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.
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.