Self-Service Rate Versus per Minute Cost

in IVR Technology

Self-Service Rate Versus per Minute Cost

Operational cost of an IVR, such as per minute charges for a hosted solution, are much less important than its self-service rate (i.e. the percentage of IVR calls that complete a key transaction without operator assistance.)  Note that this is quite apart from the crucial customer satisfaction benefits offered by a more effective IVR.

To illustrate the difference in savings I’ll compare a typical scenario across three different IVR types: touch tone, simple speech IVR, and intelligent, natural speech IVR.

Assumptions:  100,000 calls per month. Average call length is 3 minutes.  Fully loaded operator cost is $0.80 per active phone minute (from research showing an average per call cost in the United States of $4.80 for a 6 minute call).  Note that for this simple example additional factors such as transfer costs, savings from up-sells, save-the -sale, and ‘screen pops’ have not been taken into account (see my blog entry on ROI).

Touch-Tone IVR Simple Speech IVR Intelligent Speech IVR
Self-Service Rate 10% 20% 40%
Per Minute Cost 7 cents 12 cents 17 cents
IVR Cost (monthly) $ 2,100 $ 7,200 $ 20,400
Agent Savings (monthly) $ 24,000 $ 48,000 $ 96,000
Net Savings (annual) $ 262,800
$ 489,600
$ 907,200

Because IVR cost is only a small fraction of the cost of a live agent, increasing self-service rate has a much bigger impact than lowering per-minute cost. In the striking example below, even with a 42% higher per-minute cost, a self-service rate just 5 percent higher yields better overall cost savings.

Simple Speech IVR Intelligent Speech IVR
Self-Service Rate 20% 25%
Per Minute Cost 12 cents 17 cents
IVR Cost (monthly) $ 7,200 $ 12,750
Agent Savings (monthly) $ 48,000 $ 60,000
Net Savings (annual) $ 489,600
$ 567,000

There are many IVR applications where a speech IVR can more than double completion rates compared to a touch-tone IVR.  An intelligent speech IVR using natural language that is well designed and tuned can even do much better.  We have examples of Smart Call Agents providing completion rates 5, 10, or even 15 times better than conventional IVRs.

Using the best possible IVR technology not only provides by far the best savings (irrespective of per-minute cost) but it also optimizes customer satisfaction, first time resolution, and additional revenue.

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