Q3 Looked Promising – Until The SMACK-DOWN

Yep. July and August were pretty much “bust” months from a sales perspective as I mentioned in my last post.  But September started out great! In fact, we were on a roll and I had enough business lined up to beat our Q2 sales volume. I was looking forward to showing a great report for Q3 next week.  Things can change so quickly in the business world.

Suddenly, almost 2 weeks ago, I got the bad news:  New FCC regulations ban about 85% of what we do. Most of the past 2 weeks since I discovered this draconian new edict, I have been scrambling trying to find a replacement to the business model I have been building for years.  Whatever solution I find must be “legal”, must “work” for us and our Clients (ie it must actually generate low-cost leads) and it must be profitable.   I have a pretty good idea of what to do, but as of this writing I’m still not certain. Before announcing a final decision on our answer to this new regulation, I must wait for a formal legal opinion from our attorney, Scott Coombs.

The Looming Threat

October 16, 2013 a new set of regulations promulgated by the FCC will tighten the noose around the neck of ALL companies using automated dialing equipment to make outbound phone calls to cell phones, whether residential or business phones.  As of that date it is illegal to call cell phones with automated equipment without “express written consent”. Most call centers with outbound call functions are affected. We have about 2 weeks remaining to modify our business model to conform with the new regulations. If we continue operating “as is” without modifying our business model, we’ll face severe penalties that could spell extinction for this company. Obviously, I can’t let THAT happen.

What Are The Changes To The Law?

You can read some of the detail for yourself in one of many good articles I found online describing this upcoming change.  There’s also a link in this article to the law itself.  There’s a lot of detail in the new regulations that doesn’t really affect us.  But there are a couple of major items that will destroy us if we don’t prepare for them and change our business model to meet the demands of the government.

First I’ll just give you the overview of the primary sections of this new rule that directly impact everything we’re doing.  Essentially, anyone using autodialing equipment to make calls must obtain express written consent before making any call to any wireless phone or device.  What this means is that before October 16, it’s perfectly legal for us to call all business phone numbers with our GroupCaller™ predictive dialing system to solicit business from them (because calls to business phone numbers have been exempt in the past from the rules for predictive dialers and voice broadcast calls). This is currently what we do to find new clients.  On October 16, we must remove all cell phone numbers from any dialing list for ourselves or our clients (in addition to removing all DNC numbers) because we DON’T have express written consent from owners of those cell phones.

Also, before October 16, it’s also perfectly legal to call any residential phone number with our automated system as long as we’re calling with a “live” operator. After October 16, all cell phones must also be removed from the residential listings unless we have the specified “express written consent” of the call recipients. Why is this important? Because fully 85%+ of all phone numbers we call are cell phones. By calling only land lines, we’ll never have enough phone numbers to call for most of our Clients. We could still use our system to call our own prospective Clients, but the list will be about 85% smaller due to the large number of cell phones listed as a business phone of most small companies (like insurance agents).

So, How To Get Express Written Consent?

Web forms. This is how the biggest call centers and online marketers build their marketing (calling) lists. As a smaller company, we must buy our lists. To replace the list of approximately 272,000,000 residential phone numbers and 19,000,000 business phone numbers we maintain “in house” will take a long time and a lot of money. And it’ll be impossible in the short term. There are companies out there who DO have thousands of lead-capture web forms that harvest hundreds of thousands or millions of name/address/phones each month. But we don’t.  Those companies merely have to modify their online forms with some new language. No problem. For those of you who have followed our progress since 2006, you know that our ultimate plan (what I have always referred to as “Phase II” of our marketing strategy) involves a massive web presence that allows us to do just that. But during the past 18 months, we have prepared to build that online presence from the profits earned from the outbound call center lead-generation activities of  GroupCaller™.  Now, suddenly, the time is upon us where we “must” develop our online presence “right now”. But we can’t do it in 2 weeks. Or 2 months. Or even 6 months. It’ll take 1 to 2 years, and that’s only “IF” we can afford a large enough team of SEO/SMM/SMO marketing experts to do the work.

