IVR Systems: Definition & How They Improve the Customer Experience

Interactive voice response (IVR) is an automated phone menu that interacts with human callers through voice response or telephone keypad. Call centers use IVR to provide callers with quick information and facilitate self-service actions, which saves them from needing to connect to live agents and reduces the risk of aggravation from improper routing. Integrating a computer and telephony technology, an IVR system also enhances call flow metrics and lessens hold times.

Keep reading to learn more in-depth about what IVR systems are and how they benefit your customer’s calling experience and your business.

How IVR System Works

IVR systems are a core contact center technology that allows customers to handle routine phone transactions without a human operator.

IVR systems do this via the following process:

1. When a customer makes an inbound call to a contact center, the IVR system will respond with an automated greeting followed by a series of guided menus (e.g., “Press 1 for Sales, Press 2 for Billing”).
2. The IVR will facilitate self-service actions based on the caller’s answers through their voice response or telephone keypad.
3. If the IVR system isn’t able to resolve the caller’s query, it will route the call to the right department or agent. If the contact center platform has a skills-based routing feature, the IVR will identify the most qualified operator to handle the caller’s inquiry.
4. If all agents are busy, the IVR system will put the caller in the queue until an agent is ready to take the call.

There are three components of how IVR systems help a computer process a caller’s request. This includes touch-tone placement, directed dialogue, and natural language.

• Touch-tone placement: The most common type of basic IVR system uses dual-tone multi-frequency (DMTF) signaling. This feature prompts the caller to use the phone’s dial pad or touch-tone keypad to provide the requested information.
• Directed dialogue: This IVR system uses voice recognition technology, in which the caller uses verbal responses instead of pressing a keypad to navigate the menu.
• Natural language: Modern call center platforms have built-in natural language processing (NLP) software, a type of conversational artificial intelligence (AI) that recognizes commands in full sentences instead of words or phrases.

What Is IVR’s Benefit for Customers

According to the Zendesk Customer Experience Trends Report, phones remain the most preferred channel to interact with a business. In this case, most customers expect businesses to make phone interactions as smooth and efficient as possible. Here are ways why implementing an IVR system to your call center operation benefits your customers:

• Unlimited service access: IVR systems operate without a live agent and are always available to assist callers any time of the day, even outside business hours. Even if the caller ends up leaving a message, a task still gets accomplished, which improves the customer’s view of your brand in terms of providing efficient service.
• Saves the caller’s time: One great benefit of IVR systems is allowing callers to skip irrelevant options. Dropped calls are less likely to occur because IVR systems allow a caller to choose to be called back instead of waiting in the phone queue.
• Enhanced mobile experiences: As more people rely on smartphones to do practically everything, companies need to deliver mobile-optimized customer service. IVR systems are a practical solution for customers who have limited time to talk and prefer to transact on their phones. This provides a seamless customer experience tailored to their needs.
• Quicker problem resolution: An IVR system has the ability to detect the issues faced by a caller through a set of questions or options. Once it identifies the problem, it will directly connect the caller to the right department to have it solved right away.

What Is IVR’s Benefit for Businesses

IVR technology benefits small and mid-sized businesses in many ways. It goes beyond providing quicker transactions—it also affects the overall call center operations. Here are the advantages when adopting an IVR system into your contact center workflow:

• Better customer service: Automatically routing callers to the most qualified agent enhances the customer journey. Customers appreciate it when their call instantly gets answered or directed to the right team. This leads to greater customer satisfaction as they quickly get the answer they need without spending time on hold or transfer.
• Improved company image and credibility: The IVR system is at the first stage of the customer engagement process because it’s one of the first contacts your customers have with your business. Mapping your IVR system to the customer journey delivers on-brand and personalized experiences, leaving a strong brand image and an engaging process for the callers.
• Increased agent productivity: IVR systems enable intelligent and efficient call routing, which helps connect callers to the right department. This reduces the time spent collecting the caller’s information or transferring calls from one department to another. Call routing enables agents to prioritize urgent calls and improve performance metrics, such as first-call resolution rates, average answer speed, and handle time.
• Fewer errors: Large call volumes are a huge mental strain to agents, leading to misrouted calls and long wait times. An IVR system uses automated routing that reduces errors in directing incoming calls.
• Reduced operational costs: Every second spent by your live agents on the phone is causing your business extra money. IVR systems are cost-effective call center phone system features that help agents spend less time on the voice channel. A visual IVR, in particular, is cheaper to deploy than a traditional IVR because it significantly reduces call volumes, allowing agents to focus on more complex tasks.
• Delivers a more comprehensive customer view: Most companies utilize IVR systems to learn about their customers. It reveals the caller’s demographics, likes, and interests, which, in turn, are used in post-campaign evaluations to modify brand messaging.

IVR Setup Mistakes to Avoid

A poorly deployed IVR system has a major impact on business productivity and customer satisfaction. Here are some common mistakes when designing an IVR system for your contact center:

• Overcomplicated or irrelevant menu options: While you want to include many options in your IVR menu, you don’t want to confuse or overwhelm your callers. The best solution is to provide only the necessary information and arrange the options in easy-to-follow categories.
• Loud, jarring hold music or repeated sale pitches: Although lengthy wait times are inevitable, you don’t want to make your caller’s queue experience worse by playing loud music or aggressive marketing messages. Instead, play a track that identifies with your company brand or anything easy on the ear.
• Hard-to-reach live agents: While self-service options are enough to solve questions in some cases, they are also unhelpful if the caller’s query is too complex. Allow customers to bypass the IVR system by giving them a clear path to speak to a live agent.
• No callback option: There are times when your IVR system cannot accommodate all callers and solve every issue. That said, it should provide an option to request a callback once a live agent is available.

How IVR & Auto-attendants Differ

An auto-attendant is a static message whose primary function is to route calls and play music while a caller is on hold. An IVR provides interactive prompts that feed the caller with information and collects their response into a database.

Bottom Line

A properly deployed IVR system significantly impacts call center operations and customer service. IVR systems are a cost-saving solution for any business that wants to simplify the entire contact center experience and large enterprises handling large call volumes.

Now that you know what IVR is, and why your business needs it, the next step is to find contact center providers that offer IVR system functionality. To do this, check out our buyer’s guide about the best IVR systems. It includes helpful information about different providers’ pricing plans, key features, and the best practices to set up an IVR system.