Category: Telephone Answering Service

Telephone answering service articles by Peter Lyle DeHaan, PhD

Applying Artificial Intelligence in Telephone Answering Services

Post author By Peter Lyle DeHaan
Post date August 8, 2023

Consider the Role that AI Could Play in Your TAS Operation

By Peter Lyle DeHaan, PhD

You may be tired of hearing about artificial intelligence (AI), but get used to it. It’s here to stay, and it will change everything. Not only will it revolutionize business and the answering service industry along with it, but it will reach into and touch every aspect of our lives. In fact, it’s already doing just that, whether we know it or not.

Here are some ways you may want to consider applying AI to your telephone answering service.

Use AI to Supplement Management and Support

AI can function in a support role, assisting the functions and departments that surround your telephone answering service operation. Already, AI is great at producing the first draft of an email or suggesting attention-grabbing subject lines. The same applies for marketing materials and ad copy. But don’t expect AI to make a perfect final draft—at least not yet—but those days are coming, and they’ll likely arrive sooner than you expect.

Look for other ways that AI can assist nonoperation departments, such as accounting, sales, marketing, and technical. These AI tools are either ready today or are close to being ready. All you need to do is find them and implement them.

Use AI to Enhance Customer Service

The same applies for customer service functions. If a concern arrives via email, AI can often make the first draft of a cogent response. All you need to do is verify and tweak.

Chatbots are another area. You’ve likely had experience with them, albeit on the user side. Imagine what AI chatbots can do for your customer service. But before you get carried away, trying to implement a comprehensive system that will cover everything, start simply and address the basics. Once that’s working fine, expand it.

Another area related to customer service is tapping AI to perform agent evaluations. This isn’t just for select calls or random calls but every call. Only outlier results that need attention—either to correct an error or celebrate a success—need to be forwarded to the agent or management.

Use AI to Better Handle Calls

Most of the work—and most of the labor—at an answering service occurs in the operations room and revolves around answering calls or handling communication for clients. This is where AI can have the biggest impact.

Start by considering how AI can better support your telephone agents to allow them to do their job more effectively, quicker, or both. But don’t stop there. Also consider service activities that you can move to AI, with agent oversight and the ability to overrule. And, of course, there are areas you can completely outsource to AI.

But Don’t Avoid It

Some people are technologically adverse. There’s nothing wrong with that; it’s who they are. They just need to realize that ignoring it won’t make it go away, and it will one day put their TAS at a disadvantage.

Consider the last services to switch from cord boards to computerized systems. Or the last providers to stop handwriting messages and start entering them into a database. Though there were holdouts—sometimes for quite a while—they eventually realized they had to embrace the technology. So, too, will be the case with AI.

Artificial Intelligence Conclusion

When it comes to artificial intelligence, the opportunities abound, almost limitless. If you can dream it, it can likely be done—or someone has already done it.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of TAS Trader, covering the telephone answering service industry. Check out his books How to Start a Telephone Answering Service and Sticky Customer Service.

Tags artificial intelligence

Telephone Answering Service

How Should You View Answering Service AI?

Post author By Peter Lyle DeHaan
Post date June 14, 2023

Determine the Role Artificial Intelligence Will Play in Your Telephone Answering Service

By Peter Lyle DeHaan, PhD

Unless you’re intentionally ignoring it, talk of artificial intelligence (AI) is all around us. It’s hard to miss. AI is not a fad that will soon fade, a hype that will soon die down. AI is a trend that will continue to grow and become more pervasive in our everyday lives.

It’s infiltrating every industry, including telephone answering services. Given this, you may wonder how you should view answering service AI.

Let’s set aside the doomsday prognosticators who foresee a future where artificial intelligence will take over our world and deem human life as inadequate and worthy of eradication.

Though some futurists view this as a slim possibility, there’s little you or I can do to stop it. And the degree to which we embrace or dismiss AI will have no bearing on the technology’s overall impact.

Therefore, instead of fearing the concept of AI on a macro level, we should consider the potential of AI on the micro level, such as on telephone answering services. Given this, the question we must ask is how should we view answering service AI?

Answering Service AI is Not Something to Fear

First, there’s no need to be afraid of using artificial intelligence in your answering service. Though we don’t understand how AI works to do what it does, we don’t need to. What we need to focus on is the results, the outcome the technology provides. The how doesn’t matter.

