision stated that other devices could indeed be connected to the telephone network, if the devices were "privately beneficial, but not publicly harmful." (Newton, 1989, p. 109). This opened the door for Curtin and countless other entrepreneurs to design, manufacture, market, and install add-on devices connected to the telephone network.

Curtin's company, Amtelco, began manufacturing products in the 1970s to replace the cord board. These products offered new features and greater flexibility than the cord board and became the product of choice to replace the aging army of cord boards. Although other vendors were to join the fray, Amtelco's early entry into the market helped to establish it as the market leader. Amtelco's device, generically called a concentrator, took up to 100 off-premise extensions (lines) and "concentrated" them into a few lines (much like a funnel), allowing them to be answered on a basic telephone. Later, with the help of a basic computer display, which showed what to say when answering the line, Curtin's concentrator also counted the number of times the phone rang. In the event a call would ring too many times the equipment would automatically answer the line, playing a "please hold" recording for the caller. Many other vendors followed suit with concentrators of their own.

The next wave of innovation came with DID (Direct Inward Dial) service. Unlike a standard telephone line where there is a one-to-one matching of a number to a line, DID service matches many numbers to a few lines (which, in this case, are called trunks). It was realized that using the newly developed call-forwarding service from the phone company, each client could call-forward to their own assigned DID number. Whenever a particular DID number rang, it would be for a specific client. Again, Curtin capitalized on this new opportunity. He astutely developed an add-on device for the cord board. It would fit inside the cord board, allowing for DID service to be inexpensively integrated into the large number of cord boards still in service. He also upgraded his line concentrator to handle DID service, in addition to its original purpose of handling off-premise extensions.

In the 80s, DID service quickly became the mainstay of the telephone answering service industry, replacing off-premise extensions which were becoming increasingly more expensive to have the phone company install and maintain. Also, the 1980s witnessed the forced divestiture of AT&T and the birth of the personal computer. These two developments worked together to modernize and significantly advance the telephone answering service industry. Today, virtually all services over 100 accounts are computerized, answering calls by way of computer, typing messages into the computer, and using computer technology to dispatch messages to alphanumeric pagers, fax machines, and email addresses.

These computers instruct the answering service’s employees, caller telephone service representatives (TSRs), how to answer the phone, what information to obtain from the caller, and how to process the information once it has been collected. The computer allows for speed dialing of pagers and other phone numbers and can remind TSRs to follow-up on pending messages. Since all the client information and messages are typed into a computer, it is readily available to any TSR, even those who may be working at a different location, who is connected to the same system.

The current phase of innovation employs an advanced version of caller ID, called ANI (automatic number identification) and the sophisticated PRI-ISDN (Primary Rate Interface Integrated Services Digital Network) service. In this scenario, the DID number has been eliminated and the clients all call forward to a common phone number. The ANI captures the called number (that is, the caller's number), the calling number (that is, the client's number), and the reason why the call is forwarded (the line is busy, wasn't answered, etc.) The called number is the key to identify which client was called, allowing the computer to display the correct account on the computer screen for the TSR. The calling number is automatically entered into the message form, while the reason for the forward is displayed for the TSR, allowing him or her to handle the call more intelligently, since they know why the call was forwarded to them.

Technical innovation is currently a driving force in the telephone answering service industry. Amtelco, along with Cad Com and Startel are the three major vendors providing equipment to the industry. Other vendors have smaller market share, pursued special niches, developed companion products, or made ancillary devices. Ironically, major telecommunication equipment manufacturers have occasionally attempted to sell to the telephone answering service industry but have been unsuccessful as the requirements of a TAS (Telephone Answering Service) are too specialized for their general-purpose equipment solutions.

Driving this current wave of equipment development is innovation from the telephone companies. As the monopoly status of the traditional telephone companies continues to erode, both from a legal and actual standpoint, they are increasingly forced to compete. This competition leads to new and innovative services, some of which are waiting to be harnessed by the telephone answering service industry. CAPs (Competitive Access Providers, which compete with the local entrenched phone company) and IXCs (Inter-eXchange Carriers, which compete with the established long-distance carriers) are leading the way with innovations as their smaller size and aggressive nature make them better poised to meet customer needs.

Table 19, in Appendix 1 summarizes this chronology of key developments in the Telephone Answering Service Industry.

Company Overview

The Company was founded in 1960. Like many in the industry at the time, it was started by a husband-and-wife team who split telephone answering duties into twelve hour shifts each day, seven days a week. For three years this pattern continued as they built their clientele to a point where they could hire their first employee. They started with a single cord board and added more as they grew.

Over the years they acquired other answering services in nearby markets. They also used DID service to expand into neighboring towns. They sold their interest to two of their former managers who have continued to grow and expand the business.

Today, the Company is comprised of seven offices, serving sixteen primary markets. Although their focus is a two state mid-western area, the Company can effectively serve all of North America.

Unlike many of its contemporaries, who have single-office operations, the Company's multiple offices have served to force it to develop standards and policies to ensure consistency among all offices and for all practices. These standards are in written form and are contained in a Manager's Handbook, which serves as a training tool for the new manager and a reference for the seasoned veteran.

The Company is privately held, and all financial information is proprietary. It is headed by a CEO with day-to-day responsibility in the hands of its President. Together the CEO and President oversee the four areas of the Company. These areas are Sales and Marketing, Accounting, Engineering, and Operations. Sales is managed by a Sales Manager, with sales representatives, called Communication Consultants, operating from the various offices as dictated by market size. Accounting and Engineering are centralized functions, headed by the Controller and System Engineer, respectively.

