Turning a Telephone Answering Service into a Call Center
Industry Research Now Available
WARNING: this book is a PhD dissertation (2000) and contains academic research.
It’s made available primarily to aid others who are conducting their own industry research. If this is what you seek, here’s an overview:
The telephone answering service industry is maturing and undergoing rapid changes. In recent years, the traditional client has been vanishing, switching to alternative technologies, bypassing their answering service. Telephone answering services have reacted in various ways, such as mergers and acquisitions, pursuing niches, or expanding their businesses’ scope.
The conventional wisdom is that there will always be a need for the human interaction which an answering service provides. It further assumes that answering services will serve fewer clients and generate less revenue unless steps are taken to increase their reach or obtain non-traditional clients. Previous research has recommended becoming a call center to better tap and capitalize on the needs of an emerging non-traditional client base.
The findings of this research effort determined there were the essential elements which should be present for a telephone answering service to transition into a call center. Additionally, there were five items which are common industry dilemmas to be addressed. An inventory of significant call center characteristics was also developed. Most importantly, several areas of focus were advanced.
WARNING: this book is a master’s thesis (1998) and contains academic research.
It’s made available primarily to aid others who are conducting their own industry research. If this is what you seek, here’s an overview:
The telephone answering service industry is facing uncertainty due to misconceptions, rising costs, and company closures. This book presents extensive research on the industry, including a SWOT analysis and input from industry professionals. It identifies six core items for survival and success: flexibility, customer-focus, management skills, service quality, staffing practices, and employment attractiveness.
The book recommends conducting company-specific SWOT analyses and developing strategic plans, as well as increasing rates, improving sales and marketing efforts, and capitalizing on 24/7 staffing.
Readers must assess their specific circumstances to determine if these strategies are applicable. This book equips industry insiders with valuable insights and recommendations to shape the future of their businesses. By being proactive and prepared, the industry can overcome its challenges and flourish in the ever-changing telecommunications world.
A common part of many book proposals is a “competitive works” section. I recently researched competitive titles for one of my book proposals. What I saw enlightened me.
Traditionally Published Books
To research competitive titles, I first looked at books from traditional publishers. They gave me pause. I had to think a bit to determine how my book was different and how it would stand out. This challenged me, but it was good exercise.
Each book was impressive: an attractive cover, nice title, a great concept or theme where the content flowed nicely, and professional editing and formatting. However, I didn’t think about any of these qualities at first. I expected these characteristics. Since they met my expectations, I gave these traits no thought—until I looked at some indie-published books.
Indie-Published Print Books
Next, in my competitive titles research, I looked at some print books that were indie-published. At first glance, the covers were of similar quality and the titles were almost as good.
The content, however, was not the same. The concept of these books was lacking and their execution, disappointing. Also, the writing wasn’t nearly as good. One didn’t even appear to have been edited, with sloppy formatting and missing words—and that from reading less than one page. The fault in all this is not is a tool they used to publish the book. It is the author. If you put garbage into the tool, you get garbage out of it.
Indie-Published E-Books
Last, in my competitive titles research, I considered a pair of indie-published e-books. They offered no print options.
These suffered even more. Their covers weren’t as good, and their concept was questionable. As far as the writing, the interior layout was so bad that I couldn’t force myself to read it. I didn’t include them in my “competitive works” section because I didn’t view them as competition, merely a distraction.
Takeaway
From all this, I’m reminded, once again, that indie-publishing (self-publishing) is an attractive option and an affordable solution when traditional publishers take a pass on our books. While this could be for reasons outside of our control, it might also be that our content is ill-conceived or our book still needs work. Sometimes this is hard to determine, especially after we’ve poured ourselves into writing it.
Regardless, if we choose to indie-publish, we need to keep in mind that our finished product must look like a traditionally published book if we hope for folks to take it seriously.
Learn more about writing and publishing in Peter’s book: Successful Author FAQs: Discover the Art of Writing, the Business of Publishing, and the Joy of Wielding Words. Get your copy today.
Peter Lyle DeHaan is an author, blogger, and publisher with over 30 years of writing and publishing experience. Check out his book Successful Author FAQs for insider tips and insights.
Determining an appropriate valuation for a telephone answering service (TAS) looms as a challenging task, one that many outside the industry don’t fully appreciate. This paper details TAS distinctives and explains how to best determine the value of a TAS.
EBITDA
A common valuation method for most businesses is to use a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization). This general approach can be adapted to apply in most situations, but it fails to appreciate the nuances inherent in the telephone answering service industry.
When it comes to determining the value of a TAS, the EBITDA approach often falls short, underestimating the true worth of the answering service.
Multiple of Monthly Billing
An alternate telephone answering service valuation methodology, which has proven itself over time, is a multiple of monthly billing. Most TAS business sales are to others in the industry or to investment groups that understand the industry. In this case, call center valuation knowledge doesn’t apply and leads potential purchasers astray, undervaluing the property.