Answering Service AI is a Tool

Next, we should view AI as a tool. Just as a computer is a tool, the internet is a tool, and VoIP is a tool, so is AI. In the same way we evaluate the cost, the effectiveness, and the outcome of any tool we provide to our answering service, we should do the same with AI.

Can we afford AI? Will AI be effective? What results will AI provide? If the answers to this deliberation are positive, then we should look at adding this tool to our tool chest.

Note that AI is not one application, but a means to empower every application. This means we could end up with multiple AI powered tools in our answering service.

Answering Service AI Should be a Strategic Consideration

Just as with every other business decision we make, tapping AI for our answering service should be a strategic choice.

Don’t jump on the AI bandwagon without first considering its merits. Don’t let FOMO (fear of missing out) rush you into making a rash decision.

Instead, make an informed judgment based on the available facts and a careful cost-benefit analysis.

Don’t Ignore Answering Service AI

Using artificial intelligence in your answering service may be ideal for your operation and goals. Conversely it might not be the right solution for you at this time. But don’t dismiss it without first considering it.

The only wrong approach is to ignore it.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags artificial intelligence, technology

Telephone Answering Service

TAS Staffing Lessons from Restaurants

Post author By Peter Lyle DeHaan
Post date April 15, 2023

Tips to Finding Qualified Staff for Your Telephone Answering Service

By Peter Lyle DeHaan, PhD

Finding qualified staff for telephone answering services has always been challenging, but it may be more of a struggle now than ever before. Interestingly, we can gain insights from the food services industry.

Before you dismiss the idea, consider that the goal at both restaurants and answering services is to serve people. Also, both industries often tap the same labor pool. What applies to one, readily applies to the other.

Three Categories

My recent experience at restaurants is most illuminating. They fit into three categories.

1. The first are restaurants with quality staff that provide exceptional service.

2. Next are those restaurants whose hiring choices have noticeably slipped in recent years, and their service reflects it.

3. Third are those restaurants who can’t find enough employees and have scaled back their hours or streamlined their menu and options accordingly.

Which staffing scenario best describes your answering service situation?

1. Successful Models to Follow

Restaurants in the first category—those with quality staff who provide excellent service—have several things in common. First, they have modern, well-maintained facilities. Their pride in their operation shows.

Next, they have accomplished managers and supervisors backed by finely-honed procedures.

Third, they offer better compensation packages. These restaurants don’t have “help wanted” appeals hanging in their windows or on their signage. And they have not needed to lower their expectations or hiring criteria to find quality employees.

People want to work for them.

2. Lowered Expectations and Struggling

Restaurants in the second category—those who have lowered their staffing expectations—also have several things in common. Their facilities are acceptable but not much more. They’re not as clean as they once were; areas of neglect are apparent.

Management and supervision are also lacking, seemingly from decreased expectations and accountability. They have “help wanted” ads in their windows, door, and signage. And they don’t pay as much and offer fewer benefits.

3. Essentially Giving Up

Restaurants in the third category—those who scaled back to address their inability to hire staff—are harder to comprehend. The one thing I can identify them having in common is that they seem to have given up finding enough reliable staff.

They act as though being short-staffed is inevitable, and they expect their clientele to deal with it.

One quick serve restaurant I used to frequent will only open their dining room if enough people show up to work. Else they lock their doors and expect everyone to use their drive through. As for me, I just drive to the restaurant down the street.

Another area restaurant struggled for months in a downward spiral of being understaffed, having inconsistent hours, and providing inferior quality food and sub-par dining experiences.

They let all their staff and supervision go, starting over with all new employees. These new hires—who I suspect are being paid more—have restored the level of service that this restaurant once offered.

If you lament the poor-quality applicants you receive and struggle to staff as you once did, the problem may not be with the available workforce. As hard as it is to say, the problem may be an internal issue.

Action Step

Don’t blame the worker pool when the problem may be internal.

Look at your facility, your management and supervision, and your processes. Once these are as good as you can make them, address your compensation package.

