Interactive Voice Response (IVR): Definition and Benefits

What Is Interactive Voice Response: IVR Definition & Benefits

Find out how an IVR system can benefit your business and improve your customer service
by
Nicholas Price

This article was originally published on August 25, 2016, and has since been updated.


 You’ve been on your phone for what feels like hours, but it’s actually just been five minutes. Finally, a robotic voice greets you. After choosing from a list of options, you manage to troubleshoot your concerns with the help of that robotic voice. This is just one feature of Interactive Voice Response. Also known as IVR, it’s a technology that allows callers to interact with the company without being connected to an operator.

In this article, we’ll take a look at Interactive Voice Response (IVR) and what it is. We will also discuss the benefits of IVR tools to help you decide if they’re right for your company.

Quick links

What is Interactive Voice Response (IVR)?

Interactive Voice Response (IVR) is a phone system feature that allows customers or business employees to interact with a computer system through voice or touch-tone dialing.

With Interactive Voice Response, your automated telephony system can have basic interactions with your callers without having to go through a human operator, consuming both their and your agent’s time.

An IVR system is an efficient way of routing calls to their appropriate recipient. The IVR can prompt customers through a series of menus and options that will lead them to the right department. That way, when they finally do speak to a human voice, it’s someone who is equipped to handle their concerns.

IVR system responses are played back after user input. These responses can be pre-recorded audio files or digitally generated voices, and they can assist, direct, and route calls automatically based on user responses.

Ready to build better conversations?
Simple to set up. Easy to use. Powerful integrations.

Within these interactions, clients can communicate by using either the touch-tone keypad selection or voice telephone input. The responses take the form of voice, callback, or any other related media (like sending an email or text alert). 

All these features can be used without the assistance of a live operator. This reduces the number of people needed to address customer concerns and limits the amount of time skilled agents have to spend on more menial tasks, like call routing.

Why Would a Business Use an IVR System?

Traditionally, customers seek assistance from customer service specialists in person (like when visiting Apple’s Genius Bar) or over the phone by calling a dedicated customer support number. 

But with the advent of new technologies like Interactive Voice Response systems and the increasing prevalence of online support resources, such as FAQs or live chat options on a company website, customers can rely less on these personal interactions and more on self-service. 

This is a huge benefit for customers. A study by Zendesk found that:

  • 69% of respondents said that they wanted to resolve issues themselves without needing human intervention.
  • 63% would start by searching for solutions within a business’s digital channels before deciding to call its customer support hotline.

This survey highlights two important trends worth considering when designing your call center:

  • Customers want self-service. You can achieve that through an interactive system like Voice Over IP (VoIP) that integrates Interactive Voice Response systems.
  • The shift toward using digital sources first instead of traditional call centers means that companies should prioritize digital transformation initiatives to stay relevant.

So what does this mean for your company?

When your company deals with a lot of inbound calls, the flow and timeliness of service are important for your customers. That’s exactly what Interactive Voice Response (IVR) can bring to the table. Call centers can operate more smoothly with IVR, as customer support agents reduce the time they spend routing calls and can instead focus on solving customer issues. 

Simply put: An IVR helps agents triage customer needs. They’re able to prioritize calls based on clients whose concerns are urgent or can be solved quickly. This makes resolution times faster and improves the customer experience. 

How Does an IVR System Work?

An Interactive Voice Response system is a type of computer-telephony integration (CTI). To integrate IVR technology in your contact center, you need a telephony board and dedicated IVR software that will let you pre-record greetings for callers. You can customize these recordings to a caller’s needs. This way they’ll hear a different message when they’re trying to log into their account than when they’re calling to purchase products from your company.

For the end-user, these interactive systems function in a way that allows them to navigate your contact center and find an appropriate solution quickly. As a customer, when you make a call to the company, the IVR system will respond by giving you a pre-recorded greeting and asking you to choose an option from a set menu. For example: By pressing the “one” on the keypad, you will receive a given service.

