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BT to `cold call' 15 million customers to fight off challenge from rival networks

British Telecom is embarking on the UK's largest-ever customer "cold-calling" initiative, with plans to ring 15 million of its domestic subscribers at least four times a year. Chris Godsmark, Business Correspondent, examines BT's bid to fight off the competitive challenge from rival networks.

For the bulk of BT's residential customers the new year will bring more than a post-Christmas hangover. Some 15 million households, those which are not members of low-spending budget plans, are about to receive the first "cold-call" from one of BT's recently established call centres.

BT said yesterday that it would ring these customers four times, amounting to at least 60 million separate calls, every 12 months. The two-pronged strategy aims to ensure customers are satisfied with BT's existing service, including identifying any discounts not claimed, while attempting to sell extra products such as a second phone line.

Most customers will be called in the evening or at weekends, when they are likely to be at home, though BT said it would abide by a telemarketing code of practice. A spokesman defended the plan, arguing homes would not be rung up early in the morning, or after 9pm each night. Homes which objected to being called could opt out of the campaign, though BT insisted most customers were happy.

"We don't regard this as cold-calling, because we already have an ongoing relationship with these customers. We write to them eight times each year anyway," said the spokesman.

The approach, easily the biggest cold-calling exercise in the UK so far, is supported by BT's pounds 100m investment in call centres, which has so far created around 3,000 new jobs. The newest two telemarketing centres opened recently at Doncaster and Gosforth on North Tyneside, each with 650 telemarketing terminals.

Operators are given pre-programmed calls from computer tapes, which provide information on customers' existing calling patterns, and read their questions from the terminal screen. The staff mostly work part time and earn commission for products sold to supplement basic pay of about pounds 4.50 an hour. Operators are graded in league tables, monitoring the amount of new business generated. Call Centres have become one of the big growth areas of the 1990s with financial services companies such as First Direct and Direct Line establishing bases for their telephone-based businesses.

The move is BT's latest response to the challenge from competitors such as the cable companies, who are signing up new residential customers, mostly poached from BT, at the rate of about 150,000 a month. The biggest cable group, Cable & Wireless Communications, laid down the gauntlet to BT last year with a pounds 50m advertising campaign.

Last month Oftel, the UK telecoms watchdog, raised its forecast for the erosion of BT's domestic customer base, predicting that its share of residential exchange lines would drop to 70 per cent by 2000, from around 91 per cent today. BT's share of national calls made would, according to Oftel, fall to just 50 per cent, while the group would account for just 40 per cent of international calls.

The cold-calling campaign aims not just to hold on to customers, but to offset the damage from competition by encouraging homes to use the phone more often. BT claims the strategy has already paid dividends, with 14 million customers now members of the Friends and Family scheme, around double the membership a year ago.

BT has combined the cold-calling policy with an advertising strategy increasingly shifted towards promoting special offers and discounted services such as Friends and Family. In the most recent case this saw Christmas adverts promoting a 20 per cent discount off one Friends and Family number, despite the fact that the price reduction does not take effect until May.

The campaigns, more aggressive than the "good to talk" approach of the past, are the brainchild of Ed Carter, BT's American marketing adviser.