These elements all work together to bring in the workforce you need to best run your telephone answering service.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags hiring call center agents, operations management

Telephone Answering Service

How to Have a Faster Website

Post author By Peter Lyle DeHaan
Post date February 10, 2023

Speed and Responsiveness Matter for Your Online Presence

By Peter Lyle DeHaan, PhD

Having a website is the first step in creating your online presence. Then you need to keep it up to date and add content to stay relevant. But there’s a third element, one which many businesses overlook. It’s the speed of your website. Do your pages take too long to load? Is your site sluggish?

Know that in today’s I-want-it-now world, impatient people won’t wait for a slow site to display its content. They’ll bounce. When they do, they’ll go to your competitor. Each tenth of a second of delay increases the likelihood of someone leaving your site in frustration.

Yet this is a problem you can solve. Here are some items to consider.

Hosting

The biggest factor influencing a website speed is the hosting. Shared hosting is the cheapest option and the slowest. This is because hundreds, likely thousands, of websites all run through one server. If anyone of them has problems or encounters traffic spikes, every site on that server will suffer.

The key is to move away from shared hosting. Making this change is the quickest way to increase the speed of your website. Though there are many options once you move past shared hosting, all of them will provide a faster, more responsive website. And all of them will cost more.

Though you’ll pay more for faster website hosting, this is not a place to skimp.

Graphics

The images on your website also impact its operation. A site with no pictures will be faster than one with images, but today’s users expect visuals on a website. A straight-text site will be off putting. It will also look quite dated.

The first consideration is image format. Though PNG files have a higher quality, JPG files are perfect for online, and they’re also much smaller. Though exceptions exist, converting PNG files to JPG results in a much smaller file size. And smaller loads faster.

For pages with several graphics, using JPG files over PNG will result in quicker load times.

Another consideration is the dimensions of the graphic. Though websites will resize large graphics to fit smaller spaces, the better solution is to upload the right sized image to begin with. Don’t weigh your sight down with large images that you’ll never display as full-size graphics.

Feature Bloat

A third consideration is bogging down your website with features you don’t use or don’t need. For WordPress, which accounts for over 40 percent of all websites, these extra options are called plugins and widgets. Other platforms use names such as apps, extensions, or add-ons.

Only install the features you need and delete everything you don’t use. Also consider the utility of each feature. Does it truly add value to your site, or does it just look cool?

The fewer things running in the background of your website, the faster it will load and the less problems you will encounter. It’s an ideal example of the saying that “less is more.”

Summary

Don’t accept a slow website, as it will cause you to lose business and frustrate users. Instead take steps to make your website faster. This will cost some money and take time, but it’s an investment worth making.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags internet, website

Telephone Answering Service

3 Keys to SEO Success

Post author By Peter Lyle DeHaan
Post date December 15, 2022

Discover the Keys to Search Engine Optimization

By Peter Lyle DeHaan, PhD

You have a website for your telephone answering service. That’s the first step to establishing your online presence. But is your website doing all that you want it to do? Is it living up to your expectations?

If you’re not enjoying the traffic you want to have, the answer may be search engine optimization (SEO). As the name suggests, SEO makes your website more attractive to search engines.

If you impress them, they’ll show your content to more people who are searching for answering service solutions or the expert content you’ve posted.

Here are three keys to SEO success.

1. Content is Key

Good SEO starts with great content. But don’t produce content for search engines. Instead write for people. Put your visitors first and the search engines second.

If you pursue the opposite strategy and produce content with an SEO-first mentality, you may see a quick bump in traffic, but visitors will quickly bounce once they discover your content is substandard or not what they expected. It’s a prime example of the adage of winning the battle but losing the war.

2. Avoid Shortcuts

Successful SEO is an investment in the future. Adapt a long-term perspective when it comes to optimizing your website for search engines, and you’ll enjoy lasting results with traffic that matters.

Yes, there are ways to game the system and garner a short-term spike in traffic. But it isn’t sustainable. And most of these get-traffic-quick schemes hurt your site in the long term and end up working against you.

These are called black-hat SEO strategies. Basically, it’s cheating. Though nefarious SEO practitioners will continue to develop new ways to avoid doing the hard work of search engine optimization, the search engines strive just as hard to negate these cheats.

This means that to stay ahead, they need to continually develop new strategies to trick search engines.

Don’t go this route. Instead take the high road. When you do so, you’ll enjoy better, long-term results.