For your team, this means customers can route their calls to appropriate parties. Overall, this results in fewer incoming calls, lower operational costs, and increased productivity for your team members.

The Technical Basics

On a technical level, an Interactive Voice Response system consists of the following:

  • Telephony equipment
  • IVR software applications
  • A database
  • Support infrastructure

To start, the computer is connected to the company’s telephone line. Then IVR software has to be installed onto a computer. From there, a unique piece of hardware (called a telephony board or telephony card) is needed to run the IVR technology on your calls.

Here are some details illustrating the requirements for a successful IVR:

  • TCP/IP network: the internet network that provides Internet and intranet connectivity
  • Databases: real-time information that the IVR applications can access
  • Web/application server: Where the IVR system software is hosted

It’s important to note that IVR systems need a phone system to operate. When you decide to integrate IVR into your contact center operations, you should consider choosing appropriate call center software with an IVR feature.

Mapping Out Your IVR

Before integrating an IVR system with your contact center, you need to map out the IVR script itself and how it interfaces with your customers. An Interactive Voice Response map should have the following:

  • A pre-recorded welcome message. This can be personalized to mention the customer’s name if the IVR system has access to client information.
  • If the IVR doesn’t follow a 24/7 always-on system, add a pre-recorded after-hours message so customers know whether they can leave a message or not.
  • A menu for language options if your contact center caters to a customer base with multiple spoken languages. An example for keypad IVR systems: Press “one” for English, press “two” for Spanish, or press “three” for Chinese.
  • A menu for services related to purchases and sales or repairs and technical troubleshooting, depending on the department.
  • Music on hold (MOH), looping announcements, or preset messages to help clients troubleshoot basic problems.
  • An option for redirecting calls to active agents. Alternatively, an option to leave a voicemail if the service menus did not have their specific concerns listed.

When designing the IVR flow for your call center, it’s best to consider your target market’s needs. Make the most common options as accessible as possible by putting them earlier in the flow. Then, branch out to menus for call rerouting as necessary. 

Testing Your Interactive Voice Response

Now that you’ve set up your IVR system, it’s time to perform pre-launch testing with your internal team. Some areas that you should test include:

Verify customer identity

With the decrease of in-person support due to digitization, there is an increased need to verify whether your customer support teams are speaking to the real client.

Call routing

Did your customer select the correct prompts to be redirected to the right department? If your customer has issues regarding a purchase, they should be routed to the sales department, not the IT team.

IVR system workflow

Is your IVR workflow following the map you designed? Are there any specific areas that need to be improved, such as the number of options in each service menu?

For the best customer experience, test your IVR phone system extensively, checking how customers flow from one option or menu to the next. It’s also important to see if the speech recognition system is effective and whether the touch-tone options are easy to navigate.

Call Center Features Available With Interactive Voice Response Systems

An Interactive Voice Response system creates a more structured experience for your customers when they interact with your contact center.

These IVR features can complement your existing call center services:

  • Automatic Call Distribution (ACD) – a telephony device to direct calls to your call center agents
  • Skill-Based Routing – a service that assigns inbound calls to the most suitable agent
  • Business Hours or Time-Based Routing – call centers operate in varying shifts. This can include morning shift (8am–5pm), mid-shift (11am–7pm), evening shift (9pm–6am), and graveyard shift (12pm–8am). You can help customers access short and relevant information by having an IVR system that’s available for 24-hour self-service, seven days a week.
  • Call Routing – a call-management feature for phone systems where inbound calls are queued and then routed to a specific person or department based on pre-established rules and criteria
  • Ring Groups – a group of phone numbers/extensions or physical telephones that ring simultaneously if one extension is dialed
  • Call Queues – a way of routing callers to the right agents or departments who can help with callers’ concerns
  • Callback Number – if there are no available agents to answer a call, your Interactive Voice Response system can ask for the caller’s number for a scheduled callback.

Of course, each IVR system can be tailored to your business’s needs. Let’s get into some of the things you can consider when deciding how to implement IVR technology for your company.