Cell Phone Scrubbing

We’ll still be able to use GroupCaller™ to call land lines (business and residential). However, we’ll only reach about 15% of of the phone numbers previously available to us.  We have to begin scrubbing all wireless phone numbers out of our system. Fortunately, Jeff Wilson, our CIO was able to figure out how we can do that. Mostly online cell phone scrubbing services charge about 1/2 cent per phone number in the database for the scrubbing. This may not sound like much but it completely eliminates our ability to make money. As an example, in the most recent cancellation I mentioned above, the new campaign we were supposed to start last Friday had about 240,000 phone numbers to call.  Scrubbing it for cell phone numbers would have reduced the list to about 36,000 numbers – WAY to small to run a successful campaign for them, and the scrubbing would have cost us about $1,200.  To put this into perspective, the Client was paying us $1,600 for the campaign. Of course the $400 remaining isn’t nearly enough to pay for labor, VoIP expense, management expense and all the rest that goes into running a campaign. So the bottom line is, we CAN’T pay another service to scrub for cell phone numbers if we wish to make a profit.

The Solution: Voicemail Marketing.  “Maybe.”

I say “maybe” because the legal research isn’t yet complete that tells me whether or not it’s legal to do what I’m contemplating, AND I haven’t fully tested the concept to make sure it can be profitable. I have given the project of determining whether or not my proposed solution is “legal” to Scott Coombs, an Arizona business and bankruptcy attorney. He has served as my primary legal counsel for almost 30 years now, since 1984. After studying the situation and looking at all the stats, there might be one and possibly two similar solutions.  Both of them rely on manually dialed calls which are generally exempt from the new regulation.

First, and the one I think has the best chance of business success, is to manually dial all phone numbers available to us, whether business or residential, land line or cell phone, and deliver short, 30-second messages to the voice mail of those phones.  Manually dialed calls are generally exempt from these new rules. Our statistics show that 53.42% of the 1,429,813 calls we made between June 1, 2013 and today (763,806 calls) were NOT ANSWERED.  Of the remaining 666,007 calls, 14.89% were human-answered. So as a company, we actually spoke to 99,168 people during the 3rd Quarter of this year.  The rest of those calls, 566,839 went to voice mail and answering devices. Of course all this was done with our powerful GroupCaller™ that pushes an amazing number of live calls through to our agents. Knowing that the conversion percent of people we speak to who actually become “leads” is small, generally around 1% to 2% of those we actually talk to, it’s pretty clear that by manually dialing, we’ll never reach enough people to conduct a viable marketing campaign for ourselves or for our clients. But there is one method that may still work:  Leaving voice messages.  This is what I’m hoping the attorney will approve. We did a highly successful voice broadcast campaign that relied heavily on leaving voice messages several weeks ago. It was the most successful campaign I have seen since the early 1990’s or late 1980’s. This is the source of my optimism. People got their voice mail and returned the calls.  I encourage leaving voice messages on voice mail after manually dialing because I know we can build specialty software into our VoiFone™ product that will allow the agent to click a button to leave the voice message, and then immediately begin dialing the next number while the system completes the message. This can increase the efficiency of each agent by 200% to 400% regarding the number of messages they can leave in a single day.

Second, we could do the same as above, except don’t leave a voice message. Instead, the agent would simply leave a short message of 10 seconds or less asking people to call us to get an important message about “____” whatever we’re promoting (insurance, making money, getting leads, etc.) This would be much more difficult to produce a profit for ourselves but it “may” work.

The bottom line is, I can’t determine whether either of these will work economically until I know whether we can do it legally. So for now, we’re wrapping up the campaigns with our 2 remaining active clients and waiting to hear back from our attorney. If I get a thumbs-up on the first proposal above, we’ll set up some tests and try to determine whether or not we can make a profit by manually dialing through a newly modified VoiFone™, and whether the response rate is high enough that we can truly service our clients.

What’s Next?

Regardless of the solution to this legal issue, it’s imperative that I raise additional capital, and come closer to the original stated goals in our PPM (Private Placement Memorandum).  Please refer me to anyone you may know who would like to become an equity stake holder in the long-term vision of this company.

I Never Said It Would Be EASY . . .

. . . and I was RIGHT! Creating a company capable of grossing several million dollars a month in sales volume is NOT easy. I have accomplished this task 3 times in my life, first at age 29 – lost it at age 30. Next was age 35, lost it at age 38. Next was at age 41, lost it at age 48. Each loss was due to government intervention, not business practices. And each success came at the end of many years struggling to build the infrastructure.