Answering Service vs Call Center
By definition, a TAS is arguably a subset of the call center industry. But the TAS industry is substantially different. It also predates the call center industry, which started circa 1980, whereas the answering service industry first emerged in the 1920s.
While EBITDA works as an effective evaluation tool for call centers, this methodology doesn’t translate nicely to answering services. An outsourced call center typically has a small number of large clients, whereas a TAS has a large number of small clients.
Client Cancellations
If a call center loses just one client, their whole operation plunges into disarray and their future viability is questionable—unless they can replace that one client in short order.
When in answering service, however, loses one client the impact on the bottom line is negligible and usually not even noticed.
Given this dynamic, EBITDA works well for call center valuations, where the business’s future viability is unknown, even questionable. Even those call centers that attempt to lock in clients with long-term contracts, still lack the confidence of those clients remaining with them should they become determined to leave. Given this reality, outsourced call centers typically sell for a low multiple of their EBITDA.
Contrast this to a TAS with their high number of low priced clients. From a financial perspective, the TAS operation becomes a numbers game. The astute business manager knows how long an average client will continue using their services. Some will stay longer, and some will be shorter, but the average is a number they can confidently rely on hitting, month after month, year after year. They also know the average monthly billing for a typical client.
Low Volatility
What this means is answering services have a predictable and measurable volatility that is both small and understood. When a client cancels service, which happens every month, their marketing department and sales team has scores or even hundreds of realistic prospects in its sales funnel.
This means that another client will soon take the place of the one that just cancelled service. This isn’t hard to do with a monthly cost of using a TAS starting at just shy of $100, with a $200 to $300 range being common.
Given these dynamics, EBITDA calculations underprice answering services, with a multiple monthly billing being a much more realistic and actionable figure. Yes, you can valuate a TAS using EBITDA and back into a reasonable approximation of its value. But doing this requires adjustments and assumptions, which takes too much effort to be practical. And it still often undervalues the property.
That’s why most in the TAS industry have persisted in using a multiple of monthly billing to guide their initial telephone answering service valuation efforts. It has worked, and it continues to work.
Adjusting the Multiple
Just as with the EBITDA valuation methodology, the multiple of monthly billing approach determines the multiple based on other business factors. A well-run optimized TAS will command a higher multiple of monthly billing then a poorly run, mismanaged, or ignored operation.
Given this, however, is that some answering service buyers purchase only the client base. This renders all other valuation factors as largely irrelevant. For them, the monthly billing is the only thing that matters.
Others purchase the entire operation, either to run independently or to merge into one of their existing answering services.
A Seller’s Market
The TAS industry is currently experiencing a seller’s market. It’s been in this mode for several decades. Based on what I hear from buyers and sellers is that sales often occur for a monthly billing multiple in the mid to high teens. And selling at over twenty times monthly billing isn’t unheard of.
Sellers, of course, are pleased with the payout, yet buyers continue to willingly make acquisitions under these conditions. They do this to pursue an economy of scale, which only the bigger players can fully realize. This has resulted in a decades long TAS industry consolidation.
Industry Size
The actual size of the TAS industry is hard to pin down with any degree of accuracy, yet when I researched my MBA thesis in 1998 the estimated size of the industry was 10,000 answering services, which soon decreased to 5,000 by the time I did my PhD dissertation a couple of years later. I now estimate the number of services to be one tenth of that number, probably lower.
This is not to suggest the industry is shrinking. It is not.
The demand for answering service is great and appears to be larger than ever in terms of overall sales. It’s merely that the number of services has decreased.
Future Outlook
This means that those providers who want to grow through acquisition—which is much faster and often easier than growing via sales and marketing—have fewer viable services to select from.
This is the main factor in driving up monthly billing multiples and keeping them there. I expect this dynamic to continue for the foreseeable future.
I’ve never met an author who likes to write book proposals, yet if we hope to sign with a traditional publisher, we need a book proposal—a really good book proposal. Aside from being tedious and time-consuming, parts of a book proposal are challenging, such as researching competitive titles, selling ourselves as the ideal person to write the book, and talking about our platform (a.k.a. how we can move books).
To further complicate things, there is no standard format for the ideal proposal. True, there are some common expectations, but the list varies. Even the order is a matter of preference. To further frustrate matters, some people advise including items that other equally knowledgeable folks say to ignore.
Writing Book Proposals Is a Chore
This all conspires to make writing a book proposal a chore. Thankfully we only have to write book proposals if we’re going the traditional publishing route, right? No. The gurus say to do a proposal if we’re going to self-publish too. Yeah, like I’m going to do that.
However, I gained some insight into this when attending a book proposal workshop by Andrew Rogers at the Jot Conference. In addition to giving the most helpful information I’ve ever encountered on the subject, the act of writing parts of a proposal in class was insightful.
