The Cost-Saving Business Model For IVR


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The Business Model For IVR has been analyzed and characterized in many ways over the years.

Although this tool was originally developed to reduce enterprise operational expenses by automating repetitive telephone calls, it has taken on a life of its own in terms of its perceived business value in the ensuing years.

Here are just a few of the many business models for IVR in use today:

– The “cheaper automated calls versus expensive agent resource” Op Ex Savings approach

– The “skilled agent versus a marginally acceptable IVR” Customer Service approach

– The “cross sell/up sell via targeted messages inserted in the call flow” Marketing approach

– And the more recent “Analytics/Caller Sentiment” Sales/Marketing/Customer Service approach

Blurring the picture even further are the use of smart phones, the web and other mobile devices to interact with a technology that was not originally developed for these input modalities.

It’s easy to see why so many different business models exist.

That said, I think examining the reasons IVR was developed in the first place is well worth the effort. My good friend Bruce Balentine puts it best in his “It’s Better to Be a Good Machine Than a Bad Person” book (

“If we are brutally honest, the labor savings (resulting from a successful IVR deployment) can be summarized with the simple phrase, “fired, not hired or redeployed.”

Now, lets not pussyfoot around this one. Human agents who are fired, not hired or redeployed is the main business outcome of successful call center automation. We can use some of the standard euphemisms if we want to or need to (translations in parentheses), for example:

– Streamlining workflow and making the agent more productive (new agent not hired because existing agent is more productive);

– Handling the excess of calls during peak hours (not staffing to the maximum required capacity);

– Reducing our reliance on offshore resources (firing or not hiring the outsourced call center in India or Puerto Rico);

– Fulfilling the career needs of our employees by offering growth opportunities inside the corporation (redeployment); and/or

Enhancing the customer experience by responding more quickly (answer the phone on the first ring without hiring more people).

But in the end, “fired, not hired or redeployed” is the name of the game – and faster and clearer to say. Pardon me for being blunt, but the business case for speech in the call center automation segment is a real no-brainer. Yet it continues to cause confusion among buyers and sellers alike and dancing around the basic value proposition for a product or service is not a good way to make business decisions. Indeed, I would argue that the many bad business decisions that are made daily when it comes to IVR come directly from avoidance of this basic value proposition. For this reason, I prefer to use the unsanitized phrase to keep a focus on the topic and to look dissonance straight in the eye when we come to contrast the business case with the ergonomic case.

So I will restate it here clearly. The value proposition for IVR is that a successfully automated transaction costs less than the same transaction performed by a competent and well-trained human agent. Successful automation therefore allows us to fire, not hire or redeploy a portion of our workforce with minimal risk of losing our customers.”

Well said Bruce.

While IVR has come a long way in terms of its underlying technologies (Speech, NLU, TDM/VoIP Telephony, Caller Analytics etc.), I think it is always a good idea to keep its primary objective in mind. These technologies are great as long as we do not become overly enamored with the latest and greatest of the day and keep an objective eye on the bottom line.

I like to look at it from a human perspective: Caller Analytics and cross selling and up selling is fine as long as it works and you recognize that it can cost the enterprise a lot more if it does not. The same is true for marketing messages and skimping on real customer service in an attempt to automate as many calls as possible so as to save operational expenses. Whatever your objective, make sure it is a clear and well thought out one that accounts for all of the costs and benefits associated with using an IVR to take care of your valuable and hard earned customer base.

Interactive Digital ( is a software and design company dedicated to providing its clients with a competitive edge via adaptive technologies. Our focus is on improved Voice User Interface design.

Daniel O'Sullivan
CEO, innovator and technologist in software engineering and product development. Created and implemented Adaptive Technology and Fastrack Software products that have optimized over 1.5 Billion self-service phone calls worldwide and saved clients over $100M to date. Electrical Engineering undergrad with a Masters in Computer Science. Lucent/Bell Labs alumni. Winner of worldwide eco-design project and received several patents. Currently CEO of Software Technology Partners.Focus: Business Development, Technology Partnering, Mobile, Web and Cloud Technologies and Human-Computer Interaction.


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