Evaluating the Phone System Needs of Your Contact Center

Modern IVR systems have improved over time, allowing them to do more than just play pre-recorded messages for users. From providing real-time updates and information to users to providing voicemail features for callers, these new and innovative features exist alongside the basic IVR tools that can provide value to many businesses. 

But before you lose yourself in the feature lists and potential implementations of IVR technology, ask yourself this question…

Do I Need an Interactive Voice Response System?

As we’ve seen, IVR systems reduce the number of agents necessary to receive inbound calls and verify customer identity. When you reduce the time needed to ask for preliminary customer information, your agents will have more time to address their issues.

Furthermore, IVR digitizes and automates workflows, making the management of your business’s customer support efficient. There are two ways to use IVR:

  • It can handle inbound calls.
  • It can also provide outbound notifications in case you need to remind customers to make payments or to let them know about new promotions. 

Design and set up your IVR phone system based on your business needs. By doing so, you can make your team work smarter, not harder. You can also improve the customer experience for callers who contact your support agents.

You might not necessarily need an IVR system if you have a very low inbound call volume. It also might not make sense to invest in if most of your customer interactions can’t be automated and genuinely need a human touch. However, if there is some way to improve call routing for your business or certain simple tasks that can be automated over the phone, then an Interactive Voice Response system could be a great solution for you.

What Type of IVR Phone System Will I Need?

There are several use cases for IVR systems. Here are a few things you should consider:

Smart Call Routing

IVR technology can help with smart call routing. This means IVR is the first level of interaction customers have before they can speak with the right agent. Whether they need assistance from sales or if they want to return or exchange an item, an IVR helps mediate and redirect calls appropriately.

Sales

Another way Interactive Voice Response systems can help call centers is when it comes to improving sales and conducting feedback surveys. Since an IVR system needs pre-recorded messages to communicate with callers, these messages can contain either promotions or survey questions. It can also collect customer feedback and insight. If you have a more sophisticated IVR, it can directly send the data to your systems.

While small businesses with IVR systems are rare, research offers valuable insights into how it is used in the age of personalized customer services. With customer experience and service becoming one area of competition among companies, having an effective IVR system will be essential for companies who want to stay ahead of the game.

Interactive Voice Response Benefits

Below is a list of the advantages you get when adopting IVR capabilities in your call center workflows:

Better Customer Service

No business can thrive without customers. Therefore, having a good customer experience is imperative. Several studies report that 48% of customers prefer using the phone to resolve their issues.

Interactive Voice Response systems also make clients feel like they’re better attended to. IVR systems ensure that any usual question a customer might have already has a quick response readily available. A good IVR flow provides informative and time-efficient responses, guiding customers through an intuitive menu right to the department that can best resolve their needs.

Ultimately, this means answering a call on the first ring, thereby reducing customer wait time and cutting call volume, and saving time for both the client and company. And because they’re talking to the person who can solve their problems, there’s a much better chance of fixing the problem on the first call.

Unlimited Customer Access

While office hours, holidays, and breaks dictate and limit employee availability, IVR systems are always at the customer’s disposal. They can call your contact center and interact with your IVR systems at any time, even outside your business hours.

This means a customer can receive customer service whenever they need it. While the option of having a live representative is still essential for more complex support requests, an IVR system gives unlimited access to a basic level of customer service.

Wider Personalization

IVR systems allow for tremendous personalization, creating a better relationship with customers.

By using technology in a more natural way, you can create a more humanized customer experience for your customers.

Download one of our latest ebooks to see how you can create a more humanized customer experience for your audience.

Each IVR system can be modified and programmed with personalized greetings for known callers. This is possible if caller ID information is available or if the IVR is a part of a larger cloud phone system with CRM integration. Besides addressing a caller by their name, the system can also identify and share any additional information specific to them.

In addition to programming caller information, IVR systems come with several language options tailored to specific clients or callers. This is essential for businesses that operate in several countries or intend to expand globally. 

