The Total Economic Impact™ Of VoCoVo
Cost Savings And Business Benefits Enabled By VoCoVo
A Forrester Total Economic Impact™ Study Commissioned By VoCoVo, July 2024
While today’s consumers are tech-savvy, they still place value on in-store shopping for its immediacy and sensory benefits, which digital platforms cannot replicate.1 These consumers compare in-store experiences with online ones, requiring retailers to strategically design stores for enhanced customer experience (CX).2 Retailers must therefore invest in technology to provide better CX, achieve operational excellence, and drive specific business outcomes.
VoCoVo is a technology solutions provider that enables retail teams to collaborate in a connected working environment. VoCoVo’s product ecosystem includes lightweight, robust headsets, keypads, customer call points, and software that enable teams to elevate in-store communication and maximize the value of other smart retail technology. VoCoVo aims to empower teams to collaborate, communicate, and connect through voice.
VoCoVo commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying VoCoVo.3 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of VoCoVo on their organizations.
Return on investment (ROI)
142%
Net present value (NPV)
£6.43M
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four representatives with experience using VoCoVo. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a retail organization with 300 stores and revenue of £3 billion per year.
Interviewees said that prior to using VoCoVo, their organizations typically relied on internal portals accessible on personal devices (mobile phones), public announcement (PA) systems, or wireless walkie-talkies for communication purposes. However, these solutions posed limitations in terms of communication speed, efficiency, and real-time collaboration. These limitations led to delays in serving customer queries, delays in assigning activities or tasks to associates, and difficulty in ensuring a safe, connected working environment.
After the investment in VoCoVo, interviewees’ organizations improved the speed of customer service, enhanced collaboration among store associates, and improved store safety and security. Key results from the investment include store associate productivity savings from faster response to customer queries, store associate shift optimization through enhanced communication and collaboration, and a reduction of in-store theft through real-time notification of suspicious incidents.
Key Findings
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Improving customer query response times by 90% and experiencing time savings in sharing internal messages of 76%, leading to productivity savings of £2.9 million. VoCoVo headsets enable real-time peer-to-peer communication and connectedness. This reduces the time taken for associates to respond to customer queries by up to 90%. Additionally, the composite organization saves time in setting up and sharing broadcast messages intended for store associates by up to 76%. These benefits result in productivity time savings for the composite organization that amount to approximately £2.9 million over three years.
- Reducing shifts by 33%, enabling labor savings of £8.1 million. VoCoVo devices enable a connected working environment. This improves staff collaboration and task management, especially in larger retail environments where backroom associates and sales floor associates are needed to work in close collaboration with each other. This helps the composite organization improve task management and optimize associate headcounts in large stores, resulting in headcount savings that amount to £8.1 million over three years.
- Further reducing store theft by 4%. VoCoVo headsets deter in-store theft behavior at the composite organization’s stores. Further reductions in theft are derived from integration with other retail technology, such as smart shelving systems. The integration with smart-shelving systems enable real-time notification of theft activity, which helps store associates take timely action to prevent or control such incidents. The composite organization enables this integration in stores with high-theft incidents which results in theft reduction by 4% per week, saving £43,000 over three years.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
- Improving retail associate safety and well-being. VoCoVo’s always accessible, connected communication channel offers the composite organization the ability to orchestrate a safe and connected environment for associates at all times.
- Driving a culture of team learning and knowledge sharing. With VoCoVo headsets, associates can listen in on real-time customer queries and conversations, which allows them to learn from the responses given and fosters a culture of shared learning within the composite organization.
- Improving the new associate onboarding experience. Associates can instantly communicate with other store colleagues, which help new store associates easily integrate into the team environment.
- Increasing speed to action. Associates can promptly respond to work tasks due to VoCoVo’s ability to instantly transmit memos or reminders.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Hardware and installation costs of £4.4 million. Hardware costs include the cost of headsets, base units, and controllers. The installation of VoCoVo infrastructure is also accounted for with this cost.
- Proof of concept (POC), implementation, and training costs of £116,000. Deployment involves an initial proof of concept followed by implementation and associate training.