3. Outsource with Care

Though it’s possible to learn SEO and successfully implement it, many opt to outsource it instead. It seems either too daunting or the learning curve is too steep, or they lack the time, so they seek SEO professionals to do the work for them.

Unfortunately, it’s hard to assess the abilities and effectiveness of individuals and companies that offer SEO services. Most talk a good game, but not all can produce. Too many of them will perform basic steps you can easily do yourself.

Sometimes they haven’t kept up with the industry and recommend techniques that once worked but no longer do. Other times they unknowingly—or knowingly—use black-hat tactics that will cause problems in the end and damage your website’s search engine reputation.

There’s no effective way the vet an SEO professional, but referrals from happy, long-term clients are key. You should expect quantifiable, measurable results. If an SEO vendor can’t provide that, then they don’t deserve your business.

This isn’t to disparage all SEO providers. There are good ones out there who are worth every dollar they charge. The challenge is finding them and distinguishing the good ones from the not-so good ones.

SEO Success Action Steps

When it comes to SEO success, put visitor-focused content first, avoid damaging shortcuts, and select your SEO vendor with care—or do it yourself.

But the worst thing you can do is nothing. That’s the most ineffective SEO strategy of all.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags website

Telephone Answering Service

How Do You Use Social Media at Your TAS?

Post author By Peter Lyle DeHaan
Post date October 13, 2022

Use Social Media as the Spokes of the Wheel and Your Website as the Hub

By Peter Lyle DeHaan, PhD

Most telephone answering services (TASs) have a website. That’s great! But not all do. They don’t think it’s worth the modest investment and feel social media serves them quite well.

I’ve even heard from services that are thinking about ditching their website in favor of using social instead. That would be a bad move.

Here’s why:

Just Because Social Media Is Easy Doesn’t Make It Ideal

Social media is simple to use. Most of your staff is already adept at using the major platforms. And you likely have a platform-specific expert on staff who could help with any up-and-coming provider you might consider.

This is not the case with websites, which require a bit of expertise to manage and have a cost component, even though it may be small. But just because social platforms are easy doesn’t mean it’s the best solution.

With social media come significant risks, which you can smartly avoid by having your own website. Read on to learn more.

The Narrative is Harder to Manage on Social Media

The messaging on social media is challenging to manage—not yours, but everyone else’s. Anyone can say about anything in response to any one of your messages.

On some platforms you can block these offending messages, but on others you can’t. And too often these contrary messages spark an online war between your supporters and your detractors. No one wins.

Nowadays few websites allow for visitor interaction. And for those that still do, you—as the website owner—can delete the offending message. Your website is a safe place with relevant information about your business. Its free from trolls and malcontents.

You Can’t Control How the Platform Looks or Works

The wonderful thing about social media is it has a predetermined format for you to follow. Though you can control what you add, you have little say over where it goes or what it looks like. It offers little flexibility or customization capabilities.

Though some website providers follow this same philosophy, a self-hosted website offers a blank canvas for you or your design team to configure the way you want it and make it function however you wish.

You Don’t Own Your Presence on Social

I’ve saved the most compelling reason for last. You don’t own your page on any social media platform. Your provider does. They can limit who sees your messages. More infuriatingly, they can charge you so that the people who want to see your information actually can.

Even worse, they can summarily shut your account down at any time, leaving you with little recourse. When this happens you’ve lost all the traffic and the audience that you took years to build.

Owning your own website smartly avoids these problems and you falling victim to the whims of the social media overlords.

Conclusion

If you like social media, go ahead, and use it for your TAS. But don’t put all your eggs in one proverbial basket. Instead use social media to point people to your website, the one online destination that you can own and control.

And if you don’t like social media, don’t use it. Focus on your website. That’s what matters most.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags social media, website

Telephone Answering Service

What Does Your Website Do for You?

Post author By Peter Lyle DeHaan
Post date August 12, 2022

Make the Most of Your Online Presence to Better Serve Customers and Grow Your Business

By Peter Lyle DeHaan, PhD

Does your telephone answering service have a website? I hope so. What does your website do for your business? Over the years, I’ve seen a wide range of TAS websites, from severely lacking to impressively professional.

They fall into some common categories. Consider which category yours fits into. Then determine if it’s the right one.

