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3 Steps to Selling the ROI of Video Collaboration

March 19, 2017



More professionals work remotely these days. Executives are opting for telecommuting rather than losing hours in rush hour traffic. Advances in telecommunications have made remote collaboration much easier. According to Cisco, collaboration, video, and mobility tools will take up 55 percent of the projected $14.4 billion currently being spent on connectivity. MarketsandMarkets predicts that the video collaboration and conferencing market will hit $11.2 billion by 2018. Travel costs are up, but the cost of mobile technology and telecommunications are dropping. Bandwidth is becoming cheaper so video collaboration is providing a cost-effective and efficient alternative to face-to-face meetings. Companies are starting to see the real ROI of video collaboration.

According to IDC, video conferencing:

  • Increases productivity an average of 30 percent
  • Increases collaboration with new business process by 35 percent
  • Leads to 75 percent faster dispute resolution for company teams, especially those with language or cultural barriers.

So how do you sell the ROI of video collaboration to customers who haven’t seen the light? Selling the ROI of video collaboration is about selling the benefits, of which there are many. Once you outline the advantages, you can address the disadvantages and then prove the value of video for collaboration with hard figures. Here are some practical ways to approach selling the ROI of video collaboration:

Simple Proof for the ROI on Video Collaboration

The fastest way to calculate the ROI of video collaboration is to compare travel costs to video conferencing costs. When you consider that mid-sized companies spend 44 percent of their budget on air and hotels while Fortune 500 companies spend 58 percent of their budget on travel these savings can be significant, and showing customers how significant is a strong proof point for the ROI of video collaboration.

For example, if a sales rep has to make 10 coast-to-coast sales trips each year, then the cost of annual T&E for that one rep is probably close to $15,000 (not to mention more than 200 hours of lost productivity). Now multiply that by the number of employees on the road. The simple formula is:

[Amortized cost of video collaboration solution] – [savings on T&E] = [ROI of video collaboration]

So if you have 10 sales reps, each spending about $15,000 per year on coast-to-coast travel you could save as much as $150,000 annually in those sales reps alone. Of course, there are so many more advantages that the ROI of video collaboration goes well beyond sales.

A More Complicated Model to Calculate ROI

Cisco offers a more sophisticated formula to calculate the ROI of video collaboration. If you factor in other variables, such as salary, the number of attendees per meeting, lost productivity time, and other elements, video collaboration costs tend to come out at about half the cost of business travel. Here’s one example:

First determine annual meeting costs, comparing in-person meetings and video meetings:

MEETING COSTS

Face to Face

Video Collaboration

  1. Number of off-site meetings

300

300

  1. Average meeting length

2.5 hours

2 hours

  1. Average number of attendees

4

4

  1. Number of travelers

2

0

  1. Average wage of attendees

$50

$50

  1. Annual Meeting Cost (A*B*C*E)

$150,000

$120,000

Next calculate travel costs:

TRAVEL COSTS

 
  1. Number of round trips

600

  1. Average cost per trip

$600

  1. Annual travel costs (G*H)

$360,000

Then calculate productivity costs:

PRODUCTIVITY COSTS

 
  1. Average travel time per trip

6 hours

  1. Percent of non-productive time

50 %

  1. Average traveler wage/hour

$50

  1. Number of round trips

600

  1. Non-productive costs (J*K*L*M)

$90,000

So for our example, the total costs for traveling for meetings are about $600,000 per year. Now let’s consider the equivalent cost of video collaboration using Cisco’s formula.

VIDEO COLLABORATION COSTS

 
  1. Hours of video conferencing

600

  1. Equipment facility costs (O*$20*2)

$24,000

  1. Transmission and bridging costs (O*$250)

$150,000

  1. Total video conferencing costs (P+Q)

$174,000

The Hidden ROI of Video Collaboration

So the numbers don’t lie, and in the case of our example meeting travel alone is three times the cost of video collaboration. Even if you want to play with the calculations, chances are that the ROI of video collaboration will win out again and again. But there’s more.

Telepresence and video collaboration tends to improve productivity, especially among remote teams where there is a language or cultural barrier. If you have experts located in remote offices being able to tap their expertise, including white boarding and video collaboration, can shorten time to reach a business decision. Setting up video collaboration for workgroups makes it easier to gather experts from remote locations together for very little cost and maximum returns.

There are other ROI metrics as well, such as shortening supply time for new parts; imagine being able to collaborate using a video link with manufacturers on specialty products. In the case of HR, interviews are now being routinely conducted via Skype because it is easier to schedule and shortens time to a hiring decision.  

And then there’s ROI from increased sales. One large bank was able to improve the upsell and cross-sell rate for new products by 50 percent using telepresence to advise customers on more complex financial products. For complex, high-touch selling, video collaboration is much more effective than a phone call.

This is why it makes sense to incorporate video collaboration in your own selling process. As the saying goes, seeing is believing, and if you can demonstrate the ROI of video collaboration with a virtual sales call, you can really drive you point home to customers.

So what obstacles are you encountering when you sell video collaboration? We want to share your experience. Who knows, your insight might inspire a future blog.