Years Of Preparation

Each time I achieved affluence and success, a company grossing from 1.5 million to 3.0 million monthly, it took many years of preparation and hard work on that ONE project before I finally achieved what most people assumed was an “overnight success.”  Yeah. Right.  All “they” saw was the time when I went from barely surviving to doing millions of dollars a month in volume over a span of usually less than 6 months. That’s spectacular. Unless you know the years of preparation that went into preparing for that growth and volume.

Just like in the past, it has taken years to build the infrastructure for this company. The difference is this is a much bigger infrastructure than anything I attempted in the past, so it takes longer and costs more.  Frankly, this company was designed from the very beginning to be the biggest project of my life and the crown jewel of my entrepreneurial career.  At this stage, when looking at the big picture, looking back on all that has been accomplished, I can’t help but believe we are well on our way to realizing our goals and achieving some of the first milestones.

We started programming for this GlobalTmail™ / GroupCaller™ / (and more!) project in March 2006. We had completed sufficient development for “live” beta testing of the first module (the call/contact center GroupCaller™) in the late spring of 2012. That’s 6 years to have a beta version ready to go. Keep in mind, GroupCaller™ represents only about 10% of the total business model we have presented since the beginning.  Now, it’s about 15 months AFTER we started beta testing the GroupCaller™ module, and I can state with confidence that Version 1.0 is fully developed. But just like any software/hardware based firm, we don’t stop at 1.0. That’s the beginning. There are many improvements we’ve identified and are working on.  Although I CANNOT point to sales figures yet as proof of the success of our concept and formula, I “CAN” point to other indicators that tell me we’re very much on the right track. Most importantly, we have identified a need that is NOT being well-served in America.  We’re exploiting that weakness right now, which is the generally very poor quality of lead generation available to insurance agents (and many other industries) in the USA. Our ability to generate high-quality leads has been well documented and proven by our customers and by our statistics; now the task is to get the word out, close more sales, and build our list of satisfied customers.

Disappointing Summer Season

We started the summer with such high hopes and expectations. Now fall is settling in and I am forced to concede defeat in this Summer’s marketing battle. But progress in the over-all war to conquer our own sales and marketing milestones is undeniable. This Summer’s battle of which I write is that contest that pits “us” against “the market place.”  We failed to present our product (GroupCaller™ lead generation services and Hosted Call Center services) in a manner that compels our prospects to pay us for our services, not just once, but over and over. Why? There are a multitude or reasons, such as my failure to fully delegate ALL support duties quickly enough to keep the sales ball rolling. In other words, it’s impossible for me to run the company, continue development, provide customer support AND make sales. Although April-June saw a spectacular growth in sales, it took me almost all of July and August to bring our staff up to a point where they could actually deliver our services without my help.  I’m still not completely satisfied that the staff can handle all support and service delivery tasks without my help, but I’d say were 70% or more to that goal. Because almost all my time had to be spent on issues related to delivering our service, I had nearly NO time to devote to marketing and sales. In August, I started shifting my focus to marketing and sales, which underscored some weakness in our ability to deliver timely service to customers. So August was devoted mostly to fine-tuning our services plus developing a new sales model, which is presented in this article.

During the 2nd Quarter of 2013 (April-May-June), we had terrific sales growth!  I revealed in in my last post on June 14.  I intended to keep that web page updated often but I didn’t.  We aren’t yet getting sufficient revenue to justify daily, weekly or even monthly updates, so I’m only updating it Quarterly. You can look for the next update to those charts at the beginning of October. I can already tell you it’s either going to look like a disaster, or, depending on what happens in September, it might just look like the most spectacular chart you’ve ever seen!  I have reason to believe the latter, as you’ll see if you keep reading this article. Our revenue for July and August dropped to nearly zero for each month. Now we’re in the first week of September. How do we reverse the trend? Keep reading . . .

How Have We Survived?

