Have you ever called a business and heard an automated voice telling you all the different options you can press to reach a specific department or solve an inquiry?

With the assistance of that recorded voice, you can get answers to simple questions like what are their working hours, getting directions or canceling an order. It also helps you reach a specific person or department to solve more complex inquiries.

This technology is called Interactive Voice Response (IVR). It allows callers to communicate with a company without being connected to an operator. 

Following user input, the IVR system replies are played back. These replies can be pre-recorded audio files or digitally produced voices.

Let’s dive further into this subject by examining what exactly is an IVR system.

What is Interactive Voice Response (IVR)?

IVR is a telephony software that allows businesses to interact with callers and collects information by providing menu options.

The system then takes action based on the caller’s keystrokes or voice responses. For example, an IVR system usually plays a recorded greeting for the caller, then announces the menu selections before connecting the caller with the most qualified agent; transfer them to a queue, or facilitate self-service. 

A well-designed IVR software system can improve your telecommunications while also increasing customers’ satisfaction. 

An effective IVR can assist callers in getting answers and complete simple activities on their own, especially during times of increased call volume.

How Does Interactive Voice Response Work?

An IVR is a type of computer-telephony integration (CTI). You’ll need a telephony board and specific IVR software to implement the technology. You may tailor the recordings to specific caller’s requirements.

Technically, IVR solutions consist of; telephony equipment, IVR application, database, and support infrastructure. 

There are two types of IVR; basic and advanced systems. By reducing hold times and needing less staff, the basic IVR system saves time and money. Advanced systems provide a better customer experience.

How IVR works

Basic IVR Systems

IVRs are made up of two main parts that allow your phone system to interpret and process the caller’s requests. 

The first part is voice recognition, and the second is Dual-Tone Multi-Frequency signaling (or DTMF). 

When callers use their phone’s keypad to pick menu items, DTMF signaling happens between the phone and the computer. 

Without any human input, this touch-tone technology enables intelligent call routing. Callers can offer vocal replies instead of using the keypad to traverse the menu on IVR platforms with speech recognition capabilities, known as Directed Dialogue. 

For instance, an IVR menu may say, “to check your account balance, press one, or just say account balance.”

Advanced IVR Systems

Advanced IVR is a more sophisticated system that provides customers with a more natural, quicker, and pleasant experience. 

Natural Language Processing (NLP) software, a type of conversational AI, is one of the most customer-friendly advancements.

Rather than restricting the caller’s word choice by detecting just certain instructions, the computer can interpret and analyze complete phrases thanks to its advanced speech recognition technology. 

Open-ended inquiries like “what can we do for you today?” can be answered by an IVR with built-in NLP. 

As you might expect, callers value this conversational approach to customer support since it allows them more freedom and understanding. 

It’s also a more efficient IVR method because callers can get straight to the point.

Benefits of Interactive Voice Response System

A key benefit of intelligent IVRs is that they have an automated screening procedure. As a result, agents have a sense of what sort of issue they’ll be dealing with before answering the phone.

This eliminates the time-consuming and inconvenient procedure of manually moving from one department to another by agents before interacting with someone who can assist you. 

At the same time, the customer avoids being placed on hold for too long, while your company saves the high expenses of excessively extended call handling times. 

In other words, it’s the ultimate win-win situation. Let’s take a deeper look at additional advantages of IVRs;

1. Efficient Customer Service

IVR gives customers the impression that they are better served. These systems make sure that each one of the most common inquiries has a rapid answer.

An efficient IVR flow provides customers with useful and time-saving replies in an understandable way. 

Ultimately, answering a call on the first ring saves time for both the client and the business by decreasing wait time and reducing call volume. And, because they’re speaking with someone who can help them, there’s a much greater chance of first call resolution.

2. Creates a Better Company Image 

If you’re a SMB or startup business, you might not have the call volume that IVR technology is best for, but it’s still a useful tool to have. 

Since a single receptionist could not handle very high call traffic, an IVR gives the impression that your firm is larger. 

For larger organizations, IVR helps to maintain a professional image by ensuring consistency in customer service and call volume. 

However, whether you have a small or larger firm, you can use an enterprise-level IVR system to help you escalate and project a more professional image without hurting your wallet.

3. Customer Access Is Unlimited

While staff availability is dictated by office hours, vacations, and breaks, IVR systems are always available to customers.

Customers can call your phone number and communicate with your IVR virtual attendant at any time, including outside business hours. This means clients can get assistance in real-time.

While having a live agent available for more complicated support inquiries is still necessary, an IVR phone system provides limitless access to a basic level of customer care.

4. Reduction in Manual Errors

IVRs are not prone to making mistakes since they are automated. However, when you hire a human receptionist to handle your company’s calls, the situation is rather different. 

Aside from the risk of being overwhelmed by large call volumes, manual call handling can also result in errors, such as calls being routed to the incorrect department or agent. 

When your contact center is equipped with an IVR system, all calls are routed through the phone menu in the same logical order. This eliminates the need for people to make judgment calls, the source of many call-handling errors and wait times. 

You gain the benefit of knowing that each caller gets an identical IVR experience every time.

