What is interactive voice response (IVR)? A complete guide
IVR technology can be a game changer for call centers. Discover what an IVR system is and how it improves phone support.
By Cristina Maza, Contributing Writer
Last updated February 6, 2024
What is IVR?
Interactive voice response (IVR), or a phone tree, is an automated phone system tool that answers incoming calls and offers options for next steps via a menu.
IVR is a tool used by call centers that enables support teams to provide better and more cost-effective phone support. Standard systems allow customers to use a keypad to answer prompts, while advanced IVRs use voice recognition technology that understands speech.
Cloud-based IVR call center software enhances the employee experience by deflecting incoming calls and allowing agents to focus on high-level tasks. It increases customer satisfaction by providing immediate answers to basic, common questions and freeing up more agents to handle urgent, complicated matters. IVR systems also eliminate hold times by offering customers callback options.
More in this guide:
- How does interactive voice response work?
- The benefits of using IVR
- Challenges of interactive voice response
- IVR use cases
- Software related to IVR
How does interactive voice response work?
Callers interact with the IVR phone system by responding to prerecorded prompts or menu options with voice or keypad inputs. The IVR uses these responses to route customers to the right agent or department, provide recorded responses to frequently asked questions, or deflect calls by allowing callers to switch from a live call to a text message.
The standard IVR process works like this:
- The customer calls the customer support team.
- The IVR system greets the customer with a set of options, such as which department they want to reach.
- The customer chooses the relevant option.
- The IVR responds to simple questions, routes the caller to the appropriate agent, or enables the caller to schedule a callback or move to another channel.
The benefits of using IVR
Customers have increasingly high standards for support. Luckily, contact centers can use an IVR phone system to meet buyers’ evolving needs and expectations.
IVR can help customers resolve their issues swiftly—no matter when they reach out for support—and ensure they’re connected to the appropriate department the first time around. It also helps agents prioritize calls, streamline call flow, and enhance the support process.
Reduces operational costs
Interactive voice response systems reduce operational costs by automating tasks, deflecting calls, and streamlining workflows. Providing customers access to automated self-service options reduces call volume and deflects tickets.
Efficient, automated routing by IVR systems streamlines customer interactions, reducing live agent workload. This results in better customer service and support teams handling the same number of requests without adding headcount.
Tip: Regularly analyze IVR call data and customer feedback to ensure it’s providing a smooth customer experience, low call abandonment rates, and operational efficiency.
Provides 24/7 support
With IVR customer service, you can use prerecorded responses to common questions, such as listing standard business operating hours or holiday schedules. It can also give customers access to automated transactions like making payments, checking account balances, or scheduling a call back from a live agent. These features can provide flexibility and convenience.
Tip: Create IVR scripts in advance for anticipated questions related to holiday closures, hours of operation, and so on.
Enables call routing and triage
According to the Zendesk Customer Experience Trends Report 2024, 62 percent of CX leaders feel they are behind in providing more immediate experiences for customers. Plus, a single bad customer service interaction can make your customer switch to a competitor. Rather than risking customer churn, an IVR system can prioritize high-value customers and push the call to the front of the line.
Some of the top benefits of IVR call routing and triage include the ability to:
- Prioritize calls from VIPs and high-value customers.
- Route callers to specific agents or departments based on their area codes.
- View tickets for callers waiting in the queue.
- Route calls based on priority rather than time of arrival.
- Run triggers to change the call priority or routing destination when a customer enters the queue.
- Send callers to the first available agent.
Tip: Win over frustrated customers by:
- Tagging VIPs so they’re instantly moved to the front of the queue and assigned to the most capable agent
- Using call history to determine how quickly you should route a call to an agent
- Offering a callback or text so callers can avoid inconvenient wait times
Increases first contact resolutions
Customers want their questions answered quickly without jumping through too many hoops. IVR helps by routing calls to the appropriate agent right off the bat and providing quick answers to FAQs. This can improve the first contact resolution (FCR) rate (the percentage of customer tickets that agents resolve on the first attempt), customer satisfaction (CSAT) scores, and other important call center metrics and key performance indicators.
Tip: Set up relevant IVR menu options so customers get routed to the department with the training, knowledge, and tools needed to resolve their issue the first time.