Also, you can record any personalized greeting you want and include the appropriate prompts when you need to transfer callers to the corresponding department.

Create a Better Company Image

If you’re a smaller company, you may not necessarily have the call volume that requires IVR technology, but it can still be a beneficial tool to have. An IVR creates the idea that your company is huge, as one receptionist couldn’t possibly manage your call volume. 

For bigger companies, these systems foster a professional image by maintaining consistency in customer service and call volume.

More Profits to the Company

A large portion of business deals and transactions take place over the telephone. Many companies still use the traditional way—using human agents who respond directly to incoming customer calls.

IVR provides the option of a virtual receptionist and operator, saving on labor costs and freeing up your service team’s time. This promotes a better way of using your resources while still serving your clients’ needs. 

Additionally, since the IVR system will continue to perform even with high call volumes, you’ll be able to continuously address customer needs and provide customer satisfaction, which will improve retention rates (and therefore profits).

Increased Productivity

Routing callers to the specific departments or staff members to address their specific needs means less time spent conferring with colleagues to find the right answer or transferring the caller until they get what they need. Time spent on hold or being routed from department to department is a major driver in customer dissatisfaction, and you want to avoid this as much as possible.

Call routing also enables contact center agents to prioritize the most urgent calls, increasing overall efficiency and first-call resolution rates.

With an IVR system, your company will be able to attend to a high volume of calls without long call wait times or stressed receptionists. 

Error-Free

High call volumes tend to be a mental strain on call center agents, which can result in misrouted users in addition to long waiting times. This can severely impact your customer service experience. With the IVR system’s automated routing, you greatly reduce the risk of mistakes in directing a customer to where they need to go.

Why an Integrated IVR Improves Your Customer Experience

IVR systems can significantly improve your customer experience by improving various metrics that traditionally have been annoyances for customer service callers.

Benefits of an IVR for Your Customers

Customer experience is the client’s perception of your organization.

Customer service interactions have a big impact on the customer experience. According to our data, customers will wait 12 minutes to reach a customer service agent over the phone. And that’s already considered a long waiting time. 49% of customers say long waiting times are the most frustrating part of calling customer service.

With an IVR system, you can reduce this waiting time and get your customers the help they need quickly. 

Improving First-Call Resolution With Call Center IVR

Through IVR systems, call centers can improve first-call resolution, which is the biggest factor of good customer experience

These are four major ways IVR tools improve the call center customer experience.

Efficient Call Routing

With IVR technology, a phone system starts a call by gathering caller information. This information is then used to route customers to the right person the first time so they don’t need to call back after a failed customer service interaction. 

As a result, a well-designed Interactive Voice Response system can greatly reduce the average hold time for a customer. It can also improve the rate at which the problem is solved with just one call.

Automated Self-Service

Customers may also be routed to self-service steps, allowing them to easily resolve their problems without any interaction with a human agent. This means less time spent on hold listening to music or pre-recorded announcements. In addition, self-service is possible at any time of the day, meaning a customer can make inquiries at their own convenience.

Advanced Speech Recognition

Interactive Voice Response recognizes more than just single words. The caller can use voice prompts to make selections or provide complex information. This reduces friction for customers and provides more robust and fully featured self-service tools.

Personalized Caller Information

A well-designed IVR system works similarly to a well-trained call center rep. By gathering personal information about a customer, or even integrating with a CRM database, the system can provide personalized special offers or inform them about relevant upcoming sales. 

How Your Customer Experience Team Can Optimize Your IVR

Customer experience team leaders can experience various benefits by using IVR.

Lowered customer service costs

Chat and SMS interactions account for one-tenth the cost of IVR. On the other hand, they also amount to one-hundredth the cost of live agent phone calls. If the managers provide their customers with options to meet their specific needs, automation rates and self-service adoption will increase.

As a result, the number of customers who seek agent assistance will go down. Again, proactive outbound messaging offers an efficient alternative to prevent spikes in the inbound call volume.

