Increase revenue. Reduce costs. Generate higher profits. You've heard it before and know that vigilant attention to these crucial business principles is what drives today's thriving companies. And with these business credos in mind, contact center and information technology executives have scrambled to integrate the latest technology into their Customer Relationship Management (CRM) strategy over the last few years.

By now, you've transformed your call center into a dynamic contact center with web-based customer care, multiple CRM channels, and data mining and business intelligence systems. Maybe you have even added sales force automation. And throughout this process, your automated telephone-based interactive voice response (IVR) system has continued to quietly chug along unnoticed and virtually unchanged. So why fix what isn't broken?

You may have heard lately that leading companies like Dreyfus, Cigna, GE, Allstate, Avon, and others have significantly improved customer satisfaction, achieved higher self-service utilization rates, and incurred dramatic cost savings – all resulting from the addition of speech recognition to their IVR systems. By evaluating their current CRM strategy, these companies have recognized that speech recognition is the natural extension of their IVR systems. How then can speech recognition be used in your contact center? Will your customers like it and will your employees know how to use it effectively? And how about revenue, cost savings, and the ever-important ROI?

In this document, we will address these questions by sharing the experiences of early speech recognition IVR adopters, reporting on exciting new findings from leading industry experts, and presenting information and tools to help you analyze your contact center needs. Read on and you'll learn why callers prefer speech-enabled to touchtone IVR systems and use automation up to 60 percent more. You'll see why speech recognition calls can take half as long to complete as touchtone calls, improving customer satisfaction, allowing far more calls to be serviced using existing staff, while reducing toll charges up to 50 percent.

These are permanent, year-upon-year cost reductions that translate into millions of dollars of annual operating savings for a typical contact center. The same reasons you went to an IVR system in the first place – enhance customer satisfaction, reduce costs, maximize agent efficiency, generate incremental revenue – are the very same reasons you need to explore the world of speech recognition. Speech provides all the same benefits, just to a greater degree! Speech opens an entire realm of possibilities barely imaginable with touchtone evolving into a full Enterprise Voice Portal. Are you ready for the freedom of speech?

Touchtone IVR was cutting-edge technology
Since the 1970s, live agents in call centers have received and serviced inbound calls from customers, prospects, business partners, and employees or placed outbound calls as part of a company's telemarketing activities.

As call volumes increased, companies looked for ways to handle this increased traffic by supplementing their live agents. Automation in the form of Interactive Voice Response (IVR), typically with a touchtone user interface, began to be adopted.

Today, more than 2.5 million IVR ports are in service used at close to 50 percent of companies with formal contact centers using Automatic Call Distribution (ACDs) as shown in Figure 1 below. On average, 15 percent of inbound contacts are handled via self-service. Telephone self-service using IVR gained market acceptance for many good, tangible business reasons.

Source: TEQ Consult (2001)
Figure 1. Enabling technologies within ACD base.

Improving customer satisfaction – to a point
Conventional wisdom once said all customers phoning your company's toll-free number needed and wanted to speak with an agent to assist them with their service needs. But after long waits in queue, long service phone calls, and inconsistent or incorrect information and service treatment, those same customers said there had to be a better way – and there was – automated self-service using Interactive Voice Response (IVR).

When properly designed and matched to the right applications, IVR resulted in better customer service and increased customer satisfaction and loyalty resulting in increased revenue from existing customers. Callers were able to access information, update records, and perform transactions, both in and outside of normal business hours 24 X 7 X 365. They received consistent, accurate information, often quicker and simpler than having to wait in a queue for an agent. Blocked calls were all but eliminated and abandoned calls, average wait time in queue, and average call length were all reduced.

Dramatic savings through self-service
Companies were also eager to implement self-service options via IVR because of its tremendous cost advantages compared to a live agent. Most calls into a contact center are routine and repetitive in nature and can easily be completed using automation. In a study by the Gartner Group, the average cost of an agent-assisted call was $5.50 with an upper range of almost $12.00 (see Figure 2).

