Corrections or additions?
This article by Barbara Fox was published in U.S. 1 Newspaper on
November 3, 1999. All rights reserved.
AnswerNet: Moving Call Centers to the Internet
In the parade of E-commerce companies popping up all
over Princeton, here is one that is easy to understand. It’s the
old-fashioned
call center and answering service, upgraded to the Web, and it is
ready to capitalize on the new popularity of online purchasing, which
unexpectedly ballooned during last year’s holiday season.
Gary A. Pudles has joined William Robertshaw and his daughter Barbara
Robertshaw to found AnswerNet Inc. at 345 Witherspoon Street. Pudles,
the president and CEO, aims to make buying on the Internet less like
eating at the Automat, where you never see the face of the person
who takes your money. He quotes surveys showing that half of online
buyers would buy more if a “live person” were at the cash
register. “Even buying online, people want to feel good about
the purchase,” says Pudles. “Part of your K-Mart experience
is paying a live person.”
By equipping customer service representatives (CSRs) with Internet
technology, AnswerNet fills that gap. Instead of just answering phones
and retrieving faxes, small answering services and order entry
companies
— often mom and pop operations in the hinterlands — can now
respond to customers with real-time E-mail chat. “We have taken
the order entry companies and moved them into the web business,”
says Pudles. After 13 months the partnership owns six call centers,
each with from 8 to 35 seats, and has a total of more than 4,000
clients.
“The Internet has created a new paradigm in the way merchants
distribute goods and services, and I am going to be an early
entrant,”
says Pudles, who launched his LiveChat Internet CSR/Operator Service
last month. Three of the services already have web-based equipment.
“We have nice companies doing nice traditional answering service
business and are moving them into new niches,” says Pudles.
“We
are buying the technologies that small and medium-sized companies
can’t afford.” He points to three Internet products:
E-mail message delivery . Instead of having to call into get your messages or responding to a page or a fax, the messagefrom your answering service can be delivered by E-mail.E-vox voice mail system converts voice mail into an audiofile, to be attached to an E-mail. While you read your E-mail, youcan use the E-mail system to hear voice mail messages that wereforwardedby the answering service.Live chat operator service . If you have a question aboutyour purchase or want to order from a live person instead of fromthe automated form, an AnswerNet customer service representative (CSR)can respond utilizing AnswerNet’s live, secure two-way textdialogue-basedsystem.Your company can get a dedicated customer service representativefor $25 to $35 an hour, for however many hours you choose. Or youcan share time with other companies and pay about 85 cents per minuteof actual usage or about $50 an hour. Extras come with this. Forinstance,you can monitor the E-mail transmissions to be sure you like whatyour rep is saying, and you can archive the conversations for laterstudy.”It is a very friendly way and a quick way to get a response froma catalog,” says one industry expert, Joan Sitarz of Market EntryInc., based on George Davison Road. Her firm does strategic marketingand represents products in catalogs and on the Web. “A lot ofmail order houses are doing that. You can chat with other customersabout a product or ask a specific question.” She reports thatconscientious call center personnel, seeking to get customer questionsanswered, are contacting her by E-mail and phone. She forwards thosequestions to the manufacturer.Matthew Powell, a Princeton-based retailing consultant withRenaissancePartners LC, points out that most companies respond with automaticanswers controlled by software that searches for keywords to providestandard answers. “If the response can be more immediate it canbe a plus. People on the Internet expect everything at lightningspeed.If they are ordering anything they want it tomorrow,” says Powell.AnswerNet also pitches services to companies that don’t sell throughcatalogs. For instance, if a pharmaceutical firm wants to protectits sales leads, it advertises just one number and the answeringservicepatches the calls — by phone or E-mail — to the various salesrepresentatives. For dentists in the Aetna US Healthcare networkAnswerNetoffers a wireless paging service.Even technical questions can be answered with the E-mail system.”Weare about to launch with a national PC rental company to handle helpdesk calls,” says Pudles. “We ask a series of gating questionsand patch the caller to the right engineer in the right part of thecompany.”The big players in the order entry field include Matrix Marketing,which has the Pottery Barn account, and Apac Teleservices, which hasUPS as its customer. Also, some mega catalog firms, such as Hanoverand Lands End, provide outsourcing for other catalogs, with a completefulfillment service — order taking (including the E-mailtechniquesdescribed above), warehousing, “pick and pack,” and shipping.In contrast, AnswerNet does not touch the merchandise; it limitsitselfto the message taking and order taking. “Almost nobody is doingwhat we are doing on an outsource basis, particularly for the smallto medium companies,” says Pudles.Top Of PageSignius Inc.Yes, there is competition, Pudles admits, from thousandsof answering services and hundreds of web-based answering solutions:”I am going to be an early entrant, but not the only entrant.The reality is, if you give good service you will be successful.”One of his competitors, ironically, is a company founded by Williamand Barbara Robertshaw, Pudles’ advisors and financial partners.Robertshaw,63, had had a construction firm, and his daughter, 40, is a Brownalumna who had been an investment banker. With hefty venture capitalfunding, including early money from the Edison Venture Fund on LenoxDrive, they did a “roll-up,” a mass acquisition, of answeringservices (U.S. 1, August 28, 1996). They grew Procommunications from1990 to 1996, to $30 million in annual revenues. Procommunicationsevolved into another firm called Signius Inc., which moved fromPrincetonto Bridgewater.Signius and AnswerNet are number one and two in the market now, saysPudles. Yet Jim Collins, vice president of sales and marketing forSignius, does not consider AnswerNet to be his