- Cost of Integrating VoCoVo Smart Shelving System of £13,000. This cost involves the one-time cost of integrating VoCoVo with smart shelving systems.
The representative interviews and financial analysis found that a composite organization experiences benefits of £10.97 million over three years versus costs of £4.54 million, adding up to a net present value (NPV) of £6.43 million and an ROI of 142%.
Key Statistics
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Return on investment (ROI)
142%
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Benefits PV
£10.97M
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Net present value (NPV)
£6.43M
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Payback
12 months
Benefits (Three-Year)
Shop floor associate time savings Savings from replenishment associate shift reduction in large stores Savings from theft reductionTEI Framework And Methodology
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in VoCoVo.
The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that VoCoVo can have on an organization.
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Due Diligence
Interviewed VoCoVo stakeholders and Forrester analysts to gather data relative to VoCoVo.
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Interviews
Interviewed four representatives at organizations using VoCoVo to obtain data about costs, benefits, and risks.
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Composite Organization
Designed a composite organization based on characteristics of the interviewees’ organizations.
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Financial Model Framework
Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.
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Case Study
Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Disclosures
Readers should be aware of the following:
This study is commissioned by VoCoVo and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in VoCoVo.
VoCoVo reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
VoCoVo provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Bharath Sivan
Diane Deng
Drivers leading to the VoCoVo investment
Interviews
| Role | Industry | Region | Revenue | Number Of Stores |
|---|---|---|---|---|
| VP of retail operations | Supermarket chain | United Kingdom | £20.4 billion | 350 |
| Retail transformation manager | DIY and home improvement retail chain | United Kingdom | £3.8 billion | 311 |
| Principal product manager | Home furnishing retailer | United Kingdom | £1.6 billion | 198 |
| Program manager | Retail grocery chain | United Kingdom | £385 million | 350 |
Key Challenges
Prior to using VoCoVo, the interviewees’ organizations primarily depended on PA systems, personal devices (mobile phones), wireless walkie-talkies, or a combination of these for communicating and collaborating with store associates.
The interviewees noted how their organizations struggled with common challenges, including:
- Delays in addressing customer queries. The interviewees’ organizations faced challenges in quickly and efficiently resolving customer queries. Interviewees noted that when staff were asked a question, they did not have the answers to, they usually left the customer waiting while they either found a colleague who was better equipped to address the query or attempted to find the answer themselves. Such instances had a significant impact on speed of service and damaged the overall customer experience. In certain cases, it also led to loss of sales.
- Ineffective management of employee shifts in large stores. In large-format retail stores, interviewees’ highlighted challenges in effectively managing workflows and optimizing the schedules of their associates. It was cited that the interviewees’ organizations experienced a disconnect in communication and collaboration between backroom staff and storefront staff, often leading to operational inefficiencies and disjointed customer service. As a result, store managers often found themselves in a position where they needed additional headcount to manage operations, leading to increased labor costs.
- Challenges with controlling store theft. The interviewees’ organizations faced significant challenges with controlling loss of inventory due to theft. Despite substantial efforts and investments in equipping their stores with closed-circuit television (CCTV) systems, they were proven insufficient in curbing theft incidents. It was cited that the impact of theft extended beyond financial loss; it also had serious implications for the safety and well-being of store associates.
Solution Requirements
The interviewees’ organizations searched for a solution that could:
- Enhance speed and efficiency of service delivery.
- Empower associates to work collaboratively and improve productivity.
- Orchestrate a safer and connected working environment.
Composite Organization
Based on the interviews, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the four interviewees, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The composite organization is a UK-based, nationwide general retail chain with 300 physical stores. It has an annual revenue of £3 billion and operates across large (40,000+ square feet), medium (15,000 to 40,000 square feet) and small (3,000 to 15,000 square feet) format stores. The composite organization has low technology maturity and does not employ smart devices, such as wearables or tablets, for store associates to communicate with each other or manage tasks. Public announcements systems and personal devices, such as mobile phones, are the primary communication method used.
