What is interactive voice response and how does it work?

What is IVR?

Interactive voice response (IVR) is a telephone system that answers calls and presents the caller with a menu of options for the next steps. Introduced in the 1970s, early IVR systems were basic and relied on pre-recorded messages and simple keypad inputs. As technology advanced, IVR systems evolved to include voice recognition, natural language processing, and integration with customer databases, making interactions more efficient and human. 

Today, IVR systems are more sophisticated and capable of handling a wide range of customer inquiries without human intervention. They play a crucial role in customer service by efficiently managing high volumes of customer calls, reducing customer service costs, and ensuring that customer support teams can focus on more complex issues. Since customer support is always evolving, IVR remains relevant to businesses by providing quick, efficient, and reliable service.

What is an IVR menu?

An IVR menu is a structured system that visually represents how calls are routed based on various inputs and options. Its purpose is to efficiently guide callers to the appropriate department or service by offering a series of choices they can select using their phone's keypad or voice commands.

The role of an IVR menu in customer service is to streamline the call handling process, reduce wait times, and ensure that customers reach the correct support channel quickly. By automating the initial stages of customer interaction, IVR menus help reduce customer support costs and improve overall customer satisfaction.

How does an IVR system work?

Typical components of an IVR menu include:

• Greeting message: A welcoming message that introduces the system to the caller.

• Menu options: A list of choices for different departments or services, such as "Press 1 for Sales, Press 2 for Technical Support."

• Sub-menus: Additional layers of options that provide more specific choices within a department.

• Routing instructions: Commands that direct the call to the appropriate team or resource based on the caller's selection.

• Fallback options: Instructions for what to do if the caller does not make a selection, such as repeating the menu or transferring to a live agent.

By providing clear and organized options, an IVR menu enhances the efficiency of the customer support process and helps maintain good customer service.

7 benefits of interactive voice response

1. Improves Customer Experience

IVR systems can personalize the customer experience by gathering relevant information from callers and directing them to the appropriate agent or department. For instance, when a customer calls, the IVR can ask for their account number or reason for calling. This information is then used to route the call to an agent specialized in handling their specific issue. This not only saves time but also ensures that customers receive accurate and efficient assistance. Additionally, a well-designed IVR system can provide options for customers to leave messages, further enhancing their experience and satisfaction.

2. Lowers Costs

IVR systems reduce operational costs by automating routine tasks that would otherwise require human employees. By handling high call volumes and providing answers to frequently asked questions, IVR systems free up customer support teams to focus on more complex issues. Furthermore, IVR systems operate 24/7, ensuring that customer questions are answered even outside business hours, reducing the need for after-hours staff.

3. Reduces Errors

Automation through interactive voice response (IVR) systems minimizes the risk of human error. When caller information is collected and processed by an IVR, it eliminates mistakes that can occur when data is manually entered by agents. IVR systems ensure that calls are automatically routed to the right person or department based on the caller’s input. This precision improves the accuracy of customer service interactions, leading to higher customer satisfaction and more efficient problem resolution.

4. Collects Data

Interactive voice response (IVR) systems can collect valuable customer data during interactions. By tracking the most common actions, questions, and problems encountered by callers, businesses can gain insights into customer behaviour and preferences. This data helps in improving customer service strategies and refining the IVR system itself. For example, if many customers are calling about a specific issue, the business can address this proactively by updating the IVR menu or providing additional resources to handle that particular concern.

5. Increases Security

IVR systems can enhance security by incorporating identity verification processes. This is particularly important when handling sensitive personal information, such as phone numbers, account details, or social security numbers. By asking callers to verify their identity through PINs, passwords, or security questions, IVR systems help protect against fraud and unauthorized access. These security measures ensure that customer information remains confidential and secure, providing peace of mind for both the business and its customers.

6. Improves agent performance and involvement

Interactive voice response (IVR) systems are best at handling routine tasks such as answering frequently asked questions and managing simple inquiries. By automating these tasks, IVR systems free up customer service agents to focus on more complex and rewarding issues. This shift allows agents to use their skills more effectively, leading to increased job satisfaction as they are engaged in problem-solving and providing more personalized assistance to customers. Additionally, by reducing the volume of repetitive tasks, IVR systems help increase agent productivity, since agents only get interesting cases that need human attention. 