This is compared to $.45 for a touchtone IVR call. IVR is also very cost competitive with web-based self-service. So you can see why, at a ten times cost advantage for selfservice, 2.5 million ports are in service today handling millions of calls that would have unnecessarily (and expensively) been serviced by an agent. With fewer calls reaching agents, contact centers can accommodate future growth in call volumes with existing staff levels. Companies in many industries including banking, insurance, financial services, media, telecommunications, utilities, healthcare, service providers, transportation, retailing, government, oil and gas, manufacturing, higher education, and newspaper publishing have taken advantage of these huge savings improving customer service at a fraction of the cost.

Source: Gartner Measurement Figure 2. Contact center costs.

Optimizing live assistance and self-service
Of course, not all calls can or should be automated. The best candidates are those with a high transaction volume, repeatable, consistent business logic and service handling, or those that present difficult agent staffing problems such as off-hour call support or promotions. Calls requiring complicated, custom or unique responses or specific knowledge are still best served through a live agent. Automated systems can handle much of the low value-added requests for routine information like store hours and shipment status, while agents can focus on more complicated, value-added transactions, up-sell, cross-sell, and build customer relationships.

The key is to optimally match the application and the call with the appropriate and most cost-effective service level required by the customer. Automated solutions are not meant to completely replace live agents, but rather to enable self-service and reduce unnecessary costs. The goal is to find the optimum blend of live assisted and self-service call handling.

Maximizing your investment in agents
Live agents are expensive (see Figure 3). By the time you factor in all the costs including salary and benefits, recruiting, screening and training, phone usage charges, computer hardware and software, telecommunications and data networking equipment, and floor space plus other administration and overhead costs, a typical contact center agent costs about $36,000 per year. Moreover, agent turnover in the contact center industry is exceptionally high – in the 23 percent per annum range. All this goes to show that an agent's time needs to be allocated properly and efficiently. As IVR began to be integrated with Computer Telephony Integration (CTI), additional benefits in precall processing before live agent handling were seen in the form of improved agent efficiency, cost control and customer satisfaction. Because IVR provided access to back-end databases, the same information that was available to a caller was now available to an agent.

This, coupled with caller ID/Automatic Number Identification (ANI) and Dialed Number Identification Service (DNIS), allowed the system to pull a customer record or product information through the CTI-switch interface to route the data and the call to the available agent with the skills or knowledge best able to service the call. Agents became better informed and better able to focus on complex queries, thereby better serving callers. According to Datamonitor Research, pre-call processing and skills-based routing reduced the length of the call on average by 18 percent and improved call resolution and customer satisfaction. As agents focused on highest value-added tasks, their job satisfaction increased which in turn reduced attrition levels and the associated hiring and training costs.

Figure 3. Agents represent the largest contact center cost component.

Turning agents into salespeople
A critical aspect of your CRM strategy is to increase the value-add of live assistance by maximizing the agent's ability to satisfactorily handle a call and up-sell or cross-sell resulting in increased sales revenue. Agent costs represent by far the largest contact center cost component (65 percent of the total), and a company's ability to maximize its investment in this major asset and turn the contact center from a cost center to a revenue center is a major benefit enhanced by IVR.Using data reported to Benchmark Portal Inc. by contact center managers (see Figure 4), more than 40 percent of contact centers engage in up-selling and cross-selling, and 20 percent of all inbound calls present up-selling and cross-selling opportunities.

The managers also report that over 10 percent of their outbound sales calls result in a sale with the annual average sales revenue per agent totaling more than $19,000. Allowing your agents to focus on selling instead of answering routine inquiries makes good business sense – and transforms the contact center into a revenue generation center – not just a cost center.

Source: Benchmark Portal Inc.
Figure 4. Capitalizing on up-selling and cross-selling opportunities enhances agent value.

IVR was then, speech is now
Speech recognition is as much of a technological breakthrough as touchtone IVR was 15 years ago. And interestingly enough, the very same reasons your company added touchtone IVR in the past apply to speech-enabled IVR today – enhance customer satisfaction, reduce costs, maximize agent efficiency, and generate incremental revenue. Speech just gives your company a bigger payoff!