Deployment characteristics. The composite organization deploys VoCoVo across all store formats in Year 1, following a three-month proof-of-concept period. It also expands at 1% per year and continues to deploy VoCoVo in new stores. The composite also deploys smart shelving systems in selected stores and integrates it with VoCoVo headsets. The integration with VoCoVo headsets scales from five stores initially in Year 1, to 10 stores in Year 2 and 15 stores in Year 3.
Quantified benefit data as applied to the composite
Total Benefits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Shop floor associate time savings | £1,138,800 | £1,150,188 | £1,161,690 | £3,450,678 | £2,858,636 |
| Btr | Savings from replenishment associate shift reduction in large stores | £3,244,800 | £3,244,800 | £3,244,800 | £9,734,400 | £8,069,337 |
| Ctr | Savings from theft reduction | £8,840 | £17,680 | £26,520 | £53,040 | £42,573 |
| Total benefits (risk-adjusted) | £4,392,440 | £4,412,668 | £4,433,010 | £13,238,118 | £10,970,546 | |
Shop Floor Associate Time Savings
Evidence and data. VoCoVo headsets offer a wireless channel for instant communication that connects the entire team within a retail operation. Interviewees noted this enabled their store associates to stay connected, communicate, and collaborate with each other, enhancing their ability to respond to customer needs effectively. The principal product manager at a home furnishing retail organization explained that when customers approach their associates with queries, they used to spend up to 10 to 15 minutes either looking for a colleague to help answer the question or find out the answer themselves. With VoCoVo, they reduced the time it took to answer customer queries by 90% as associates could find answers much faster since they were connected through the wireless communication channel. Speedier service delivery also improved the overall purchasing experience for the customer.
In addition to this, interviewees noted VoCoVo headsets could also be used to relay important messages or announcements directly to the staff instead of using internal portals or PA systems, which ensured customers were not disturbed. The VP of retail operations at a supermarket chain explained that, on a daily basis, they had to share multiple messages or reminders with their staff, ranging from reminders for product withdrawal to periodic checks or other important ad-hoc updates. Sharing such messages through VoCoVo was instantaneous. Associates were no longer tied to PA systems or their personal devices to check the internal portal for such messages. This enabled them to cut down the time taken to compose and share such broadcast messages by 75%.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- Each store in the composite organization’s chain receives an average of 10 customer queries every day. These queries included questions about product availability, recommendations, or category specific questions, such as specifications, comparisons, alternatives, and source and policy information.
- The average time taken for store associates to resolve a customer query is 10 minutes. This involves either physically finding a colleague who can answer the query or finding out the answer themselves.
- The composite experiences a reduction of 90% in the time taken to answer customer queries with VoCoVo.
- Each store in the composite organization’s chain shares two reminders or broadcast messages with their associates every day.
- The average time taken for associates to compose and share broadcast messages is 20 minutes. This involves gathering the information from the store manager’s office, walking to the PA system, and sharing the message.
- The composite experiences a reduction of 76% in time taken to answer customer queries with VoCoVo.
- A productivity capture rate of 50% is applied as a TEI standard as it can be assumed associates reallocate only a certain part of the time saved to productive work.
Risks. The benefits experienced may vary for organizations based on:
- The nature of goods and services the organization sells. Customers purchasing home improvement products, electronic products, etc., might have more clarifications and questions or might require more guidance from store associates to help them with their purchases.
- The number of customer queries received by the stores.
- The number of reminder or broadcast messages stores share.
- The average hourly wage of retail associates.
Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of £2.9 million.
