Can using Voice over Internet Protocol (VoIP) give you a leg up on the competition? Cost savings may be one advantage but experts warn marketers to first do their homework before making a leap of faith.

By David Lustig

Voice over Internet Protocol, more commonly referred to as VoIP (pronounced Voy-p), is the technology that converts your voice into a digital signal that travels over the Internet. If you are using a “regular” telephone number, the signal is converted to a regular telephone signal before it reaches its destination. VoIP, says the Federal Communications Commission (FCC), can allow you to make a call directly from a computer, a special VoIP phone or a traditional telephone connected to a VoIP adapter.

But just because technology brings us new forms of communications and new methods to conduct business, it does not mean we have to embrace it. If it adds no value to our lives, it is worthless.

VoIP, however, adds value and for those who wish to incorporate it into their businesses, it can be very worthwhile.

The FCC contends that some advantages of VoIP are that many offer features and services that are not available with more traditional telephone services. If you use VoIP, you can decide whether to pay the cost of keeping your regular telephone service. You also can use your computer and VoIP service at the same time. Assuring you have an Internet connection, you also can take your VoIP service with you when you travel.

The Federal Communications Commission also says, however, that users should be aware that some VoIP service providers may have limitations to their 911 service, some will not work during power outages-and the service provider may not offer backup power, and the VoIP providers may or may not offer directory assistance/white page listings.

HOW DO INDUSTRY SOURCES FEEL ABOUT VOIP?
West Corporation of Omaha, Neb., believes that in an industry where success is highly driven by technology change, they are constantly trying to meet the technical needs of their clientele.

“In recent years, we have made significant VoIP implementations that offer both internal technical capability and cost-reduction benefits,” says West’s Steve McCoy. “We recognized that our early preparation with VoIP was also necessary to be able to offer products and services to clients as they implemented VoIP capabilities within their own environments. Those expectations are now being met as we have begun to establish VoIP interconnections with customers.”

Neal Topf, president of Callzilla, LLC, a Miami-based company providing inbound and outbound call center solutions to U.S., European and Mexican companies requiring telesales and teleservices for Spanish-speaking customers, explains, “The company employed VoIP technology to be able to efficiently and cost-effectively transmit calls between their points of origin and termination. It is the logical solution to our business, and it enables us to increase our production at lower costs and pass that cost savings to our clients.”

Howard Saresky of Ogden, Utah-based Convergys agrees with Topf, saying that his firm feels the “use of VoIP is extremely important to our customers, as it allows us to deliver significant flexibility, feature functionality and cost savings without sacrificing service quality. VoIP provides a number of benefits, including centralized management, ease of consolidation, simplification of expansion and upgrading infrastructure, offshore enablement and ease of global route calling, while at the same time lowering costs.”

THE ADVANTAGES
But what are the advantages for a telemarketing firm that utilizes this technology?

“While it is clear that VoIP offers a wide range of potential cost savings to any implementer,” says McCoy, “understanding that potential requires more than just a simple accounting of minutes of calling. The most prominent characteristic of VoIP is that voice becomes ‘data’ and you are no longer forced to maintain two separate networks.

“Two important perspectives will weigh on telemarketing firms in gaining advantage with VoIP: Understanding the characteristics of programs that can best utilize the technology for the telemarketer’s own savings and at the same time, as customers may require VoIP for services such as call transfers or other interfaces between a client and the telemarketer, these new technical capabilities will be required to avoid erosion to lines of business.”

Callzilla’s Topf says, “Our call centers are located near-shore to the U.S. In order to get inbound and outbound calls between the U.S. and our centers, VoIP enables us to create a close-knit network between our points of presence and the points of presence where our clients’ customers are located, ensuring optimum voice quality, a very low operating cost structure, and lower capital expenditure requirements.”

IS THERE A BENEFIT FOR DIRECT MARKETERS?
Yet the question remains, from a practical standpoint, how does this benefit direct marketers?