You’re right. It’s brutal here in the trenches. Too much work (for me averaging about 14 hours daily, 6 or 7 days each week), and very little money. But we survive because I have raised sufficient capital. Capital (or the lack of it) is the reason behind the success (or failure) of most companies. In the spring, Sam (not his real name) invested an additional $50,000 in the company, adding to the $50,000 he had placed with us last year. I have added an additional $80,000 of my own money, which i received through an inheritance. With that money, I bought stock in the company to keep us alive this year. That $130,000 is the reason I’m still able to write to you and the company has survived. Sales have been anemic at best. But there are reasons for it. In part, I have NOT wanted, nor have I tried, to do a complete “roll out” in any sales promotion. The reason is I must first see bona fide results of a successful test. In the meantime, I’m continuing to expend some effort to raise more capital for our survival and also I’m developing 2 “big ticket” items to sell (a “Professional Package” and the “Enhanced VAR – Value Added Reseller”.  . It’s incumbent on me to create cash for this company. We have a full time staff that depends on this company for their livelihood, including ME. We have invested way too much in terms of money, time and effort to let go and give up at this stage, so you can expect I’ll devote whatever time, effort and resource is required to ensure that we ultimately reach the goal I set for us so long ago:  Multi-Million Dollar Monthly Sales Volume.

What’s Going RIGHT?

The Wednesday before the Labor Day holiday I conducted a Voice Broadcast Campaign that got a conversion rate higher than I have seen since before the year 2000. It was initially 1.82% of those receiving the call who responded. It has now topped 2.0% !  You may not recall this, but in the past we have struggled for a 0.1% response rate, so this represents a FULL 2000% INCREASE (20 times higher) than anything I experienced in the past since we began using our voice broadcast system, and is close to what I saw in the best days of voice broadcast, back in 1988 to 1991. This is the best news I have seen! On August 6 we began experimenting with a new sales model. You can take a look at the end product of this sales modal on our website – the Insurance Leads For Sale page. And with that, here’s what’s going RIGHT:

  • Overview Marketing Theory Was Proven CORRECT!  This may sound a little trite, but it’s perhaps the biggest, best news of all!  Please bear with me because it’s going to take a little explaining (and reading on your part).
    • First, I theorized that if any industry REALLY NEEDS leads and needs them constantly, it’s the insurance industry, ESPECIALLY new, independent insurance agents. I was right. There is an abundance of proof available that shows the need is big and getting bigger.  In short, we are already IN the right place at the right time. That’s a big part of the war to conquer our sales and marketing goal which is already won!
    • Second, I had a theory that, if I could show insurance agents that we really DO have leads available, we really CAN get them, and that they’re available for purchase RIGHT NOW, we’d get their attention and they would be more likely to buy from us. I was right on PART of that theory:  We got their attention in a very big way! But the “…likely to buy from us…” part has yet to be seen.  I can still “feel” it coming, though, so I am very encouraged by the results of the past 2 weeks.
    • Third, we definitely chose the right industry (insurance) as our initial target market for our services. One of the reasons we originally chose the insurance industry as the primary industry we’ll target to start with was our belief that insurance agents are WAY under-served when it comes to lead generation. Most companies who sell or acquire leads for insurance agents do NOT provide good leads. The natural result is that most insurance agents still NEED a great source of leads . . . and they’re VERY unhappy with their choices for lead-gen right now, and as a result, VERY skeptical of anyone new (like us). That’s the DOWN-side. But the UP-side is so much bigger, that makes it’s worth putting up with the skepticism.  Once we acquire a reasonable number of regular, repeat customers (like maybe 50 to 100 or more), I predict this company is going to grow like a weed, and we’ll have a very hard time keeping up with the new sales volume. I believe the new growth will be mostly fueled by word-of-mouth (the way it SHOULD be).
  • New Instant Delivery Page & Low $5 Price Attracts Interest:  The Leads For Sale page has attracted far more interest than anything we have done since we first started experimenting with any form of marketing. The mere fact that we have what so many insurance agents need ‘RIGHT NOW’ seems to get people checking out the web page and website. I don’t know yet whether the page itself will be a monetary success. It remains to be seen whether the leads on this page and others like it will generate enough sales to exceed the expense of creating and continually updating it. BUT, it’s very clear that merely HAVING it seems to give us some “street cred.” I have discovered that most people who are attracted to it REALLY prefer to just get “EXCSLUSIVE LEADS” which has been our primary focus anyway. So if this page does nothing more than engage a record number of insurance agents in a conversation about doing business with us, then I think it has done its job.
  • Follow Up After Acquiring Leads:  The “sales model” is a rather simple 4-step process:  First pick a marketing area. Second, cold-call the area to gather Leads and place them on the sales page for that area (Utah, Arizona, Nevada, etc.).  Third, use voice broadcast to announce this page to insurance agents and send them a link (ie this generates leads for us). Fourth, talk to our prospects, answer their questions, walk them through the buying process.  I have also discovered that insurance agents are calling back more than 1 week after having received the voice message from our voice broadcast!  This is BY FAR the biggest, best result I have seen in voice broadcast since the early 1990’s and late 1980’s.  It’s nothing short of a miracle!  We intend to make sure we USE this knowledge by continuing the process, filling up our own pipeline of prospects and beginning to close sales with them each week.Here are the actual results of the voice broadcast to 4,914 Utah insurance agents in a 5-hour campaign on August 28, 2013, the Wednesday before Labor Day:
    Partial call results for voice broadcast to Utah insurance agents