Shop Floor Associate Time Savings
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| A1 | Total number of stores | Composite | 300 | 303 | 306 |
| A2 | Average number of customer queries per store per year | Interviews | 3,650 | 3,650 | 3,650 |
| A3 | Time spent per query without VoCoVo (hours) | Interviews | 0.17 | 0.17 | 0.17 |
| A4 | Time spent per query with VoCoVo (hours) | Interviews | 0.02 | 0.02 | 0.02 |
| A5 | Reduction in time spent on answering queries with VoCoVo | Assumption | 90% | 90% | 90% |
| A6 | Fully burdened hourly rate for a retail associate | TEI standard | £13 | £13 | £13 |
| A7 | Subtotal: Shop floor associate time savings in answering customer queries | A1*A2*A3*A5*A6 | £2,135,250 | £2,156,603 | £2,178,169 |
| A8 | Average number of broadcasting messages per store per year | Assumption | 730 | 730 | 730 |
| A9 | Time spent to send to create a broadcasting message without VoCoVo (hours) | Interviews | 0.33 | 0.33 | 0.33 |
| A10 | Time spent to send to create a broadcasting message with VoCoVo (hours) | Interviews | 0.08 | 0.08 | 0.08 |
| A11 | Reduction in time spent on creating a broadcasting message | Assumption | 76% | 76% | 76% |
| A12 | Subtotal: Time savings in sharing broadcasting message | A1*A6*A8*A9*A11 | £711,750 | £718,868 | £726,056 |
| A13 | Productivity recapture rate | TEI standard | 50% | 50% | 50% |
| At | Shop floor associate time savings | (A7+A12)*A13 | £1,423,500 | £1,437,735 | £1,452,112 |
| Risk adjustment | ↓20% | ||||
| Atr | Shop floor associate time savings (risk-adjusted) | £1,138,800 | £1,150,188 | £1,161,690 | |
| Three-year total: £3,450,678 | Three-year present value: £2,858,636 | ||||
Savings From Replenishment Associate Shift Reduction In Large Stores
Evidence and data. Interviewees noted that VoCoVo helped orchestrate a connected working environment for store associates, improving coordination and productivity. The VP of retail operations at a supermarket chain explained that in large-format stores, they experienced a disconnect in communication and collaboration between the backroom staff, who were responsible for replenishment, and the storefront staff, who directly interacted with customers. This disconnect often manifested as uncoordinated actions, leading to operational inefficiencies like delayed restocking, misplaced products, and out-of-stock situations, which increased the need for additional associates to manage operations. Such situations not only resulted in increased labor costs but also led to a negative shopping experience for customers. Introducing VoCoVo enabled better coordination and task management with reduced effort, allowing the interviewees’ organizations to reduce their backroom associate (replenishment) headcount by one.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- Large stores in the composite organization’s chain employ three associates in replenishment.
- A retail associate works 40 hours weekly.
- The composite experiences a reduction of 33% in the number of associate required to in large stores for replenishment.
Risks. The benefits experienced may vary for organizations based on.
- The number of associates dedicated to replenishment in large stores.
- The extent of technology used within the store to manage tasks, such as a dedicated task management solution.
- The average hourly wage of retail associates.
Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of £8.1 million.
Savings From Replenishment Associate Shift Reduction In Large Stores
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| B1 | Total number of large stores | Composite | 150 | 150 | 150 |
| B2 | Number of replenishment associates per shift in a large store before VoCoVo | Interviews | 3 | 3 | 3 |
| B3 | Total hours worked by replenishment associate per week | TEI standard | 40 | 40 | 40 |
| B4 | Percentage reduction in associates per shift | Interviews | 33% | 33% | 33% |
| B5 | Fully burdened hourly rate for a retail associate | TEI standard | £13 | £13 | £13 |
| Bt | Savings from replenishment associate shift reduction in large stores | B1*B2*B3*B4*B5*52 | £4,056,000 | £4,056,000 | £4,056,000 |
| Risk adjustment | ↓20% | ||||
| Btr | Savings from replenishment associate shift reduction in large stores (risk-adjusted) | £3,244,800 | £3,244,800 | £3,244,800 | |
| Three-year total: £9,734,400 | Three-year present value: £8,069,337 | ||||
Savings From Theft Reduction
Evidence and data. VoCoVo offers API-based integrations with intelligent retail technologies such as smart fridges, shelving, security cameras, and workflow applications. Interviewees noted that with VoCoVo, any notification generated by such smart devices could be converted to an instant voice notification, delivered to the associates through their headsets. The program manager at a retail grocery chain explained how their organization integrated VoCoVo with the smart shelving systems in their stores with high levels of theft incidents. This integration enabled store associates to receive instant voice notification of suspicious activity, allowing them to respond in real time. This helped the interviewed program manager’s organization reduce store theft by 4%.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The composite organization initially deploys smart shelving systems in five stores in Year 1, scaling to 10 in Year 2 and 15 in Year 3.
