Rosetta Stone 2012 Annual Report Download - page 25

Table of Contents
We accept payment methods other than payment cards, particularly in some areas of the world. As our service continues to evolve and expand
internationally, we will likely continue to explore accepting various forms of payment, which may have higher fees and costs than our currently accepted
payment methods. If more consumers use higher cost payment methods, our payment costs could increase and our financial results could suffer.
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We rely on both an in-house call center and third-party call centers to sell our solutions, respond to customer service and technical support requests
and process orders. Any significant interruption in the operation of these facilities, including an interruption caused by our failure to successfully
expand or upgrade our systems or to manage these expansions or upgrades, could reduce our ability to receive and process orders and provide products
and services, which could result in lost and cancelled sales and damage to our brand and reputation.
As we grow, we will need more capacity from those existing call centers or we will need to identify and contract with new call centers. We may
not be able to continue to locate and contract for call center capacity on favorable terms, or at all. Additionally, the rates those call centers charge us may
increase or those call centers may not continue to provide service at the current levels.
We structure our marketing and advertising to drive potential customers to our call centers and websites to purchase our solutions. If our call center
operators do not convert inquiries into sales at expected rates, our ability to generate revenue could be impaired. Training and retaining qualified call
center operators is challenging due to the expansion of our product and service offerings and the seasonality of our business. If we do not adequately
train our call center operators, they will not convert inquiries into sales at an acceptable rate.
Our call center employs a large number of personnel and historically has been subject to a high turnover rate among employees. We may have to
terminate employees from time to time as our business changes and labor demands shift among our facilities. Any significant increase in labor costs,
deterioration of employee relations, slowdowns or work stoppages at any of our locations, due to employee turnover or otherwise, could harm our
business and profitability. In addition, high employee turnover could increase our exposure to employee-related litigation. Likewise, the third-party call
centers we utilize face similar issues.
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If our products contain defects, errors or security vulnerabilities, our reputation could be harmed, which could result in significant costs to us and
impair our ability to sell our products in the future. In the past, we have encountered product development delays due to errors or defects. We would
expect that, despite our testing, errors will be found in new products and product enhancements in the future. Significant errors in our products or
services could lead to, among other things:
•delays in or loss of market acceptance of our products and services;
•diversion of our resources;
•a lower rate of license renewals or upgrades for consumer and institutional customers;
•injury to our reputation; or
•increased service expenses or payment of damages.
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