5. Personalization at a Greater Level

Personalized features for recognized callers may be set into your IVR system. For example, this is feasible if caller ID information is accessible or the IVR is part of a more extensive cloud phone system with CRM integration. 

Aside from greeting a caller by name, the system may also recognize and convey any extra information that is unique to them. 

IVR systems come with numerous language options customizable for individual callers, in addition to identifying caller information. This is critical for companies that operate in many countries or want to expand internationally.

6. Increased Productivity

Customer discontent is compounded by time spent on hold or being routed from department to department, which you should try to prevent as much as possible. 

Call routing also allows contact center operators to prioritize the most important calls, based on predefined criteria such as client status or stage in the funnel. 

Your company will be able to handle a huge volume of calls with an IVR system, avoiding long call wait times and frustrated receptionists. 

In sum, it helps you increase your business productivity.

Interactive Voice Response Limitations

One of the most significant drawbacks of smart IVR systems is that many people hate talking to computers.

Telephone menus and lengthy instructions may be difficult for older people, while a slow phone menu often irritates younger callers. 

Let’s see additional IVR limitations;

1. Too Many Options

Many businesses allocate and implement far too many IVR menu levels and options, making it simple for callers to become disoriented. 

Some callers become frustrated and push any number or simply hang up without receiving a solution to their problem. 

Start creating an IVR script with as little unnecessary information as possible, such as instructions on how to use the phone menu system, hours of operation, extension numbers of each department.

Instead of providing all of the information upfront, list a few main options and allow the caller to move from there.

It is recommended that your menu doesn’t exceed four options.

2. Irrelevant Advertisement and Repeated ‘Yes or No’ Options

Many automated speech recognition systems repeat the caller’s response and ask them to confirm by saying Yes or No. Although this is a crucial step when collecting customer data, you must set up your system to be as least repetitive as possible.

On the other hand, many IVRs repeatedly play the same advertisement over and over while the customer is on hold. So, unless it’s brand new promotion, commercials are actually irrelevant to most people while over the phone.

3. Voice Prompt Could be Hard to Understand

Voices recorded over the phone rather than in a studio could be hard to understand by customers. Also, choosing a cheap text-to-speech automated software will undoubtedly leave clients unsatisfied.

4. It May Add Stress

If a customer is already angry before they call, it’s very likely that listening to a long recording and trying to follow the options becomes frustrating for them. This could add stress to the situation and they’ll be likely to mention that to the agent.

Thus, it’s important that you keep your menu reasonably short, straightforward and easy to understand and include the option to contact a person directly.

Interactive Voice Response Recommendations

IVRs have shown to be one of the most efficient methods for businesses to cut expenses, reduce employee workload, and improve customer service. 

However, deciding on an IVR system isn’t always straightforward. The following is a guide to selecting an IVR system and IVR setup;

  • Consider what departments, offices, and employees to include. Simply put, what are the actions you’d want your IVR to be able to complete?
  • Depending on the actions you choose in the previous step, you now have to select the IVR type you will need. The advanced system is of course, recommended.
  • Choose a voice you’d like to use for the system
  • Make the switch to a cloud-based phone system. It will streamline and unify your communications.
  • Make sure your experience is tailored to your customer journey. For example, align your phone system to assist existing and potential customers in reaching out to the appropriate members of your team.
  • Allow an option to speak with a real person. It will also improve your customer experience.

Interactive Voice Response FAQs

How much does an IVR cost?

In most cases, an IVR system costs between $0.02 and $0.10 per minute of conversation time. In addition, the cost savings from redirecting inbound calls from live agents, which may be $0.25/min multiplied by the average handling time, must be recognized. In contrast, an on-premise installation costs more than $1,500 per line, not counting upfront fees and support.

Where is IVR used?

IVR is useful in almost every industry. It’s primarily used in call centers, big corporations, organizations with a lot of departments or locations, government institutions, ecommerce stores, etc.

How do callers interact with an IVR?

Callers respond to the IVR system by following instructions given by pre-recorded voices either by pushing buttons or speaking. 

What are the parts of an IVR system?

The components of IVRs include an IVR phone system that combines an industry-standard IVR server (computer hardware) with developed IVR software as well as IVR applications developed specifically for each client and support infrastructure. 

Summary & Takeaways 

The importance of IVR to businesses, whether small, medium, or big cannot be over-emphasized.

It creates a win-win situation for both business owners and clients. Although it has its limitations, its pros outnumber them.

Here are some important takeaways to consider:

  • Interactive Voice Response is a technology that allows callers to communicate with a company without being connected to an operator.
  • A well-designed IVR software system may help improve contact center operations communications and KPIs while also increasing customers’ satisfaction.
  • There are two types of IVR systems; basic and advanced systems. By reducing hold times and needing less staff, the most basic IVR system saves time and money. Advanced systems provide an enhanced client experience through AI.
  • A key benefit of IVRs is that they have an automated screening procedure. Other benefits include; improved productivity, reduction in manual errors, wider personalization, better company image, and unlimited customer access. 
  • One of the most significant drawbacks of IVR systems is that many individuals hate talking to computers.
  • IVRs have shown to be one of the most efficient methods for businesses to cut expenses, reduce employee workload, and improve customer service.