- The composite organization integrates smart shelving technology with VoCoVo to enable instant voice notification.
- Stores with high levels of theft incidents experience an average theft of £2,500 each per week.
- The composite experiences a 4% reduction in theft due to the smart shelving and VoCoVo notification integration.
- Since the savings from theft reduction due to faster response to incidents is enabled by a combination of smart shelving system and its integration with VoCoVo, the study cannot attribute 100% of the benefits to VoCoVo. Therefore, VoCoVo is accredited with 40% of the overall savings.
Risks. The benefits experienced may vary for organizations based on:
- The value of theft experienced by the stores.
- The amount of security measures adopted by stores that can prevent theft incidents, such as RFID scanners, closed-circuit Televisions (CCTV), and security personnel.
- The reliability or success rate of the smart shelving system to correctly identity a shoplifting attempt.
- The stand-alone capability of the smart shelving systems to trigger alarms or notifications by itself without the need of a third-party tool like VoCoVo.
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of £43,000.
Savings From Theft Reduction
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| C1 | Number of stores with smart shelving integration | Assumption | 5 | 10 | 15 |
| C2 | Average theft per week per store | Interviews | £2,500 | £2,500 | £2,500 |
| C3 | Percentage reduction in theft with VoCoVo integration | Interviews | 4% | 4% | 4% |
| C4 | Percentage attribution of theft reduction savings to VoCoVo | Assumption | 40% | 40% | 40% |
| Ct | Savings from theft reduction | C1*C2*C3*C4*52 weeks | £10,400 | £20,800 | £31,200 |
| Risk adjustment | ↓15% | ||||
| Ctr | Savings from theft reduction (risk-adjusted) | £8,840 | £17,680 | £26,520 | |
| Three-year total: £53,040 | Three-year present value: £42,573 | ||||
Unquantified Benefits
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
- Improving retail associate safety and well-being. One of the primary benefits interviewees highlighted was VoCoVo’s ability to orchestrate a safe and connected environment for associates at all times. The principal product manager at a home improvement retailer cited that VoCoVo significantly helped in reducing security incidents, such as violent and abusive customer behaviors. Being connected to colleagues via the headsets not only helped associates reach out for help or support but also deterred customers from behaving aggressively as they understood their actions could be reported immediately. The program manager of a retail grocery chain also echoed this, highlighting that VoCoVo provided a sense of security for associates who work late night shifts. These benefits helped associate experience and overall morale.
- Driving a culture of team learning and knowledge sharing. Interviewees also noted the impact VoCoVo has on driving a culture of shared learning. One interviewee said that, since every associate could listen in on customer conversations or customer queries that were being answered, it helped less-experienced colleagues learn from these conversations. It also created a shared sense of responsibility and enabled associates to communicate learnings.
- Improving new associate onboarding experience. Interviewees reported the ability to ease new store associates into a team environment as another positive impact of VoCoVo. One interviewee said that, although new employees were provided training at the time of onboarding, they would still take time to understand the structure and operations within the store. With VoCoVo, new associates could receive assistance from a coworker immediately, helping associates settle into their new job easily.
- Increasing speed to action. Instant communication enabled by VoCoVo ensured that any messages or call to actions were instantly delivered. The VP of retail operations at a supermarket chain explained how memos or reminders were previously sent on personal devices, and it would take some time for associates to get a chance to read them. This reduced the speed at which associates could be directed to tasks or activities. Having messages delivered directly to the headsets allowed associates to monitor or check any devices and manage tasks more effectively.
Flexibility
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement VoCoVo and later realize additional uses and business opportunities, including:
- The ability to orchestrate a connected store experience. Interviewees cited the significance of connecting VoCoVo to other technologies through API integrations. This included integration with telephony services, smart fridges, and CCTV systems and other retail technologies that help create a connected store experience where colleagues as well as devices can communicate in real-time.