“Many direct marketers will recognize some cost savings with VoIP in the most fundamental area of call processing,” says McCoy. “As other methods of IP communications with end-customers expand in use-messaging, e-mail, the web, etc.-and require more integration with voice applications, VoIP technology provides more clear methods for those applications to be built.”

“Our having lower telco costs mean lower overall pricing for our clients,” notes Topf. “Call quality is optimal. VoIP is the vehicle that allows us to route calls to and from our near-shore centers, where the real cost savings on labor begins to kick in. Lower marketing costs for our direct marketing clients mean lower ‘cost of goods sold’ and overall higher margins and greater return on investment.”
There are, however, like any technologies, misconceptions. And VoIP has many.

“The most common misunderstanding is that the term VoIP is synonymous with savings,” says West’s McCoy. “Yes, VoIP can offer tremendous reductions in cost in many circumstances, but it is important that marketers understand the characteristics of the programs and the nature of the systems that they move to the technology. Currently, VoIP can be more expensive than some classical ‘circuit-switched’ solutions.”

“Misconceptions are many,” says Callzilla’s Topf, including worries about call quality. Quality is always a concern, yet with the right mix of technology, a highly trained and experienced technical group and the right partners/providers, these fears are mitigated.”

VOIP IS NOT PERFECT
VoIP, it should be stated, is not a panacea for everyone.

“There are a wide range of disadvantages with VoIP,” says McCoy, “but these are, mostly, based on institutional inexperience and not inherent technical weaknesses.

“Issues such as limitations with availability from many carriers and call quality challenges, are not overwhelming, but will only be mitigated by the continued expansion of VoIP use and development of operational standards and methods.”

“Without proper planning and network design, Internet outages occur,” warns Topf. “Without the proper resources or technology in place, call quality can easily fall below toll-quality standards. Technology changes quickly, so investments in one type of equipment or technology can quickly become outdated, mandating marketers to pony up for new investments in the ‘next great thing.’

“One key in our success is that we picked U.S.-based IP-Com Inc. as our VoIP as our provider. They specialize in call center applications using VoIP, helping not only in design, migration and planning, but also in the day-to-day monitoring and administration of industry-level quality standards.”

SOMETHING TO GET INVOLVED WITH?
So with this wide variation of advantages and disadvantages of VoIP technology, why should direct marketers pay attention to it?
According to McCoy, “VoIP is not universal, but it is important to understand the momentum of any particular technology at a given time if it is fundamental to your business.

“Certainly ‘voice call processing’ is critical to direct marketers and VoIP is changing that paradigm. One needs only to look back to those who were skeptical that web and e-mail would change their businesses, as a reminder of what can happen to those who do not prepare. You can even go back further to the introduction of the ’800′ toll-free services and touchtone telephony for examples of nay sayers who were later, out of business. VoIP is as key to the future of direct marketing as those technologies were 30 to 40 years ago.”

Convergys’ Saresky says that this technology does require organizations to educate and retain existing talent and/or bring in new talent to understand nuances that VoIP introduces in order to ensure high quality voice services through the enterprise.

“Over the next five years, VoIP technology will be increasingly deployed to deliver calls to agent desktops whether in a traditional call center or offshore or to remote locations that might be used by home agents,” he says.

According to Topf, “The world is an IP world. It is a matter of time until all telco carriers migrate the majority of their networks to IP-based platforms. Consumers are embracing IP more and more, forcing telcos to find cheaper and more efficient ways to extend beyond what is called the last mile, or the piece of the network that connects a user in their home or office to the greater telecommunications network that interconnects us.

“And these two are converging movements that, like trains moving at high speed, are [coming] toward each other at an incredible place. Marketers need to be aware of this moment mostly because of the cost advantages it offers them in communicating effectively with their customers and own internal business units.”

What’s the future of VoIP? Many think it is quite bright.

“Over a five-year period,” says West’s McCoy, “it is envisioned that VoIP will be the primary technology for call processing within the bounds of any company campus architecture.”

David Lustig is a contributing writer to Electronic Retailer magazine. We would appreciate your feedback. To submit comments, please e-mail the magazine at [email protected].