IP Telephony Cost & Business Case
FlatWorldSystems can help make the right choices and execute the strategies.
What are your true costs for telephony? It isn’t just the
cost of the phone lines and long distance charges plus the cost of the phone
system itself. Telephony has hidden internal costs as well. You must include
people costs, opportunity costs, contribution to business bottom line and
expenses. To understand your true cost you must analyze your business and every
aspect that is impacted by telephony or its lack. This need not be a detailed
analysis. If it takes great detail to see a benefit or problem then the overall
contribution is not likely to have a serious impact. On the other hand, if a
quick series of notes on a piece of paper show significant impact then there is
opportunity and reason to consider change.
As an example let’s look at the cost for a sale via phone.
Let’s suppose your average gross profit margin excluding sales costs is 30% and
that your average hourly cost for all the staff involved in the sale, the sales
rep, admin, support is say $30 per hour. Let’s also say that to complete a sale
administratively is 10 minutes for taking the order, entering it and eventually
shipping it, collecting and deposit of the payment. Let’s also consider that
the simplest sale takes 10 minutes of phone time to inform the client and close
on one try. Adding all this up means 20 minutes or $10 at $30 per hour. This
means give a 30% margin that a sale of $35 is a raw breakeven, a sale of $100
yields no more than $20 dollars and so on. Businesses that have the above
economies and efficiencies are rare so your business probably needs a minimum
sale of perhaps $300 with good efficiency to make a sustainable profit and a
minimum revenue of about $10,000 per month plus an additional $5,000 - $7,000
per month per staff.
Considering the simplified logic above, the cost of phone
service at a few cents per minute ($1 to $2 per hour) will be dwarfed in your
overall costs. Shaving time out of handling a sale on the other hand or worse,
wasting time on a small sale has huge implications. The business case for any
change in telephony and its part in your business process and strategy should
focus on efficiency or time connected to your client for initial prospecting,
information, a sale, support and administration.
Let’s look at some ideas about efficiency or obstruction.
- A voice call missed means leaving a message or listening to a message left
and repeat processing adding at least 2 minutes to each iteration
- A voice call with poor quality may mean hanging up and trying again or
asking for repetition so again adding minutes to most situations.
- “Just a minute, can you please hold while I look that up?” adds a minute or two to each conversation.
- “I’m sorry the message you left got lost can we go over that again” is a common
waste.
- “I’ll have to get back to you and arrange a teleconference for that” can be a
big problem because there will be a negotiation to arrange a time and a
method then pass calling information and then hold the teleconference. A
bad speaker phone is a common element in traditional teleconferences
generating mis-understanding, repetition, dropped calls, interference,
noise and customer dis-satisfaction.
The cost analysis and business case for every business
should be unique. No standard formula exists that fits all. If your business
has problems with its current system and you are having trouble identifying the
cause then you will have a bigger challenge coming up with a solution. Either
you have to do some serious research and learn about this or get some outside
advice from one or more sources before you can make an intelligent choice.
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