• December 23, 2010
  • By Donna Fluss, president, DMG Consulting

Speaking of Solid Payback

Article Featured Image

Voice self-service solutions are
considered mission-critical
by business managers in most
North America–based con-
tact centers with more than 150 agents,
and these systems are growing in impor-
tance in India, Western Europe,
and other parts of the world.

The value proposition is clear,
simple and highly profitable—
when interactive voice response
(IVR) applications are well de-
signed, properly implemented, and
appropriately maintained, they
automate anywhere from 20 percent to
more than 90 percent of incoming calls.
Many enterprises would face a major financial
hit if they had to employ agents to handle the calls
automated by their IVRs.

Nevertheless, IVRs are often neglected and under-
resourced. Too many companies have IVRs that were
implemented years ago and enhanced only when some-
thing broke or business requirements changed. Addi-
tionally, IVRs are often relegated to the non-essential
category by CIOs, who were happy to outsource them
long before hosting became acceptable for other mis-
sion-critical contact center solutions.

While a seeming contradiction, the success and de-
pendability of many IVR solutions have caused them to
be treated as second-class citizens. Technology groups
take them for granted because the systems generally do
not require a great deal of support to keep them in pro-
duction. However, while call processing continues with-
out interruption, the vast majority of IVRs in North
America are not performing at optimal
levels, according to recent DMG Consulting research.

DMG estimates that more
than 80 percent of IVR users around
the world can improve automation
rates and dramatically increase
customer satisfaction simply by
investing in routine optimiza-
tion of their IVR solutions.
Here’s another way to look at it:
If an IVR was installed more
than three years ago and has not
had an overhaul ofits script or voice
user interface (VUI) since then, it’s
time for a full health check.

The following example proves the point.
A financial services organization receives 1 million calls
per week. This organization has an IVR that automates
60 percent ofits calls—600,000 weekly. The variable cost
per agent-handled call is $5.50.Ifas little as 2 percent of
the remaining 400,000 calls per week were automated, an
additional 8,000 calls from agents would be displaced.
This would save the organization $44,000 per week or
nearly $2. 3 million per year. At the same time, service
quality would increase and complaints would decrease.

Of course, there are additional factors to consider. By
automating some of the easier calls, an agent’s average
handle time is likely to increase for the remaining calls
by an average of two to three seconds, at most. Assum-
ing a 200-second average handle time, this would
increase the cost per call by approximately 1 percent.

Yet, this gain could easily be offset by a corresponding
reduction in average handle time due to a decrease in
customer complaints about the IVR. (Note: During
wrap-up, agents generally record the reason callers need
help, so the volume of complaints about IVR applica-
tions may be under-appreciated.)

Additionally, consider also the cost of the optimiza-
tion project, which runs from approximately $50,000
to $150,000—depending upon the resources required.

The payback period from an IVR optimization, with a cost of $150,000 for the project and a 1 percent
increase in the cost per call, was less than one month.
(It saved the organization almost $1.9 million during
the first year.)

Given these returns,one would expect many organi-
zations to jump at the opportunity to enhance their
IVRs. However, there are three primary reasons end-
user organizations are not making investments, all
based on fear:

(1) Vendors scare away prospects by pushing them to make major
investments in expensive speech
recognition-based platforms;

(2) enterprises lack the appropriate
resources available in-house and are
trying to avoid using expensive pro-
fessional services for an uncertain
return; and

(3) users do not see a compelling
reason to take a chance on disrupting
what they consider a highly effective
IVR is not new or sexy. It’s perceived
as a dependable core contact center
application that runs without requir-
ing a lot of attention. Most contact
center leaders would prefer to invest
in new solutions, like speech analyt-
ics,rather than in their old IVRs.

The catch is that a small investment in
IVR might result in major cost sav-
ings. Any organization that has not
optimized its IVR application in the
past three years should undertake an
assessment to identify ways to
improve the existing system and esti-
mate the potential long-term benefits

If you determine that IVR opti-
mization would be beneficial, find a
vendor that can help deliver savings
continually. IVR optimization should
not be a one-time exercise. Leading
IVR users continually strive to
enhance the performance of their
solutions; it’s part of their annual
budget and their corporate culture.

If the necessary resources are not avail-
able in-house, find a hosted/managed service IVR
provider that can help enhance the operating environ-
ment will little up-front investment and risk. The world
of IVR has changed dramatically in the past five years, as
have many business requirements.

Donna Fluss (donna.fluss@dmgconsult.com) is founder and president of
DMG Consulting, a leading provider of contact center and analytics research,
market analysis, and consulting. To learn more about IVR optimization, visit


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