High call volumes can overwhelm call center agents, especially during peak times. IVR software offers automated, front-line customer support, deflecting tickets and streamlining workflows. Here are a few ways IVR helps businesses achieve this:
- Voicemail or callback: Prompt callers to leave a message or receive a callback when dealing with long wait times.
- Number or department: Forward calls to a specific phone number when an issue requires specialized knowledge.
- Secondary IVR menu: Use a recorded message to direct callers to your website for information or offer more options.
- Text back: Switch a phone call to a text message to reduce inbound calls and provide digital resources.
- Answer FAQs: Answer frequently asked questions automatically with prerecorded messages and solutions.
Agents can also use advanced call transcription and quality assurance functionalities to offer better support. Contact center solutions can track customer conversations in real time and gather crucial insights that you can use to improve internal call center processes.
Tip: Offer self-service options but also give callers an option to connect with a live agent (or request a call back) without making them wait too long.
Challenges of interactive voice response
While IVR offers plenty of benefits, the call center solution doesn’t come without a few challenges. By understanding these challenges, however, businesses can proactively manage and overcome potential issues, ensuring a more effective and customer-friendly IVR system.
Lack of human touch
The absence of human interaction in IVR systems may make customers feel disconnected or frustrated, especially when dealing with complex or emotionally charged issues. The automated nature of responses can lead to a perception of an impersonal servicer.
How to manage this challenge: Integrate personalized greetings and expressions in the IVR prompts. Use a conversational tone in scripted messages to make interactions more engaging. Additionally, implement an option for callers to easily transition to a live agent when they require a more personalized and empathetic response.
Complex IVR menu and navigation
If the IVR menu is too complex or the navigation is confusing, callers may find it difficult to locate the information they need. This can lead to frustration or even create an angry customer, potentially causing them to abandon the call.
How to manage this challenge: Simplify the IVR menu by organizing options logically. Minimize the number of layers in the menu structure to make navigation straightforward. Regularly analyze call data and gather customer feedback to identify pain points in the IVR system. Adjust the menu structure accordingly for a more user-friendly experience.
Speech recognition accuracy
Inaccurate speech recognition can result in misinterpreting customer inputs, leading to frustration as callers may need to repeat information multiple times.
How to manage this challenge: Invest in speech recognition technology that continuously updates language models for improved accuracy. Provide clear instructions to users on how to articulate their responses and offer alternative input methods, such as keypad entry, to mitigate issues when speech recognition accuracy is challenging.
IVR use cases
Businesses of all sizes and industries can use an IVR solution. While many industries can utilize IVR software, here are just a few use cases:
- E-commerce and retail: IVR streamlines order tracking, product inquiries, and customer support, providing a convenient self-service option for shoppers to access information about orders and products.
- Finance: IVR facilitates balance inquiries, fund transfers, and account management, offering customers a secure and efficient way to handle routine banking transactions.
- Healthcare: IVR systems for healthcare businesses assist with appointment scheduling, prescription refills, and general health information, enhancing patient engagement and easing the burden on administrative staff.
- Education: IVR helps educational institutions by providing information on course schedules, exam results, and administrative details, offering students and guardians a self-service channel for accessing important academic announcements.
Software related to IVR
Check out these software solutions that complement IVR software. These tools can help expand inbound and outbound support for exceptional omnichannel experiences.
AI chatbots and IVR systems are both technologies designed to enhance customer interactions. Although AI chatbots use conversational AI and machine learning to improve over time, and IVR requires manual configuration to understand voice and text-based prompts, they share a common goal: to automate self-service support and help customers get assistance without waiting on hold for an agent.
Live chat and messaging software
IVR provides an automated voice interface for customers to navigate menus, access information, and complete transactions without human assistance. In conjunction with live chat and messaging software, customer service teams can facilitate real-time or continuous text-based customer conversations, offering engaging, personalized support.
FAQ software and IVR both focus on enhancing customer self-service, addressing common queries efficiently, and reducing live agent workload. Integrating IVR applications and FAQ software ensures a seamless experience, enabling users to access information through voice and text interfaces.
Interactive CX starts here
According to our CX Trends Report, 71 percent of businesses use digital channels primarily for first contact and voice for resolving complex customer issues or escalations. With IVR, your business can provide a powerful automated system that helps streamline workflows and keep ticket queues manageable.
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