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Talking Your Way to Savings 

Talking Your Way to Savings

Talking Your Way to Savings

Adding speech to touchtone IVR can increase usage and yield payback in six to twelve months.

By Donna Fluss
Communications Convergence

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Speech recognition is a compelling and functionally rich technology with many applications in and out of contact centers. It’s easy to use, well accepted by callers, novel — even fun! But speech tech is still hard to sell: even companies who have already invested considerable effort and money in touchtone-based IVR remain reluctant to make the incremental investment to render these apps speech-accessible.


But that’s where the biggest ROI can be found! An effective speech recognition project will realize a payback in its first year — if founded on an existing investment in IVR (as it should be, in many cases), expense is reduced and payback time shortened.

On the productivity side, speech recognition reduces the number of calls requiring agent attention. More people will try a speech system than a standard touchtone IVR (see Table One, next page); use-rates for self-service apps increase dramatically when speech is added. This translates directly to fewer calls in queue, fewer call-abandons, fewer agents needed at busy hours, shorter call times (hence fewer ports) required on both IVR and ACD, and more business transacted — even outside of business hours. It also means happier customers.

In some situations, speech may also let you add value by providing services. Callers on hold, for example, might be invited to browse financial news through a voice portal. Even revenue-generating services are possible. A carrier providing speech-enabled automated directory assistance, for example, might leverage a scaled-up version of the same infrastructure to provide dial-by-name, shop-by-category, or other, speech-mediated voice portal services, at a fee.


Contact centers are turning to speech recognition to automate call- handling and empower customers to do more for themselves. But the technology will only produce success if implementations are made easy with simple and standardized development tools (e.g., VoiceXML); and with quality scripting and UI resources.


During the recession, many call centers have downsized, operating with minimal staff, and reduced service levels. As the economy recovers and call volumes increase, contact centers must add staff or invest in self-service technologies that allow customers to help themselves.

Speech recognition can benefit enterprises whether or not they have an existing touchtone IVR system. If the call volume is high enough, even a company that already realizes an 80% touchtone IVR utilization rate may get a great payback from speech recognition. According to an April 2001 report from Giga, adding speech recognition to a touchtone IVR platform “increases usage by 20% to 60%.” (See Table One).

Before investing in speech rec, enterprises must examine their operating environment and conduct an ROI analysis to determine if a speechsystem will enhance customer self-help functionality and offload calls from agents. Below is an ROI analysis for an enterprise that receives one million calls per month and had a 62% touchtone IVR acceptance rate prior to its speech implementation. This company identified self-service options and service enhancements that speech recognition could enable. Adding speech recognition increased the self-service rate to 75% and had a payback of less than two months. The net present value (NPV) and internal rate of return (IRR) for this project, over a three-year period, were $18,792,795 and 640%, respectively.

(Notes: Net present value (NPV) considers the “time value of money.” The term means that a dollar received today is worth more than a dollar received in the future because the dollar received today can be invested to earn interest. NPV helps you find the present value in “today’s dollars” of the future net cash flow of a project.

If you have an investment that requires and produces cash flows over time, the internal rate of return (IRR) is defined to be the discount rate that makes the net present value of those cash flows equal to zero.


Monthly Volume
  Total incoming calls 1,000,000
  Usage Rate —  
  touchtone IVR only 62%
  Usage Rate —  
  touchtone/speech system 75%
  One Time Investments  
  IVR ports  
  (hardware/software) 1 $480,000
  Speech ports (software) 2 $424,000
  Development, implementation
  and integration $400,000
Annual Costs
  Hardware maintenance (18%) $86,400
  Software maintenance (18%) $76,320
  In-house support (1/2 FTE) 3 $50,000
  Projected monthly savings $715,000
Projected annual savings $8,580,000
  Projected annual costs $212,720
Net annualized savings $8,367,280
Return on Investment
  Pay-back period (months) 1.8
  Internal Rate of Return 640%
  Net Present Value 75%
(3 years @ 12%) $18,792,795
  Cost per agent-handled  
  phone call 4 $5.50

The model assumes that back-end systems and processing costs are the same regardless of how calls are handled.

1. The model assumes that that there will be an equal number of IVR touchtone and speech ports. 120 incremental IVR touchtone ports, at a cost of $4,000 per port, were added to accommodate the increased use of the system.

2. 265 speech ports are required to accommodate the busy hour of 1 million calls/month. The cost per speech port is $1,600.

3. The model assumes that adding speech rec to a touchtone system will require incremental in-house technical support. The cost of each support person is assumed to be $100,000 per year.

4. Gartner Measurement estimates that the cost per agent-handled phone inquiry is $5.50.


After years of free spending in the late 1990s, many companies implemented strict guidelines mandating that investments produce hard-dollar savings to be approved. Cost centers, which include the majority of call centers, can justify investments in productivity improvement, cost reductions and cost avoidance. Profit centers, which include sales and marketing organizations, can justify investments based on productivity improvements and increased revenue. A cost center can no longer justify investments based on soft-dollar returns, such as increased sales leads or quality improvements (although “soft” benefits often contribute to hard-dollar savings). (See Table Two.) So speech recognition projects that result in call reductions and a six- to 12-month ROI will be approved.


Speech recognition represents significant productivity and revenue generating opportunities that all companies should explore. To enhance chances of a successful implementation, prospects should request a no-fee beta test and possibly a money-back guarantee if the speech system does not deliver the projected benefits. No initiative is without risk. But the potential benefits more than justify serious consideration of an investment in a well-designed and implemented speech recognition application.

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