Streamlined business processes

A call center with many departments can be difficult to manage, especially with a large volume of customers calling in. With Interactive Voice Response, a large portion of the management effort is relegated to IVR systems, which do a lot of routing and task management by themselves. Teams can then focus on serving customer requests.

Interactive Voice Response Examples

Below are some samples of how you might want to design an IVR conversation between different call centers.

US support line calling different teams simultaneously

What a map of an IVR system for a UK-based contact center would look like

UK support line calling various teams speaking different languages

Sample image of a multilingual IVR system for a global community

 

Multilingual IVR Tree

Sample map of an IVR system for a US-based call center with an option for Spanish speakers

What do all of these sample IVR maps have in common? They clearly show how calls will be routed when a customer chooses an option. You can redesign these IVR maps to redirect a call to an available agent or voicemail, depending on the sequence of options keyed in or dictated by the caller.

7 Tips and Best Practices to Improve Your IVR

When you design your IVR workflows, you should also put yourself in your customer’s shoes. Imagine how their customer journey would go once you launch your IVR system. You should therefore design it in a way that is easy and straightforward to use. The fewer steps it takes for them to either talk to a representative or leave a voicemail, the better.

Here are 7 tips to improve your IVR system:

1. Research your audience to find IVR platform optimizations

When developing your business personas, determine which customers are most likely to use the automation features. This will allow you to design them in a way that effectively meets their self-service needs.

2. Availability on and off business hours

Ideally, your main IVR menu should always be open, even outside business hours. An automated assistant through your IVR can handle inbound calls to further improve your customer experience. Your IVR workflows should be able to answer simple inquiries such as store hours, locations, account balances, and shipping information. However, it’s essential to establish an endpoint for each menu so customers won’t keep calling or waiting for an answer that won’t come that day.

3. Use a survey to improve customer IVR experience

You should always know what your customers feel about your IVR system so you know how it can be improved. Using the IVR, you can insert a post-call survey with objective outcomes to obtain measurable and actionable insights. These insights can help you determine which areas of customer service need improvement.

4. Keep a simple IVR menu above all else

For call steering, keep any menu options to four or less, and don’t have more than two levels of options. In self-service applications, start with the easiest, high-volume services and build up from there. Adding more options to your IVR menu may seem like a good way to discover a caller’s specific intent. However, keep in mind that around 75% of callers think IVRs force them to listen to irrelevant options.

5. Lead your customers to the right people

As a business owner, you want all your customers to be assisted immediately and efficiently. This means that your initial selection menus should be short. Start by grouping callers into broad categories based on common inquiries, then have your system redirect calls to the right departments. Don’t try to automate complex transactions; rather, pass these calls to an agent to handle. This will provide a better customer experience than making them deal with a robot that they think doesn’t understand their concerns.

6. Natural language speech recognition for your voice response system

Natural-language Interactive Voice Response systems help companies automate more transactions than touch-tone interaction would allow. This permits the launch of more flexible and complex applications and allows IVR systems to recognize new responses they might not have heard before. 

7. Listen to what your customers have to say

No business can claim to provide a good customer experience without actually listening to its customers. As previously mentioned, you can use your IVR to help customers find resolutions and collect user feedback. Including a brief survey at the end of the call can help your team optimize performance and improve the customer experience.

Seamless Integration

The truth is, not all customers are the same. There are still those who prefer to speak with a representative and would gladly pick up the phone to do so. Even in cases like these, Interactive Voice Response has a purpose—implementing an IVR system can help them input their concerns and route them to the most appropriate agent.

When your clients have a good customer experience, all good things will follow for your business. With Aircall, you can set up seamless integration of call center software with modern IVR technology. You can tailor your Aircall IVR system to your specific needs, use multi-level menus for more in-depth customer choice, and even customize routing behavior and how calls are sent to various groups in your contact center.


If you want to learn more about how Aircall can serve your business, book a consultation with us. We’d love to show you how we can help you optimize your call center operations.

The phone system for modern business