7. Provides 24/7 support

Interactive Voice Response (IVR) systems offer the advantage of providing round-the-clock support, ensuring that customer service is available 24/7. While many companies may not have the resources to maintain a full-time, 24-hour customer service team, an IVR system can fill this gap. It can manage customer calls outside of regular business hours, offering automated responses, taking messages, or routing urgent issues to on-call staff. This continuous availability enhances customer satisfaction by ensuring that help is always accessible.

3 Challenges of interactive voice response

While IVR systems offer numerous benefits, they also come with their own set of challenges. Below, we will explore three common issues associated with IVR systems: overly complex menu options, long waiting responses, and impersonal contact.

1. Too Complex Menu Options

One major challenge with IVR systems is overly complex menu options. When menus have too many layers or options, users can become easily frustrated and confused. Navigating through a maze of choices can lead to a negative experience, as customers may struggle to find the right option for their needs. This complexity can result in low customer satisfaction and increased call abandonment rates. To mitigate this, businesses should design intuitive and straightforward IVR menus, ensuring that options are clearly labeled and limited to essential choices.

Moreover, companies can choose to opt to use voicebots, these Digital Assistants will ask customers to state their subject in one sentence or a few words and direct them accordingly. This way, traditional IVR systems are substituted and customers can be sent to the right department efficiently. Read more about voicebots in other blogs available on the company website. 

2. Long Waiting Responses

Another challenge is long waiting times. Customers contacting support are often already dealing with an issue, and extended waiting times can test their patience. If the IVR system takes too long to process requests or connect callers to the right agent, it can lead to call abandonment. Customers may hang up in frustration or opt for a callback, which can further delay issue resolution. To address this, companies should optimize their IVR systems for efficiency, ensure quick response times, and provide estimated wait times or callback options to manage customer expectations better.

Again, companies can choose to use voicebots in order to solve this problem. With the help of these Digital Assistants customer's calls are being picked up immediately, and the customer is able to ask their questions or be redirected to one of the employees. 

3. Impersonal Contact

Impersonal contact is a significant challenge of IVR systems. Callers reaching out to customer service are often already frustrated, and an automated response can strengthen their dissatisfaction. An automated system may not address the emotional nuances of a customer's problem, leading to feelings of neglect. To balance automation with human interaction, businesses should ensure that IVR systems provide easy access to live agents when needed. 

By understanding and addressing these challenges, businesses can enhance the effectiveness of their IVR systems, ultimately improving customer satisfaction and support efficiency.

Improve IVR with ICR

Intelligent Call Routing (ICR), or voicebot, is an advanced technology that enhances IVR systems by analyzing caller data and directing calls to the most suitable agent or department based on specific criteria. Unlike traditional IVR systems that rely only on predefined menu options, ICR uses factors such as caller history and the nature of the inquiry to ensure that each call is handled in the best possible way. This results in more efficient call handling, reduced wait times, and increased customer satisfaction. Integrating ICR with IVR systems brings various benefits, including improved accuracy in call routing, better resource allocation, and a more personalized customer experience.

Frequently asked questions about interactive voice response

What is the meaning of interactive voice response?

Interactive voice response (IVR) technology allows callers to interact with a computer system using speech or keypad input. Often used in customer service environments, IVR systems guide callers through pre-recorded menus, enabling efficient call routing, automated responses and information retrieval without the need for human intervention. 

How do you use interactive voice response?

To use IVR in your customer service, start by designing a clear and intuitive menu structure for common customer enquiries. Implement the system by recording prompts and integrating them with your telephony infrastructure. Train staff on the system's functionality and continually monitor and update the IVR based on user feedback.

By setting clear goals and answering the right questions, a well-functioning IVR system can be established. To achieve the best customer service, this can be used in combination with ICR. For more information on similar topics, read the blogs on our webpage.