- The ability to multitask. Interviewees also highlighted that VoCoVo enabled their associates to multitask more effectively as they were no longer tied down to a specific location. With VoCoVo’s range of communication devices, such as customer call points and checkout keypads, store associates could answer queries remotely or provide response remotely without leaving their task at hand. This enabled the workforce to be more mobile and productive.
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Quantified cost data as applied to the composite
Total Costs
| Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|---|
| Dtr | Hardware and installation costs | £3,649,238 | £305,843 | £305,843 | £305,843 | £4,566,765 | £4,409,823 |
| Etr | POC, implementation, and training Costs | £86,016 | £31,500 | £853 | £853 | £119,221 | £115,998 |
| Ftr | Cost of integrating VoCoVo with smart shelving system | £0 | £2,625 | £5,250 | £7,875 | £15,750 | £12,642 |
| Total costs (risk-adjusted) | £3,735,254 | £339,968 | £311,945 | £314,570 | £4,701,736 | £4,538,463 | |
Hardware And Installation Costs
Evidence and data. The primary costs associated with VoCoVo for the interviewees’ organizations were hardware and installation charges. Interviewees noted that hardware costs included the headsets, base stations, and the controllers required to set up the solution. Installation costs included the charges associated with setting up wiring and physical infrastructure for VoCoVo’s connected communication ecosystem.
Modeling and assumptions. VoCoVo provided the license fee presented in this financial model. This fee has been adjusted to the composite organization’s characteristics and deployment approach. The model also assumes a 15% annual replacement rate for headphones due to wear and tear.
Risks. This cost may vary depending on:
- The organization’s requirement around headsets.
- The size of the organization’s stores.
- The organization’s headset replacement rate
- The labor cost for installation.
- Store expansion or changes over time.
Results. To account for these risks, Forrester adjusted this cost upward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of £4.4 million.
Hardware And Installation Costs
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| D1 | Total number of stores | Composite | 300 | |||
| D2 | Hardware costs (headsets, base stations, controllers) | Interviews | £2,610,750 | |||
| D3 | Installation costs | Interviews | £562,500 | |||
| D4 | Average rate of headset replacements due to wear and tear | Interviews | 15% | 15% | 15% | |
| D5 | Cost associated with headset replacements | Composite | £265,950 | £265,950 | £265,950 | |
| Dt | Hardware and installation costs | D2+D3+D5 | £3,173,250 | £265,950 | £265,950 | £265,950 |
| Risk adjustment | ↑15% | |||||
| Dtr | Hardware and installation costs (risk-adjusted) | £3,649,238 | £305,843 | £305,843 | £305,843 | |
| Three-year total: £4,566,765 | Three-year present value: £4,409,823 | |||||
POC, Implementation, And Training Costs
Evidence and data. The interviewees noted their organizations started implementation of VoCoVo with an initial proof of concept (POC) followed by full rollout. The initial POC stage was conducted in selected stores and was primarily done to evaluate the connectivity, voice clarity, and range of VoCoVo headsets. Interviewees explained this was done in four to five stores and lasted for a maximum of three months. It was then followed by implementation and complete rollout of the VoCoVo system to all the stores. The POC and implementation phases involved efforts from VoCoVo as well as the interviewees’ organizations. The interviewees explained that both phases included a maximum of one project manager working full-time and six retail associates dedicating their time part-time. This team was provided continuous support from the VoCoVo team which consisted of an account manager and IT team. Post-implementation, interviewees also cited efforts for training and onboarding store associates, which was supported by videos and guides VoCoVo provided. The interviewees also highlighted the simplicity and intuitiveness the headphones, which helped associates get familiar and use the headsets within a matter of minutes.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The proof-of-concept phase involves one project manager working full-time and six retail associates working part-time for a period of three months.
- The implementation phase involves one project manager working full-time and six retail associates working part-time for a period of five months.
- Training and onboarding involves one project manager spending up to 4 hours per store introducing and educating the store associates to effectively use VoCoVo.
