April 18, 2001, 2:35 PM — Companies thinking about investing in voice over Internet Protocol (VoIP) frequently cite the cost savings reaped from the elimination of long-distance tolls as the only primary benefit of the capability. While adding IP capabilities to your call center will indeed have an immediate impact on your operating expenses, it's naive to think that long-distance cost savings are the only, or even the most important, benefit of an IP strategy. If implemented properly, VoIP can greatly enhance your entire customer relationship management (CRM) strategy. In fact, as an integral part of a multichannel contact center, VoIP has the potential to enhance customer loyalty, improve operating efficiency and boost sales. With these benefits, it's no wonder that IDC recently reported that by 2003, call center systems will make up almost 30% of worldwide VoIP revenues, which are projected to total $1.4 billion. But before you IP-equip your call center, it's important to understand how IP fits into your CRM strategy. It's also important to work with a vendor that understands the importance of your customer relationships and how IP will add value.
Perhaps the most obvious advantage of adding VoIP to your call centers is the reduction of long-distance costs. This benefit is particularly enticing for customer-facing contact centers, most of which offer toll-free numbers for customers to call for service and support -- numbers that are free for the customers but represent a major expense in charges paid to public switched telephone network (PSTN) providers.
Thus the possibility of making VoIP available to customers that have Internet telephony-enabled PCs and encouraging these customers to use VoIP rather than PSTNs is attractive to any business with a mission-critical contact center. Forrester Research Inc. estimates that Internet-based contact centers can gain a 43% cost advantage over PSTN-based contact centers.
That's a powerful incentive, but it's not the only benefit VoIP offers, and it may not even be the most important. The Internet-enabled contact center can provide other important business advantages.
The convergence of PSTN-quality voice and data over a single network now makes it possible to replace the traditional hardware-based telephony switch, the foundation of today's contact center, with an IP-based, software contact-routing application that performs the same functions. These "switch-free" contact servers can greatly simplify the CRM infrastructure and reduce associated costs. This is an especially important benefit for small to midsize companies that are considering installing contact center capabilities in-house. An IP based call center is less expensive and easier to deploy than a hardware telephony switch with Web capabilities. This converged system also gives the enterprise a single, integrated network that allows more standardization and reduces equipment requirements.
For companies that have multiple contact centers, these advantages are multiplied. Today's companies with multiple contact centers require a hardware switch at each location in addition to costly T1 lines for multisite routing and load balancing. A switch-free VoIP solution installed at one location can perform routing across multiple sites using the LAN or WAN for both routing messages and voice. Distributed contact centers that take advantage of satellite offices or remote agents will also become more viable, thanks to VoIP.
In the past few years, the surge in Internet use by consumers has forced companies to equip their traditional call centers with the means to respond to customer queries from a variety of channels including phone (both wired and wireless), fax, Web chat and e-mail. As customers come to expect better and more personalized customer service, companies should look at their CRM strategy as a profit booster. Recent research by The Forum Corp. indicates that the average business is losing between 15% and 35% of its customers annually and 69% of these defections are due to a poor sales or service interaction with the customer. Yet, according to the Harvard Business Review, cutting customer defections by just 5% has the effect of boosting profits between 25% and 95%. It's clear that managing customer interactions successfully can have an instant impact on the bottom line.