Operations is by far the biggest portion of the Company, comprising over 90% of the employees, most as TSRs. TSRs work in all seven offices, though only four offices are staffed twenty-four hours a day. The seven offices are grouped by profit center, which is essentially a geographic division. Each profit center has one main telephone answering service system (also known as a switch) and the requisite ancillary equipment to support it. Two of the profit centers each comprise a single office, while the other two centers include multiple offices connected to centralized systems. The Company was a pioneer in this regard, being one of the first to connect two remotely located telephone answering services together, running on the same system, while retaining staff at both locations. This innovation allowed for increased economies of scale, reduced labor costs, and increased efficiency. Regardless of which office the call may come into, it can be answered by whoever is most available at any of the connected offices.

The Company is strong in its operations and technical prowess, but like many in the industry would like to do better in the sales and marketing area.

Over ninety percent of the Company's revenue is from traditional telephone answering service. About four percent is from voice mail sales and three percent from enhanced services. Enhanced services include telephone order taking, literature and catalog requests lines, dealer locator services, and phone reservation lines. Less than one percent of their revenue is from internet-related services. It is the expectation of management that most future growth will be in the areas of enhanced services and internet related services.

Purpose of Research

The Company is currently working on developing a five-year strategic plan. This is the first time long-term planning has been formally conducted by the Company. In past years planning efforts were generally done informally and only for the following year. While most of the strategic plan will similarly address this same one year time frame it is desirable to view it in the context of a larger interval and to see and plan continuity from year to year.

The purpose of this research, therefore, is to determine options for the Company's strategic plan, but not to determine the plan itself. Because many similarities exist between the Company and the industry as a whole, the author feels that the findings of this study are not only applicable to the Company specifically but will be generally relevant to the industry as a whole.

It is anticipated that several possible courses of action may be uncovered and suggested by this effort. It will be up to each industry member to appropriately apply these alternatives to their business, their goals, and their desired outcome. No one scenario is right for all answering services, therefore care must be given to correctly apply the findings of this research, which are generic in nature, to the specificities of the individual business environments to which it may be used.

Importance of Research

In informal discussions among telephone answering service industry participants, many consider it to be either a mature or declining industry. Among them, Mari Osmon (1996, p. 3) states candidly, “traditional TAS is on the decline.” Oliver Shatz (1996, p. 12) adds, that “the number of telephone answering services has dropped dramatically over the past ten years.” The perspective of the Company is consistent with these viewpoints.

Mature industries are those in which growth is slow or zero (Berkowitz et al., 1997, pp. 321–322). Any new sales or clients merely replace lost business, and those sales are typically made at the expense of a competitor. That is, as an industry, accounts tend to be traded between member companies as opposed to completely new accounts being sought and added to the industry.

A declining industry is one where revenue is decreasing and new customers and sales are not sufficient to replace lost business (Berkowitz, 1997, p. 322). Informal discussions among industry participants generally confirm zero or negative growth in the telephone answering service industry. The Company's experience affirms this view, although some offices of the Company have experienced growth which contradicts this perspective. However, the Company forecasts that such growth is not expected to be sustainable or long-term. Statistics confirm the impact these trends have had on the industry. According to the Association of Telemessaging Systems International (ATSI) there were 10,000 telephone answering services in 1988 (TAS history, 1989). Today ATSI puts the number at less than 5,000. This is a fifty percent decrease in nine years and should give pause to all in the industry to consider if they might be a causality of the next nine years.

Given the industry status as a mature or declining industry and the precipitous drop in the number of answering services, it is imperative for its members to carefully, thoughtfully, and pragmatically develop a strategy to deal with the very likely prospect of decreased service demand, decreased revenue, and shrinking profits. Failure of a company to devise and implement such a plan will likely doom it to failure and inevitable extinction. This is not, however, to imply that a plan, by its very nature, will ensure business success and continued existence. It is quite possible to plan for the future and still fail. Therefore, not only must a stratagem be fashioned, but it must also be both realistic and pragmatic. Then this blueprint must be steadfastly and successfully implemented, making midcourse corrections and adjustments as it unfolds. Lastly, only with some good fortune and favorable timing can a company expect their plans to succeed, allowing companies to survive in such industry conditions.

While future plans will, and should, vary from company to company, they will fall into broad categories of direction. These categories might include, leaving the industry altogether (that is, selling), diversifying into similar or unrelated business lines, focusing on developing and exploiting a niche market, consolidating the remaining market (through an acquisition strategy), or taking the company to another level (that is, launching a new business from the vantage of the current position in the industry). As previously mentioned, there will be no single suitable plan or direction which will apply to the industry as a whole; the desirability and correctness of each must be tempered with the personality of the company and its managers, the personal goals and time frames of the owners, and the specific business climate and financial condition in which the business finds itself.

Limitations of This Study

To expect that any examination will be perfect and without flaw or limitation is unrealistic and could cause those considering it to make incorrect or erred judgments and decisions. Because people are involved in any research effort, their biases, predispositions, experiences, and unique perspectives may skew, cloud, and otherwise impede the impartial gathering, analyzing, compiling, summarizing, and dissemination of information.

The author (who is also president of the Company under discussion) has been in the industry for over eighteen years and as such carries with him a perspective from inside the industry. If new paradigms are being sought, an industry insider might fail to consider them, discard them outright, or miss them completely. Also, the author's views and perspectives have been shaped by those around him, including the Company and industry for which the study is being conducted. This would suggest a tendency to confirm what is the current corporate view of the industry, be it correct or not. Also, the unique characteristics and conditions of the company in which the author works undoubtedly flavor the examination and influence conclusions.