Risks. This cost may vary depending on:
- The number of stores.
- The available resources to support implementation.
- The extent of training required.
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of £116,000.
POC, Implementation, And Training Costs
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| E1 | Number of stores selected for POC and testing | Interviews | 4 | |||
| E2 | Time spent on testing and feedback gathering (hours) | Interviews | 480 | |||
| E3 | Number of retail project managers involved | Interviews | 1 | |||
| E4 | Fully burdened hourly rate for a retail project manager | TEI standard | £25 | |||
| E5 | Percentage contribution from retail project manager | Interviews | 100% | |||
| E6 | Number of part-time retail associates involved | Interviews | 6 | |||
| E7 | Fully burdened hourly rate for a retail associate | TEI standard | £13 | |||
| E8 | Percentage contribution from retail associate | Interviews | 50% | |||
| E9 | Subtotal: POC and testing costs | (E2*E3*E4*E5)+ (E2*E6*E7*E8) | £30,720 | |||
| E10 | Number of stores implementing VoCoVo | Composite | 300 | 3 | 3 | |
| E11 | Time spent for implementation and rollout (hours) | Interview | 800 | |||
| E12 | Subtotal: Implementation and rollout costs | (E3*E4*E5*E11)+ (E6*E7*E8*E11) | £51,200 | £512 | £512 | |
| E13 | Time spent per store on training and onboarding store associates (hours) | Interviews | 4 | 4 | 4 | |
| E14 | Subtotal: Training and onboarding costs | E4*E10*E13 | £30,000 | £300 | £300 | |
| Et | POC, implementation, and training costs | E9+E12+E14 | £81,920 | £30,000 | £812 | £812 |
| Risk adjustment | ↑5% | |||||
| Etr | POC, implementation, and training costs (risk-adjusted) | £86,016 | £31,500 | £853 | £853 | |
| Three-year total: £119,221 | Three-year present value: £115,998 | |||||
Cost Of Integrating VoCoVo With Smart Shelving System
Evidence and data. Interviewees noted integrating VoCoVo to smart retail technology involved a one-time cost.
Modeling and assumptions. VoCoVo provided the integration fee presented in this financial model and adjusted this fee to the composite organization’s characteristics and deployment approach.
Risks. This cost may vary depending on:
- The number of stores.
- The number of smart technology integrations needed per store.
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of £13,000.
Cost Of Integrating VoCoVo With Smart Shelving System
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| F1 | Stores with smart shelving integration | Assumption | 0 | 5 | 10 | 15 |
| F2 | Cost of integration per store | Interviews | £500 | £500 | £500 | |
| Ft | Cost of integrating VoCoVo with smart shelving system | F1*F2 | £0 | £2,500 | £5,000 | £7,500 |
| Risk adjustment | ↑5% | |||||
| Ftr | Cost of integrating VoCoVo with smart shelving system (risk-adjusted) | £0 | £2,625 | £5,250 | £7,875 | |
| Three-year total: £15,750 | Three-year present value: £12,642 | |||||
Consolidated Three-Year, Risk-Adjusted Metrics
Cash Flow Chart (Risk-Adjusted)
Total costs Total benefits Cumulative net benefits-
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
Cash Flow Analysis (Risk-Adjusted Estimates)
| Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
|---|---|---|---|---|---|---|
| Total costs | (£3,735,254) | (£339,968) | (£311,945) | (£314,570) | (£4,701,736) | (£4,538,463) |
| Total benefits | £0 | £4,392,440 | £4,412,668 | £4,433,010 | £13,238,118 | £10,970,546 |
| Net benefits | £3,735,254 | £4,052,473 | £4,100,723 | £4,118,440 | £8,536,382 | £6,432,083 |
| ROI | 142% | |||||
| Payback | 12 months | |||||
Appendix A: Total Economic Impact
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Total Economic Impact Approach
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Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
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Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
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Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
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Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.
Appendix B: Endnotes
1 Source: The Future Of The Digital Store, Forrester Research, Inc., October 25, 2023.
2 Ibid.
3 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
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