competition, partlybecause of size (“If AnswerNet starts to grow, they will pop upon our competitor list,” says Collins) and partly because Signiusis moving away from telemessaging into teleservices for the directmarketing business community. It has reduced its locations from 40to 26 and is refocusing the company to grow internally, do branding,and take advantage of the company’s size.The Robertshaws have left Signius for the partnership in AnswerNet.It now has call centers in Pennsylvania (Allentown), Oregon,Washington,Maryland, Illinois, and Canada. One more call center is expected tobe purchased this month and that would bring projected revenues upto about $5 million.What might stymie AnswerNet’s growth goal is the paradigm shift fromvoice to text. It is a drastic change, and an expensive one, becausethe people behind the computer terminals need to be sufficientlyeducatedthat they can write and spell well. The written communications goout without editing and are therefore vulnerable. In effect, thesepeople have to be very proficient at the new art of participatingin the commercial equivalent of an Internet “chat room.””Live chat is an Internet-centric service, very difficult to costand price,” says Collins.Another factor that might hinder Pudles is, paradoxically, thatAnswerNetis too profitable. “We’ve been cash flow positive since the firstday, and that’s a concept that venture capitalists don’t get.”Venture capitalists want to make too big an investment and take toomuch control, he thinks. “They are used to big burn rates, sothey can put up their money, get all kinds of equity and interest,and control every aspect of your company,” says Pudles. “We– the team of Bill, Barbara, and Gary — have the experience,and they don’t. We are doing things on our own terms. Too many VCswant to come in and control your company completely.””Everybody wants equity, and there aren’t a lot of hard assets– just leased space and a telephone system. The value is in thecustomer lists and the people. At the end of the day, I want the moneyI raised to acquire businesses that can generate profits, so I caninstitute my programs out of the profits.”The partners put up early money, and the first outside capital wasjust over $500,000 from Waterside Capital in Norfolk, plus financingfrom Progress Bank in Blue Bell, Pennsylvania. Now Pudles is lookingfor an “angel” investor willing to take a small basic return,a preferred dividend, and a piece of the deal. “With that moneyI can acquire businesses.”Another requirement for this mythical investor is to also buy intoPudles’ values. “Answering service people don’t make all the moneyin the world, and I don’t pay the highest salary in the world, butI would like to try to create a nice place to work,” says Pudles.”I am looking for an investor to share that vision.”Pudles has toiled in many workplaces, some that fit his vision andsome that did not. His father worked for Exxon in Linden and his latemother was a bookkeeper who worked extensively in real estate. Hewent to Syracuse, Class of 1984, to law school at American University,and is a member of the Maryland, Virginia, and District of Columbiabars. At a traditional law firm he started a real estate litigationand business practice.He now realizes he spent his career dragging traditional businessesinto modern technology. His next job was to run Muzak when thedeliveryof “elevator music” was changing from an FM radio broadcastto a one-meter satellite dish, from two channels to unlimited choices.”I was running the business but there was no risk involved inmy life.”Pudles helped launch the first Personal Communications Systems (PCS),the Sprint Spectrum System. “Because of our success, the IPOsfor similar companies, such as Omnipoint, were huge. We leased, zoned,and built 350 sites in 18 months, but Bell Atlantic had 400 sitesin 13 years. We gained 25 percent of the market but they are nowshuttingdown the system we built in Washington in favor of differenttechnology.”Then he participated in a start-up for Apex, a specialty real estatemanagement company renting rooftop space to telecommunicationscompanies.His clients were big commercial companies such as Mack Cali, HartzMountain, and Alfieri. “We took what used to be a mom and popbusiness and made it the largest national rooftop managementfirm.”He and his family — a wife with a home-based business and twoyoung children — relocated to Pennsylvania and he prepared tobuy a business, but in the middle of the due diligence effort thatwent sour. “It was January, 1998, and my wife kept telling meto go out and start my own business. I didn’t want to start fromscratch,and one of the major things I liked was telecommunications. I hoppedon the Internet and found the answering service business,” saysPudles.During his initial due diligence search he had encountered BillRobertshaw,who issued a standing invitation to come back any time. So the daythe deal tanked, he went back to Robertshaw, who he considers anamazingmentor “and an even more amazing friend.””He has a heart the size of Texas,” says Pudles. “I havebeen around smart business people my whole career, but he’s got tobe one of the smartest strategic planning executives I have ever heardof. Within three days I put up my entire life savings and we werein business.” The first year, last year, the business did $600,000and this year the firm’s gross is projected to be $4 million at abetter than average profit margin. “We’re profitable. We’re havingfun. I’m a pretty lucky guy.”Given the statistics his confidence does not seem misplaced. “Howmany retail businesses exist in the United States? You are sure goingto need a lot of order taking on the Internet. Unless I am a jughead,an investor is not in risk of losing everything tomorrow.”– Barbara FoxAnswerNet Inc., 345 Witherspoon Street, Princeton08542. Gary A. Pudles, president and CEO. 609-921-7450; fax,609-921-7632.Home page: https://www.AnswerNetNetwork.com.Top Of PageOut belowPudles harks back to the time in high school when, frustrated by notbeing able to help a deaf family at a flea market, he took it uponhimself to learn to finger spell. “I have always had this visionof an ability to communicate,” he says.”If all my ideas are wrong, I have good solid fundamentals with100 people working hard for the success of the company. If it doesn’twork, all my people stay employed, my kids go to camp next summer,and we have a great business with great people.”Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