Callers prefer speech-enabled systems
For many applications, the size and depth of touchtone menus were confusing, inflexible and made completing certain transactions long and laborious. Other applications, even with very short, flat menus, were difficult to maneuver because users were required to input alphanumeric representations such as stock symbols, airport codes or long part numbers. This lack of user friendliness defeated the purpose of automation and capped self-service adoption rates. Callers became frustrated and dissatisfied. Many simply "zeroed out" and waited for an agent or worse, abandoned the call.

The touchtone interface created a longer, more costly call, agents' workloads were not reduced, and they were still forced to take routine calls. Speech recognition eliminates this problem. Early deployments in the business, finance, and insurance vertical markets clearly suggest that Advanced Speech Recognition (ASR) is not simply replacing agents. It is replacing entire DTMF self-service platforms because the call avoidance economics that justified these platforms are being exhausted at five or six menu options. This is not a capacity limitation; it is a user interface (UI) limitation and to continue to enjoy additional cost savings through self-service voice automation requires going to speech recognition.

New ASR capability combined with IVR offers the advantages of automation in a much more user-friendly way. No interface is more natural than simply speaking your request into a telephone. Speech recognition dramatically reduces on-hold time and eliminates confusing touchtone menus. Consumers have reacted very favorably to speech recognition. In May of 2000, Nuance, Inc., completed a comprehensive study of speech-system users. This study found that 83 percent preferred speech systems to touchtone, and the overall satisfaction rating with these systems exceeded 87 percent (see Figure 5).

Many respondents also preferred speech systems to agents and/or operators because of the consistent service level this medium provides. A recent Frost & Sullivan study noted that 50 to 60 percent of callers who skip complex touchtone systems are comfortable using speech recognition for the same application. Studies by Meridien Research from October of 2000 have shown up to 70 percent of the straightforward calls currently received by contact centers can be easily automated with voice recognition.

Source: Nuance Benchmark Survey, May 2000
Figure 5. Callers prefer speech recognition to other types of telephone support.

Callers use an automated system more
An April, 2001 study by Giga Information Group found using speech recognition can increase IVR usage from 20 percent to 60 percent.

In fact, a well-known financial services firm was able to increase its percentage of automated calls using speech recognition compared to its previous touchtone IVR by 20 percent within the first year, 30 percent the second year, and anticipates a 44 percent improvement within the third year (see Figure 6)

This increase in selfservice utilization rates is a major contributor to the quick payback and high ROI attainable from investing in speech-enabled IVR.

Source: Financial Services Company
Figure 6. Speech early adopter results.

More self-service saves money
Using data from Benchmark Portal, an average contact center handles about 675,000 contacts per month of which 15 percent are handled by self-service. That says roughly 100,000 calls are typically handled within the IVR monthly. Using the Gartner stated cost advantage of $5.05 ($5.50 live assisted versus $.45 self-service IVR) per call, a 20 percent improvement in IVR utilization due to speech would mean 20,000 more calls per month would be serviced in the IVR saving the typical contact center over $100,000 monthly.

A 40 percent increase in IVR utilization would save the typical contact center over $200,000 and a 60 percent increase would save over $300,000 monthly. Based on the increased self-service utilization rate alone (without even counting incremental revenue derived from increased agent up-selling and cross-selling), you can see how a typical contact center can achieve savings of at least $1.2 million and as much as $3.6 million annually by implementing a speech-enabled IVR (see Figure 7)!

Source: Gartner Group & Benchmark Portal Inc.
Figure 7. Benefits of higher IVR utilization.

Speech lowers network charges
By cutting – or eliminating – hold time, menu navigation time, and the time spent prompting the caller through various menus, speech can dramatically reduce call length and associated telecom charges. What's more, when callers opt for speech, the hold times for callers waiting for agents decrease as well, further reducing toll charges. A recent Frost & Sullivan study notes that toll charges dropped on average of 15 to 50 percent with speech recognition. An April 2001 study by Giga Information Group found the use of speech recognition saves money by shortening the length of a call by 30 to 50 percent from menu-driven IVRs.