A Placeholder

Some websites are nothing more than a placeholder. It may say “coming soon” or have generic text that gives no specific information.

I suspect this is from companies that registered the domain name to use for email purposes. Or maybe it’s businesses that registered the name but never got around to setting up the site.

Either way, be aware that prospects and others looking to learn about your business will stumble upon it. The message a placeholder website sends is not a good one. You’d be better off if it didn’t exist.

An Online Brochure

Moving beyond a do-nothing placeholder website is turning it into an online brochure. Effectively this means taking what once would have been in printed marketing materials and putting them online.

Typically this begins as a one-page website. There’s nothing wrong with this. At a basic level, an online brochure provides visitors with some information about your operation. It’s a great start.

An Information Center

Building upon a website as an online brochure, add other content that prospects will find helpful. This means adding more pages. In addition to your marketing information, you’ll want a homepage, an about us page, and a contact page.

You may also want a blog to post news and content marketing pieces, but don’t jump into starting a blog without first thinking it through and making sure you or someone on your team has the commitment to produce content on a regular basis.

A Marketing Tool

You can expand your website beyond an information center and turn it into a marketing tool. You can add pages that cover services offered, specialties or industries served, testimonials or reviews, pricing, and a sign-up form.

Which ones you include will vary with your marketing strategy, so don’t think you need to pursue every suggestion. Just add what makes sense for your situation.

A Client Support Resource

Until now we covered website options from the perspective of a prospect. It should also have a section for clients. Provide client-specific information to help them get the most out of their experience with your answering service.

You can also include a client portal to allow them to access messages, submit a customer service request, and make on-call or employee directory changes. You can also allow them to pay their bill online.

Most or all these options should require a customer login, thereby blocking prospects from accessing this information or trolls intent on causing mischief.

Your Online Hub for All Interaction

The best websites are both a marketing tool and a customer support resource. It becomes your online hub for communication with both prospects and clients.

If your website is currently at this level, well done! But that doesn’t mean you’re finished. Look for ways to make it simpler to navigate and more user-friendly.

A website is never done and requires ongoing tweaking. The goal is that each change makes it better and more effective.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags marketing, website

Telephone Answering Service

Look for Ways to Better Serve Your Clients

Post author By Peter Lyle DeHaan
Post date June 16, 2022

Seek Initiatives to Stand Out from Your Competition

By Peter Lyle DeHaan, PhD

You’re proud of your telephone answering service; at least I hope you are. You strive to serve your clients and their callers well. You do things with excellence. You relish the fact that you facilitate hundreds or thousands of communication efforts every day.

Yet your competitors feel the same way. Every answering service does.

So how can you stand out? What can you do to differentiate yourself from every other service, which seems to most people to be just as impressive as yours?

You should focus on providing quality service; everyone does. It’s not a distinguishing factor anymore but an expectation.

Instead look for ways to better serve your clients. Here are some areas to consider.

Inquiries

The first idea to better serve your clients is to start before they become your customer. One area to look at is the amount of time from when they click on your ad to when they’re having a true conversation with someone on your team. An automated response or AI-powered bot doesn’t count. Only true human interaction matters.

Strive to shorten this time as much as possible. Establish systems to aid in this effort, and reform your sales staff’s perspectives of the imperative need to respond right away.

Onboarding

Once you’ve closed the sale, the next step is setting up their account and beginning to answer calls. Again, measure the time from when they commit—such as submitting paperwork or signing an online form—to when you answer their first call.

Streamline this process is much as possible. Cut bureaucratic steps. Look to do functions in tandem rather than sequentially.

Yet balance speed with completeness.

Don’t subject them to a generic solution within an hour or even a few minutes with the goal to add the details later. This will give them a negative first impression of your answering service, one from which you might never recover.

The goal is to minimize the time from when they hire you to when you’re providing complete, first-class service. The longer you take, the more opportunity they have for buyer’s remorse to sit in. Take too long and they could cancel service before they even start.

Message Delivery

The TAS industry has made great progress in better serving clients with all the innovative options in your arsenal of tools to get them their messages and information quickly and effectively. Yet most of these capabilities exist on your platform, which means every other answering service has these options at their disposal as well.

Look for other innovative ways to help your customers with their communication needs, delighting them in the process. This will be a key distinguishing characteristic to better serve your clients.

