Economics of the Do Not Call List

January 30th, 2009 by Potato

There’s one thing that’s been bugging me for a long time about telemarketing: how does it work? That is, how is it remotely profitable for companies to hire people, even below-minimum-wage offshore workers, to call people in their homes to sell them things? The theory is of course that a lot of the attempts will fail, but a few will succeed. This works for spam email: all it takes is one stupid son of a bitch in a hundred thousand to fall for the spam and it’s worthwhile, because sending spam is essentially free (especially these days with zombie botnets responsible for much of the load). I have trouble believing that the latest generation of spam ever works — random character strings without any kind of message, sometimes an image without a link — but that might be as much about de-training filters as it is about sales. Ditto for comment spam.

However human telemarketers have to get paid. Even if they’re only paid $5/hour, they’d probably only be able to pitch to 100 or so people an hour. How much is a hit worth to those hiring them? Rogers calls me once a month, at least, so it’s not even like they’re reaching 100 unique people each hour. What would their success rate have to be to make this a worthwhile venture? That depends partly on what landing a moron is worth — if getting a new subscriber to home phone is only worth $5 to Rogers (or the call centre), then they need to land one every hour, or every 100 attempts, but at $50 then it’s “only” one in 1000. Me, I have a hard time believing that telemarketing has anywhere close to a 1 in 1000 success rate. I have a policy — and everyone who hates telemarketing should too — that I will not, under any circumstances, buy something from a telemarketer. That handy policy also helps protect you from a large amount of fraud. Even for those who don’t, is having someone calling you during dinner to pitch the same thing you just got 3 direct mailings and saw 15 TV ads about going to suddenly change your mind? Who is telemarketing going to work on that those other cheaper, less annoying methods of marketing won’t?

To get telemarketing to stop, all we have to do is make it not worth their while, to bring the success rate down below about 0.1% (or even below 1%). I would have guessed that it was already below that… but according to a quick Google search, it’s actually above 5%, which just blows my mind. [Sorry, no references that appeared valid/unbiased enough to cite]

The Do Not Call List sounds like a decent idea on the surface, but unfortunately it’s been reported that signing up might not really help you, and that offshore telemarketers might have taken the list so now people who signed up are getting called more. Me, I found a slight decrease in calls after signing up, but I already had a lot of telemarketers calling my (listed) home line. I did not sign up my cell phone, since I figured that the list getting leaked was a possibility, and there were already very few people who called that number, so why bother? If you’re not presently swamped by calls, don’t sign your number up.

Anyhow, a post in the Freakonomics blog rang true with me: this has to be the worst list to steal/buy. Even if the do-not-call list doesn’t work through its original intended fashion (using the law to stop telemarketers), it should still work in an economics fashion: this is a list of people who don’t want to be called. If you call them, they will likely not buy your shit. In fact, they’re people who were aware enough of the telemarketing issue to go out of their way to sign up for a do-not-call list, and so they’ll probably be pissed if you do call. Stealing this list and calling people on it should be expected to lose money for the underhanded telemarketer. The Canadian do-not-call list is full of loopholes, for charities and political parties for example. If any of those excepted companies call, remind them that you’re on the do-not-call list. If they say that they’re an exception, then tell them that you don’t care about the legalities, but rather that you won’t give your money to an organization dumb enough to waste resources calling people who don’t want to be called.

On the other hand, some commenters in that post indicated that the do not call list is just the opposite: a collection of people who are gullible and vulnerable to telemarketers, so they need the protection of that list, or at the very least it is a list of working numbers answered by humans… making it the perfect list of people to call.

4 Responses to “Economics of the Do Not Call List”

  1. Ben Says:

    Earlier this week I was called from 909-842-9107 to my cell phone, out of curiosity I answered and it was a dead line. Later that day I looked the number up online and apparently it originates in California and they try to sell you some kind of warranty extension for your car. They called again and I didn’t answer, and they left no message. Earlier today I got another call from 702-520-9128. I didn’t answer, looked it up and lo-and-behold it was a number doing the SAME thing. Later in the day I found out that this has been going on with A LOT of people around the GTA and beyond
    In reading these threads it lead me to the realization that the “Do Not Call List” is not only a list of people not to be called, but also, in the wrong hands, a list of valid, working phone numbers, so even if you don’t want to be called, evil doers with this list can call you and expect you to answer since you’re not expecting them to be calling!

  2. Potato Says:

    Oh yeah, we get that annoying warranty scam recording all the time. The other ones we’re still getting despite the DNC are the “this is your captain” scam and “hurry, your eligibility to lower your rate is running out”… I don’t know what makes them think that calling the same number every day is ever going to generate sympathy. Beyond that we also get a call from Rogers every month or so, because we have a business relationship so they’re exempt…

  3. Netbug Says:

    Carpet bombing works, in many things.

    I find it strange that people get unsolicited calls. On my cell phone, I get zero and even on my parents 35 year old home line, published, not screened, they still only get like 1-4 per month.

    FYI, with Rogers, you CAN call in to the business office and ask them not to call you at all. It flags the account and you SHOULDN’T get calls; at least not from Rogers themselves. Sometimes the third-party resellers (who are complete and utter morons) just ignore those though and call anyways, but you can report them. Ask for the Office of the President for anything regarding procedures.

  4. Potato Says:

    I probably should, but the calls give me fodder for writing them letters and asking them to lower my bill (“Why are you wasting $1/month calling a current customer with useless junk, just lower my bill!”). It doesn’t work in practice, but I like to think it will, one day.