A leading financial services firm saw the average length of their automated calls fall by 33 percent using speech versus touchtone (see Figure 8). This savings in toll charges alone means the ongoing costs of a speech versus touch IVR solution is often one third less. A typical contact center with 173 full-time equivalent agents generates more than 12.9 million minutes annually in telephone usage. For every 10 percent reduction in call length, the typical company can save more than $100,000 annually in phone charges. Speech adopters are saving hundreds of thousands of dollars annually on their phone bill alone plus the savings from increased IVR utilization!

Source: Financial Services Firm Actual Results
Figure 8. Speech calls are more cost-effective than touchtone.

Speech enables new self-service applications
The previous examples have focused on traditional contact center applications in which speech recognition has replaced touchtone as the preferred IVR user interface. Applications involving balance inquiries are more pleasant with speech. Applications involving parts availability and ship dates are more practical with speech. More pleasant and usable applications do drive higher IVR self-service utilization rates as depicted below in Figure 9; however, the quantum leap in effectiveness will come from the applications that are now newly possible with speech.

These applications are now being extended in entirely new ways across sales, service and marketing. Initially web-enabled to provide remote, networked access from a PC, these applications are now being voice-enabled as well to provide mobile voice access to the same data, applications, and transactions via a fixed or mobile telephone. Applications within sales force automation such as opportunity management, configuration and quote management, partner relationship management, and incentive compensation readily lend themselves to voice communication by mobile and remote employees and other members of an enterprise's distribution chain.

Figure 9. Speech opportunities

Field force automation applications including field service forecasting, scheduling and dispatch, contract management, warranties, repairs, and parts availability, tracking, and management are also being speech-enabled. Marketing departments are deploying speech-enabled campaign management systems to track multi-channel marketing program effectiveness. Speech recognition is being used in supply chain and order processing applications.

A leading national cosmetics retailer uses a sophisticated speech-enabled IVR to allow their large network of independent sales representatives to place unassisted orders 24X7, while on the move, without using a computer – while significantly reducing expenses. Each of these applications has a strong stand-alone business case. As they proliferate within an enterprise the payback improves because of the economies of scale offered in an Enterprise Voice Portal (EVP) as shown in Figure 10. An Enterprise Voice Portal is a single, distributed software platform shared across multiple applications requiring voice access to back-end data. An EVP utilizes single text-to-speech and Advanced Speech Recognition engines, leverages and re-uses common grammars, and provides a centralized voice brand identity.

This platform and associated applications deliver a single solution enabling real-time, personalized, self-service access to data, applications and/or transactions, wherein the user interface tends to be natural language spoken commands and the output may be any media type -- spoken data, fax, email, or wireless text. Creating an Enterprise Voice Portal is the end goal of progressive enterprises striving to better serve their customers, partners, suppliers, and employees in the most cost-effective manner possible. The scaleable, distributed, standards-based, client-server architecture of Syntellect's Vista IMR solution provides the foundation to deliver cost-compelling, speech-enabled solutions today in the contact center that can grow to support sales force automation, field force automation, supply chain management and employee benefits applications tomorrow.

Figure 10. Enterprise Voice Portal (EVP)

Now that you have seen how a speech-enabled IVR increases customer satisfaction, increases the rate of self-service utilization (creating dramatic cost savings), lowers phone charges, generates sizable incremental sales and creates the foundation for an Enterprise Voice Portal, are you ready to explore the freedom of speech? The financial and customer service benefits are simply too big to ignore. Your customers deserve it. Your competition IS doing it and your management will ask about it sooner rather than later.

Tools you can use
What you need are some tools to help you begin the analysis. Let's look at a methodology you can use to determine whether your touchtone IVR has hit the "effectiveness wall" and to what extent your contact center is a candidate for speech recognition.

Figure 11. Five signs your IVR isn't working anymore Source: The Kelsey Group (2001)

By simply tracking these traditional contact center performance metrics over time, you can see whether your contact center and customers have hit the wall with touchtone and are ready for the freedom of speech.

The Impact of Speech
Here are some metrics to look at when evaluating the return on speech for your organization. Example data is provided depicting a typical contact center and call volume utilizing 24 ports of IVR.

About the Company
Syntellect Inc. ispecializes in speech-enabled customer, employee and supply chain self service software solutions and hosted services which play an integral role in an enterprise's full customer relationship management (CRM) strategy.