Telemarketing is the process of selling goods and services over the telephone. It has been used to successfully market a variety of products ranging from insurance to newspapers to industrial equipment, and it has the potential for selling virtually any product.

There are two kinds of telemarketing— outbound and inbound. Outbound telemarketing calls are those placed by salespeople to homes or businesses. Inbound telemarketing occurs when customers call in to businesses to place orders.

Outbound telemarketing is particularly appealing to businesses whose salespeople have traditionally made outside sales calls. It reduces the cost per contact, increases the number of contacts that can be made per day or week, and still retains the human element. Computerized databases of prospects and automated predictive dialers can further extend the potential number of contacts a telemarketer can make. Outbound calls can be used to canvass for new business, follow up former customers, and contact new leads.

Outbound calls present an ideal marketing situation in which the telemarketer has the undivided attention of the prospect and can get immediate feedback. At the same time, the limited window of opportunity requires that the sales person establish rapport and trust quickly, listen carefully, and provide clear information. Success in outbound sales is related to product knowledge and presentation skills and, thus, can be enhanced by training.

Inbound telemarketing is also a very efficient marketing approach that also retains the element of personal interaction. Calls are generated by catalogues mailed to prospective customers or by radio, television, or print advertisements. These promotional pieces solicit customers to buy by calling a toll-free number. When customers call in, they may either reach a telemarketer directly or receive an electronic message that gives them the option to be connected to a salesperson. Since inbound callers have entered the buying process when they call in, a customer service orientation is more critical to the success of the telemarketer than sales training.

The use of the telephone as a sales tool dates back to the early 1900s. However, the full potential of outbound telemarketing was not recognized by business until WATS (wide area telephone service) lines came into existence in 1960. Likewise, the full potential for inbound sales did not become apparent until the Sheraton motel chain implemented the first toll-free 800 lines in 1967. During the 1970s, telemarketing techniques became more refined and were incorporated into the marketing strategies of business of all sizes. Between 1981 and 1991, spending on telemarketing efforts grew from $1 billion to $60 billion. And in 1997 telemarketing sales, to consumers and businesses, totaled $425.5 billion.

Although telemarketing has experienced continued growth, it has not been without problems. Many consumers have a negative perception of it because of untimely and annoying calls. It has also been the vehicle for a variety of fraudulent schemes, a fact that prompted a crackdown by the U.S. attorney general in 1997. Despite these concerns, the outlook for the industry appears to be positive. Research indicates that businesses are becoming increasingly receptive to doing business with sales representatives by telephone, sales trends are upward, and expansion is indicated by the projection that an additional 5 million telemarketing employees will be hired between 1995 and 2000.