The Business Case for IVRs and Automated Speech Recognition

Over the last five years, leveraging self-service to drive down costs and improve customer satisfaction has garnered a lot of attention from chief executives looking to optimize call center organizations. Providing quality customer service to quickly become both a competitive and comparative differentiator in the marketplace in which core product offerings are being commoditized is more important than ever before.

Interactive Voice Response (IVR) or Automated Speech Recognition (ASR) systems are commonly used in call centers to deflect routine calls from live agent support – thus, reducing labor costs for call center organizations – and providing the right channel for customers to resolve their inquiries in an automated fashion. IVRs have matured over the years, with the introduction of speech recognition powered self-service, combining a mix of linguistics, art and science to guide a customer through a voice self-service experience.

According to the Gartner report, Predicts 2009: CRM Customer Service and Support: “Even with budget constraints tightening, the demand for service is not decreasing. The power of customer demands is increasing, as multiple sellers compete for the same share of budget. Customer service requirements are heightened and enterprises must streamline the customer experience and curtail associated costs, while adding value and efficiency to the service of transaction.” *1)

Further research suggests that, while 744 percent of customers would prefer to talk to a business representative over the phone (versus other channels), telephone self-service is largely untapped. Therefore, a huge opportunity exists for organizations looking to contain costs and improve customer satisfaction by leveraging an IVR or automated speech recognition IVR as an automated attendant. According to Forrester Research, the cost of an average phone support incident is $33, while the average email support incident costs $10. *2) The cost to complete a call for a customer who zeroes out averages between $3 and $7 dollars (USD) [even higher depending on industry vertical and the nature of the call. The same call handled by an automated system, such as an IVR, costs 90 percent or less, averaging $0.45 each. *3) The financial benefit for implementing an IVR or ASR and minimizing the need for live agent support is enormous. On average, for U.S. companies that operate call centers with more than 100 live agents, the annual savings of reducing zero outs by a mere 5 percent through improved call automation technology exceeds $500,000 USD per company. *4)

For buyers looking to justify the investment, knows all too well that developing a business case with measurable benefits and an accelerated internal rate of return is a very important step in the procurement process.

The first step in developing a business case is stating the central problem that a new IVR or ASR will solve, along with identifying those costs and potential benefits that will be addressed as a result of the implementation. If your objective is to lower the cost per call (or transaction), while improving experiences through decreasing the number of calls routed to a live agent, then state this as the central problem being addressed and isolate the costs and benefits. In this example, the labor costs to handle a call or transaction and the anticipated savings in labor resulting from more calls being contained and resolved in the IVR/ASR is key to the design of your business case.

The second step in crafting your business case is to ensure that your case has self-evident validity. When a chief executive reviews a business case, the credibility of the case is always called into question; after all, a business case predicts the future and those reviewing the business case will have – or should have – questions such as:

• How can we measure the results?
• Have various options been explored? What is the likelihood that gains will actually be less than predicted?

A sound business case for IVR/ASR anticipates these questions by conveying self-evident validity. In other words, your business case should contain a cost model, benefits rationale, and risk and sensitivity analysis that will help your decision maker understand how risk will be minimized and measured.

When building your IVR/ASR business case checklist, ask yourself the following questions:

• Are the subject, purpose and scope presented upfront and clearly outlined?
• Are costs and cash flow projections highlighted against a time line?
• Does the case fully describe its assumptions and methods?
• Are all important benefits included?
• Are critical success factors addressed?
• Have risks been identified and measured?

Doing the math and calculating the ROI on the purchase of an IVR/ASR is the easy part; ensuring the accuracy of the business case and the projection of the ROI is another matter. It doesn’t take a rocket scientist to identify and quantify the cost/benefits of an IVR/ASR solution, but it is more difficult to ensure that the potential potholes, which could cause the business case and ROI to fail, are carefully addressed. While the upward trend for using IVR/ASR is growing, designing the IVR/ASR according to your customers’ needs is the lynchpin for ensuring success.

Consider the times you have dealt with an IVR that made you feel like you were moving through a maze. How did the experience make you feel? If you can recall being frustrated with a speech recognition system that could not correctly distinguish your responses, you can understand how customers may perceive their interaction with your business as well. By spending more time in upfront usability and design workshops that leverage the experiences of customers and employees who are directly involved in customer interactions, you can gain valuable insight into the customer experience. The key to any self-service initiative is to ensure that the experience is as intuitive and user-friendly.

There are many tangible benefits to implementing an IVR/ASR system in your call center organization. As voice self-service reaches the tipping point, there is tremendous opportunity to gain a measurable competitive advantage by offering a flexible and intuitive solution to assist customers in solving their problems. In an independent survey, more than half of customers indicated that the user experience of an IVR/ASR system determines whether or not they would repurchase products or services from that company in the future. Therefore, it is necessary to develop an IVR/ASR solution that meets (and exceeds) customer expectations to capitalize on future revenues.

Sample benefits of an IVR/ASR solution include:

• Efficiency
  - Lower cost per call/per transaction by decreasing the number of calls routed to and handled by a live customer service agent
• Repurchase and Revenue Opportunity
  - An intuitive IVR/ASR design increases the likelihood and propensity of customer repurchase
• Convenience
  - Quick, easy answers to customer problems increase the likelihood of customer satisfaction and loyalty

Art Hall
Art Hall, a Manager with Alvarez & Marsal Business Consulting, specializes in operational business issues, including operational CRM, multi-channel call centers, shared services, collection management and related processes. Mr. Hall brings more than 13 years of experience in operational management and in designing strategies and processes to improve multi-channel call center performance, vendor management and operational people leadership. Mr. Hall is a 2007 1to1 Customer Champion as recognized by 1to1 Media, a division of Peppers & Rogers; president of the Customer Relationship Management Association in Atlanta; and frequently serves as a speaker at various customer-focused conferences in North America and abroad.

*1) 2009 Gartner, “Predicts 2009: CRM Customer Service and Support”
*2) 2003 Forrester Benchmark Study, “CRM Status: Customer Service Channels Benchmark”
*3) The Journal of Customer Loyalty Issue 22 summer 2005 “IVRs Unleashed”
*4) The Journal of Customer Loyalty Issue 22 summer 2005 “IVRs Unleashed”