Billing

Have you ever received an invoice that was hard to understand? Did it contain descriptions that didn’t make sense or line items that delineated information that confused you?

Do the invoices your answering service sends carry these same issues?

Information on most invoices reflect what the business needs to better manage the financial aspect of their operation. The side effect is a less-than-ideal presentation to customers.

This is backward. Don’t frustrate your customers with a confusing invoice just because it is what works best for you.

Redo your invoicing with a customer-first mentality to better serve your clients.

Problem Resolution

Though we wish problems never arose with the service we provide to our clients, they do. The obvious solution is to strive to minimize the occurrence of problems in the first place.

Yet when they do pop up, how you react is critical. This includes how quickly you respond and how accurately you resolve the problem. A third, but often overlooked, element is how the customer reacts to your efforts. If you’ve corrected their concern and they don’t realize it, you still lost.

Moving Forward to Better Serve Your Clients

As you review this list of areas for improvement, pick the one that offers the biggest potential impact to your customers. Then work toward improving it. This will help you better serve your clients and stand out from your competition.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags customer service, sales and marketing

Telephone Answering Service

Does Your TAS Do More Than Take Calls?

Post author By Peter Lyle DeHaan
Post date April 14, 2022

Answering Services Should Seek to Diversify Their Service Offerings

By Peter Lyle DeHaan, PhD

I’ve often encouraged telephone answering services to expand their service offerings. One option is to become a multichannel provider. A wise approach that aligns with the core mission of facilitating client communications is to handle additional channels.

This can include email processing, text services, web-based chat interaction, and social media monitoring.

Some answering services have moved in this direction with varying degrees of success. Others have contemplated it but are yet to act.

Another camp is those that have resisted offering other communication channels. I get that. Pursuing what is different presents challenges and is scary.

Yet it’s important for any business—including answering services—to diversify their service offerings to better prepare for the future. Whatever your perspective of this multichannel strategy, here are some ideas to help you move forward and realize success.

Select One Channel

Don’t pursue a multichannel strategy by diving into every opportunity at once. Strategically select one option and resist the urge—no matter how tempting—to let another channel distract your attention.

Which channel are you most comfortable pursuing? Though this is a good place to start your deliberation, don’t stop at this point.

Next, evaluate the strength of your existing staff. Which channel best connects with their inherent skill set?

Third, check with your vendor to see which option they can best and most easily provide through your current system. You’ll want to integrate this new channel in with your existing answering service platform.

A last step, which could also be your first one, is to check with your existing client base and gauge their interest for each channel option.

Ideally, you should select the channel that your existing staff has the skills to address, will work on your current platform, and you can market to your established client base.

Proceed With Care

Once you’ve selected a second communication channel to pursue, plan carefully before you proceed. Don’t announce this new service and solicit customers expecting to figure it out as you go. Train your staff. Test your platform. Anticipate potential problems and adjust as needed.

Do all this before you sign your first client to this new channel.

Market the Channel

Once you’ve done all the needed preparation, now is the time to promote this new service. Start with your existing client base. Perhaps even handpick clients who will be predisposed to work with you and help you fine tune your offering.

After you’ve added the service to all your existing clients who are interested in it, begin a proactive sales and marketing campaign to solicit new business specifically for this channel. As a bonus, you can cross sell them on your voice channel.

Master This Channel

As you gain success in the second channel, resist the urge to add another one too quickly. Excel at this channel before you consider diversifying further into a third one. Don’t rush it. But don’t coast either.

Repeat When Ready

Once you’ve achieved operational and financial success on your second channel, you’re ready to replicate the process with a third one. You may desire to expand quickly and repeat your success.

But it may also be wise to take a strategic pause to settle into a new rhythm of offering two channels before you proceed to add a third. Just be sure not to remain there too long.

Multichannel Success

Keep moving forward to diversify your service offerings and become a multichannel provider. Your future will thank you.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags leadership, management, strategic planning

Telephone Answering Service

Telephone Answering Service Valuation Methodology

Post author By Peter Lyle DeHaan
Post date March 28, 2022

By Peter Lyle DeHaan, PhD

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.

Learn more in Peter Lyle DeHaan’s book, How to Start a Telephone Answering Service.

Tags Peter Lyle DeHaan, TAS Trader