The New York Times recently ran an article titled, “Tech Companies Leave Phone Calls Behind.” I love the NY Times and am a paying subscriber. But this article missed the real trend.
The premise of the article is that in an increasingly online world ruled by techies who don’t want to talk on the phone, the era of being able to call the company in which you do business is winding down. They cite Quara, Google, Twitter & Facebook as obvious examples.
… phones cost money, phones do not scale. Besides, why call when you can use Google, or send a Twitter message?”
It’s hard to really find fault with the reporting. In some ways it appears factually correct. But it’s really missing two key factors that would be misleading to the uninitiated.
1. Tech Companies most certainly do take calls. But only from customers.
2. In the future I predict more inbound calls / not less
Say what? That doesn’t sound right! Google doesn’t seem to ever take calls from ME when I have a complaint! That’s because you are not their customer.
Let me explain:
1. Tech Companies & Calls:
I once read a quote on Twitter that said,
If you use a tech service for free then product is you
In fact, it is. Google, Facebook & Twitter all provide free services to end users and we eat them up. But they make the overwhelming majority of their money from advertising.
They are selling audiences to advertisers. They are packaging you up into demographic and psychographic audiences – all the better to be purchased by brands trying to reach large niche audiences. They offer targeting tools for geographies, married people, parents, income levels, political affiliation – everything.
Whenever I talk about advertising people comment how much everybody hates ads. Only 2 problems:
– 94% of people hate paying for products even more (avg pay rate for ‘ad free’ tech products is < 6%)
– Ads are effective. It’s why people buy branded products
These tech companies also sell “intent” which means that when you search for “baby stroller” you’re going to get ads that are relevant to an expressed desire you’ve articulated.
Heck, they even “re-target” you as you may have noticed. You visited said stroller website and didn’t buy. For the next month you notice a lot more banner ads for baby strollers.
As I said, YOU are the product.
They call Google, Facebook, Twitter as much as they want and whenever they want. Believe me. The customer are advertising agencies and brands themselves.
Of course tech companies with free products don’t want to take a phone call from end users. Unless you become a paying customer you’re just a cost center to them.
You’ll note, of course, that Apple will happily take calls from you. They’ve even opened this totally retro, old school concept called “a store” and it’s physical.
As Google starts offering more consumer products (read: mobile devices) I assure you they will find ways to take customer service calls from you.
2. More Calls in the Future:
The premise of the article can be summed up in this quote
Officials at Facebook, Google and Twitter (all reached first by e-mail) say their users prefer to go online, finding it more pleasant and efficient than wading through a phone tree’”
Sounds plausible. But turns out it’s not factually correct.
According to Forrester Research (2011 report) 77% users who abandoned an online purchase cite the inability to speak to some as their primary reason for leaving.
This is consistent with data I see from RingRevenue, a company in which I invested and sit on the board.
Here’s some other things you might find interesting:
- There are around 20 billion in-bound sales calls in the US each year
- Online conversion of purchases drop considerably when the value of a product is above $150
- Online conversion for any complex product (insurance, home alarm systems, mortgages) are also very low
- Most high-value or complex product vendor actually PREFER calls. Why? Higher conversion rates (10-15x online conversion) and higher value at closure (up to 2x higher) due to up-sell & cross-sell potential
The best evidence is just how much higher these merchants will pay for qualified leads. Here are some representative rates that we’re seeing by category
So if I were Facebook or Twitter I most certainly would want to be driving phone calls. Just not to me. I’d be driving them to merchants who want to reach their potential customers through me.
Google already knows this. It’s why when search on many business types you now see phone numbers. Those are paid ads where they get paid per call.
And one piece of data that we’ve gathered that I haven’t seen published anywhere else is also very interested. We have found that when you put a phone number in an ad two unexpected factors go up
- 12% higher click-through rates on the online ad (more clicks!)
- 15 higher conversion of online lead forms
It turns out that these end users who supposedly find it more efficient and pleasant actually trust companies more when they have phone numbers. They seem like more real operations.
If you want to understand more about the real trends in phone calls there are a bunch of white papers here.
But What About Mobile?
An even more interesting thing about phone calls – and one that is about the future rather than the past which is why I think the Times reporter would have missed it by not asking the right people – mobile devices are likely to drive up inbound calls dramatically if these said tech companies that abhor phone calls can grok this trend.
You may have seen recently the WSJ report that Twitter is killing it with mobile ads while Facebook & Google have struggled. If you haven’t you should read the article – it’s an interesting trend.
Here’s the deal. Banner ads on your computer suck as I’ve outline before (presentation I gave at BlueGlass conference) (blog post I wrote on integrated adviertising & another one on online/offline integration ).
But if they suck on your computer Imagine just how bad they really suck on mobile devices where the screen size is much smaller. For me that’s why Twitter works. Their ads on mobile devices are increasing integrated (I was early in arguing for this – 2.5 years ago) and relevant and therefore get much greater conversion.
And what form of ad unit totally KILLS it on mobile? Duh. Phone numbers. When you’re interested in a product or service and can call in a single click and connect at the point you had interest – it’s a win for both customer and merchant.
Again, I have the data that proves it. RingRevenue grew it’s revenue 3x 2010 over 2011 and is on track to grow more than 3x again in 2012 with no signs of slowing. We have ridden the mobile wave.
One key to understanding how to make mobile campaigns work is that you must have call filtering between the push of the button and the call hitting a call center.
Here are some data provided by a BIA / Kelsey report (2012)
So having a software filter in front of the calls is key to making them cost effective. You need to be able to screen out the 52% of calls that are information requests with technology.
We’ve seen that with some mortgage providers where up to 50% of calls are for bank hours, location or directions. Software can make the costs of these calls trend towards zero and the 8% of pocket dials also self filter through software.
With software filters on inbound calls you can screen for obvious things that might affect you such as time of day (only take calls when you have people answering phones!), geography (no calls outside of my core territories), block out numbers that call too frequents (fraud), etc.
I have invested in 6 ad technology companies so I get to see trends across all segments of the industry. I can tell you that mobile ads are going to deliver serious revenue & growth to those who understand how they will be different from those that came from other media types. How ads work are always different across media types.
And for one of the most anticipated presentation every year – the venerable Meeker Report (see slide below), the opportunity is staring you in the eyes – don’t let the naysayers convince you mobile ads will not be big.
And don’t let any reporters convince you that phone calls are dying. Let them be your friend.
People still want calls.
Top image courtesy of Fotolia
(Cross-posted @ Both Sides of the Table)