    Partial call results for voice broadcast to Utah insurance agents

    There are only 2 stats in the chart above that show the people who actually received our message:  “AL” and “PM”. The “AL” stat shows the answering machines and voicemails on which we left a recorded message asking them to call if they want insurance leads right away for as low as $5 each. the PM (“Played Message”) shows the the number of times people actually listened to the message after picking up the phone.  (The PU stat shows the people who picked up the phone but hung up BEFORE hearing the message.).  We had 41 inquiries (so far, they’re STILL coming in!) from a total of 1,968 messages delivered. That’s a total of 2.08% conversion rate, which is nearly unheard of these days. It’s 20 times higher than what we experienced in the past. I have to believe we can and we WILL monetize this response rate.  And soon. I’m working very hard to keep that momentum going by following up on the inquiries, but just as importantly, ramping up new campaigns in new areas. Next on deck:  Nevada (Las Vegas). We’ll add Idaho, New Mexico and Arizona right after that – likely all of them next week. Now that momentum has started, I don’t want to lose it.

  • Cleaning Up The Call Center Staff:  Two days ago we terminated more than half of the call center staff due to lack of performance.  We are beefing up the salary and bonus package to attract high-performing agents. Each call center agent MUST acquire a minimum of 3 leads on their shift or they are NOT profitable for us (assuming we can sell all their leads). We have only 2 agents that consistently average 2 leads daily. Two others are consistent with averaging 1 to 2 leads daily. Everybody else is gone. Tomorrow or Monday we’ll begin interviewing new agents. Their new compensation package is TWICE as high as before, but the requirement to earn this salary is far higher. Now, they must endure one week of training with no pay, but only a small food and transportation allowance (100 pesos a day – that’s about $2.40 per day or around $10.00 USD for the first week).  If they show adequate performance (at least averaging 1.5 leads daily) they will have 2 more weeks to prove they can average more than 3 leads daily. During those next 2 weeks, they’ll get half salary.  If they pass this 1st 3 weeks successfully, they will receive the full salary of 16,000 pesos monthly (about $381 USD). We’ll also pay spiffs and bonuses that will increase the earnings substantially for the best performing agents. Our Call Center Manager (Randy) advises me that this will be sufficient to attract very experienced call center agents capable of doing the work we require.  This is great news for our clients!

Back-To-School Time Means Back-To-Blogging For Me!

Now that school is back in session, and now that the results are in for our summer efforts, I’m going to make a bigger effort to keep this blog up to date.  I’ll try to squeeze in at least one article each week, usually on a Saturday morning. My week days are jam packed with keeping this business up and running. Each day starts early, around 6 am, preparing for the days’ sales and development activities. I have no “down time” in the early morning hours, then at 9 am, calls start and I’m on the phone almost continually until the end of the day. After dinner, I’m back at the console, preparing for the next day, updating HTML code, doing correspondence and everything else that must be done to keep this company alive. So it seems Saturday morning is about the only time I’ll have for blog updates (these updates sometimes take 2 to 3 hours to complete so it’s NOT a small task).

I update this blog plus the public blog.  Don’t forget to check both!