For the purpose of the exercise, I used my then-current WIP (work in progress, which I’ve since published) Women of the Bible—for which I did not have a written proposal.
Noting the title and subtitle was easy since I already knew that. A synopsis paragraph affirmed my vision for the book while describing the target audience was insightful. Though we didn’t have time for it, writing the hook—a compelling one to two sentences to sum up the book—would provide additional clarity. Last is the table of contents, which effectively is an outline to guide the writing.
(I realized that to self-publish I could skip the other items of a typical proposal, including a detailed outline, platform information, author bio, and sample chapters. Yea!)
A Mini Book Proposal for Self-Published Books
Having these five key items established would help me write and hone any book I want to self-publish. Plus, they wouldn’t take too long or be burdensome to develop. Armed with this insight, I intend to write a mini-book proposal for all my future self-published books to guide my writing and clarify my vision.
The items for a mini book proposal when self-publishing is:
Title and subtitle
Hook
Synopsis paragraph
Target audience
Table of contents
This is not an overwhelming list and won’t take much time to pull together. Remember, this will make our book easier to write and the finished product, better.
Learn more about writing and publishing in Peter’s book: Successful Author FAQs: Discover the Art of Writing, the Business of Publishing, and the Joy of Wielding Words. Get your copy today.
Peter Lyle DeHaan is an author, blogger, and publisher with over 30 years of writing and publishing experience. Check out his book Successful Author FAQs for insider tips and insights.
Young people are more apt to read books than older folks
To listen to mainstream media about the state of book publishing leaves most people with an incorrect understanding of the industry. The press gives the impression that fewer people are reading and those who do are mostly older. The industry is dying, so why bother to write and publish books?
Yes, things are changing, but not how most people think—and that’s exciting. The truth is young people are buying more books, not less.
A 2012 news item from Bowker, based on extensive research by Bowker Market Research and Publisher’s Weekly, proclaimed that Gen-Y is now leading all demographics in book consumption. More recent reports confirm this reality. That’s great news! There is a demand for books and a future for books.
The report also confirmed a shift to online purchases and an increase in e-book sales. Other reports suggest it is older readers who embrace digital reading, with younger readers preferring print. Go figure.
Times are changing, so writers and publishers must adapt, but the most important thing is people still want to read and young people are leading the way.
Learn more about writing and publishing in Peter’s book: Successful Author FAQs: Discover the Art of Writing, the Business of Publishing, and the Joy of Wielding Words. Get your copy today.
Peter Lyle DeHaan is an author, blogger, and publisher with over 30 years of writing and publishing experience. Check out his book Successful Author FAQs for insider tips and insights.
Ever since I finished my dissertation three years ago, my plan was to turn it into a book. Actually a dissertation is already a book. Mine weighs in at 40,000 words. What I mean is that I want to turn dissertation into a marketable book. Dissertations are not marketable. They are academic and boring. I suspect the only people who actually read dissertations are the instructors who have to and other students doing research for their dissertations.
In fact, turning my dissertation into a marketable form was one of my goals for 2013. Alas, I didn’t achieve that objective. In truth, I never started it. Other writing projects were more interesting and got in the way.
However, the project is back on. I recently generated some interest in the book version of my dissertation, and an editor asked for a proposal. Book proposals are arduous affairs—at least for me. You need to talk about platform and marketing. You need an annotated outline and you need three sample chapters. Yuck.
The outline was easy enough, but it also revealed that the order of my dissertation—as necessitated by academic requirements—would not work for a book. I would need to move sections around and merge other segments for people to actually want to read it and not give up.
For the sample chapters, I pulled out three of the more straightforward portions of my dissertation and set down to edit them. My plan was to pull out the arcane requirements, remove the formerly required repetition, simplify long sentences, and replace the big words. I often do this type of editing at work, so I thought it would be easy for my book. I was wrong.
Turning my dissertation into a book is not going to be an easy edit but a complete rewrite. It won’t be something I can crank out in a week or two. It will take months. I’m not complaining—because I desperately want a larger audience to read my ideas—but the amount of time and work required discourages me.
This points to a larger issue for me. Though I can accurately estimate the time required for smaller projects, such as blog posts, articles, short stories, and freelance assignments, I often struggle to realistically project the amount of time it will take to write books.
Though I know how many words I can write per hour, after a few weeks of staying on track, something inevitably conspires to derail me.
The book version of my dissertation is presently on hold as I await feedback from the editor. However, I may be starting another book next week. And this one will have a deadline. I hope my time estimate is realistic and feasible.
Learn more about writing and publishing in Peter’s book: Successful Author FAQs: Discover the Art of Writing, the Business of Publishing, and the Joy of Wielding Words. Get your copy today.
Peter Lyle DeHaan is an author, blogger, and publisher with over 30 years of writing and publishing experience. Check out his book Successful Author FAQs for insider tips and insights.
