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Lavalife Corp.
IVR VoIP Transformation
An Unlikely Company Builds the First Significant Inbound Local and Toll-Free VoIP Platform in North America
Background
Lavalife Corp. of Toronto isn't in the telecommunications business. It is in the voice-personals business - in fact, it created that business in 1987. Telecommunications is the backbone for it. Lavalife is one of the leading providers of technology-based meeting services for singles, giving its members safe access to like-minded singles anywhere, any time.
Lavalife has more than 600,000 members in Canada, the United States and Australia, exchanging 1.3 million messages every day. Singles simply record a personal profile - providing information about themselves and what they're looking for - to which other singles can respond.
A subsidiary of Vertrue Incorporated, the company employs 270 staff from its Toronto head office and call centre, including an IT department of 60 people. Since its inception in 1987, the company has recorded dramatic revenue and growth. It launched a text-messaging service, www.lavalifemobile.com, in 2004.
Challenge
Lavalife's initial growth sprang from the development and application of interactive voice response (IVR), a telephony technology in which a touch-tone telephone is used to interact with a database to acquire or receive information.
Although the Voice Personals product was launched in 1987, in more recent years this mature business had found itself increasingly under threat from challengers, including Internet service providers and mobile operators. Profitability was restricted by high capital costs and expansion was constrained by the need to "be local" in compliance with telephone company requirements.
The company was maintaining multiple points of presence (PoPs) across North America at significant expense. A PoP is a site where a collection of telecommunications equipment, usually modems, digital leased lines and multi-protocol routers exist. Access providers distribute PoPs across an area of operation to increase the chance that their subscribers will be able to reach one with a local telephone call. To this end, Lavalife was maintaining and co-locating one rack of gear within a telco site in each city where it operated.
Each telephone operation processed customer calls locally in Lavalife's IVR application, handling mostly local calls with some regional toll-free minutes. This technology solution was proprietary, with legacy telco proprietary hardware and a layer of custom call-handling routines developed in-house to handle the complex call flow at a technical level.
Each location was connected to the Lavalife call centre via an ATM network to accommodate customer service, payment processing and content monitoring. This solution was cumbersome to plan, operate, maintain and enhance. Worse yet, the capital expenditure related to the routers, switches and other equipment was costing the company millions of dollars in maintenance costs. There were other issues, too.
The IVR personals business relies on careful media placement and management. Successful promotion relies on direct TV and local print advertising featuring a unique telephone number for each ad. Legacy telcos had difficulty reacting quickly and flexibly enough to fulfill such requests.
By 2004, optimizing the business model and revenue had become a priority. Testing and expanding into new markets implied that the technology barrier to entry would have to be eliminated. To do so, Lavalife would need to rid itself of its aging equipment and dependency on the existing telephone carriers. Yet, before hanging up on its unfulfilled relationships, an alternative partner and solution would need to be identified.
Understanding the vast potential of VoIP to open up new markets and channels, reduce costs, and improve efficiency, the firm first embarked on developing a VoIP software interface that would emulate its distributed hardware. Understandably, finding assistance for its initiatives among telcos was challenging. Nevertheless, Lavalife's determination was unswerving and negotiations were soon under way.
Solution
The VoIP solution was conceived and tested by a small project team and a very aggressive rollout in the US and Canada immediately ensued.
By converting billions of minutes of IVR Personals traffic from legacy telecommunications infrastructures to VoIP and processing them centrally, the new solution replaced 25 platforms in cities across North America. In one fell swoop, the new solution reduced costs and improved efficiency in a number of categories and also removed long-standing technology constraints, enabling the business to expand into new geographic areas.
Today, all traffic is captured locally by a telco and delivered centrally to Lavalife's IVR applications as an inbound VoIP stream over a private IP network. The systems are generic servers, with no proprietary hardware components or associated custom low-level software.
Results
The solution has produced equipment savings estimated at $3.8 million. Approximately $250,000 in hardware costs and $400,000 in software costs replaced almost $4.5 million worth of production hardware.
Savings in maintenance costs are estimated at $50,000 annually. System interruptions have been reduced by 70 per cent. Increased flexibility due to fewer fixed costs means easier entry into and retraction from markets without significant cost effects.
Innovative Use of Technology
Lavalife built the first significant inbound local and toll-free VoIP platform in North America. This delivered at least 10 per cent to its bottom line and removed technology costs as a barrier to entry in new markets.
Lavasoft also built the first certified VoIP toll-free routing software because this service was unavailable.
A 2006 CIPA Winner!
For its exceptional application of information technology to solve real-world business problems, Lavalife Corp. has been awarded a 2006 CIPA Silver Award of Excellence in the Innovation, For Profit category.
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