Casting A Spotlight On Premium Rates

The National Audit Office (NAO) has issued a report on the use by Government Departments of premium rate numbers. Despite efforts to reduce their use the NAO found that many departments continued to make use of 0845 numbers rather than replacing them with cheaper 03 alternatives.

In fact the Department of Health is the only one to have completely switched to geographic rate numbers with others such as HMRC and the Department for Work and Pensions being heavily reliant on costlier alternatives. Callers to the higher rate numbers paid some £56 million in charges in the year 2012-13 half of which was spent waiting for the call to be answered.

Interestingly, if the lost waiting time is factored in the NAO estimates that that adds some £100m to calling costs. In issuing the report Amyas Morse, the head of the NAO said “Callers do not receive a better service from higher rate numbers and many callers are put off calling government phone numbers altogether. The most vulnerable callers, such as low-income households, face some of the highest charges.”

But whilst reports such as this cast premium rates in a negative light, there are some times when the use of premium rate numbers is a business necessity. For example, premium rate lines are used by some businesses as a way of offsetting the costs of operating a help line or of providing information on products or opening times. Similarly, those running services such as tipster or competition lines use premium rate calls as a means of paying for the service. In each case, the business needs to look carefully at a cost/benefit analysis and decide if charging customers via a premium rate line is the most effective way of gathering revenue without losing custom.

With pence per minute or per call options available, premium rate numbers can be an effective element of the business marketing mix.  As with other non-premium rate lines, calls can be linked to individual operators, hunt groups or to automated services making premium rates a flexible way of communicating with and helping customers. Premium Rate services are regulated by PhonePay plus and some services will need prior permission from the regulator before being set up.

The NAO report has cast a spotlight on the use of non-geographic and premium rate numbers and that can impinge on those businesses which have incorporated premium rates into their business service mix. But premium rates still have their part to play in normal business life, as do freephone numbers and whilst we may look to the government to make calling cheaper we can still look to business to make the optimum use of their income and resources.

Written by Alison