A customer calls a nationwide or worldwide business looking to speak to one specific department. A real person answers the phone call at a central office and then asks the customer who they are trying to reach. The call then gets transferred to the regional office of the recipient, where the next receiver then asks the customer where the call should get transferred, and the customer states customer care, as an example. Finally, the calling customer reaches the customer care department of their local office and can settle their query. That is a long, timely process, that will frustrate a caller if they haven’t hung up already. That process could get simplified with the use of an IVR, but what is IVR?

What Is An IVR?

An IVR, or Interactive Voice Response, is a telephone menu system that allows a caller to use the dialing pad for routing them to the correct call recipient, with no unnecessary in-between call agents. An example of IVR in action would be something like “Press 1 for sales, press 2 for accounting, press 3 for purchasing,” and so on. Some IVR solutions also work with verbal input, allowing a caller to state their intended recipient, instead of pressing a button on the telephone keypad. Implementation of such a phone system, in a call center, for example, will cut down on wasted time, increase call operator efficiency, and free up more staff to focus on more pressing matters than routing a phone call.

The Birth Of An IVR

Interactive Voice Response technology gained traction in the 1970s. However, the technology was expensive and complex to install, so it didn’t appeal to many call centers at the time. IVR first saw application in a commercial sphere in 1973, when Steven Schmidt developed an order entry inventory control system. It wasn’t until the late 1990s that companies started implementing computer telephony integration systems or CTI, with IVR capabilities on a wider scale. The technology ended up becoming necessary for a call center to function with maximum efficiency. However, at the time, Interactive Voice Response was still limited to physical input on a telephone keypad, via DTMF tones, for routing a call. It was the 2000s that saw voice recognition commands becoming standard, and as they became more common, the price became more affordable. The main reason that voice prompts gained popularity was that speech recognition applications could better utilize more CPU power, allowing for more complex tasks.

How Does An IVR Work?

For those who have never been on the receiving end of an IVR system and thus not had the chance to see it in action firsthand, they can rely on the below to provide a rough idea of what a caller will experience.

  1. The caller places the call to the company they wish to contact.
  2. The IVR system answers the call and plays a pre-recorded greeting.
  3. Within this greeting, the button or audio prompts get explained for the caller. Both the greeting and the prompts can come via pre-recorded audio or with the use of text to speech software.
  4. The caller will then speak the desired prompt or use the dial pad on their phone to select the option related to them.
  5. Depending on the company’s preference and size, this process can get repeated as needed until the caller gets to where they need to go. However, as detailed below, there is such a thing as too much.
  6. With the selection made the IVR routes the caller to the correct recipient. If that recipient is not available, the caller will get met with a voice mail or a recorded response. The caller may then get offered the chance to wait in a queue or will have to try again later.

What Can An IVR Do For A Company?

The above makes an IVR system seem like a simple telephone routing system, replacing that of a physical switchboard, though it is more than that. A company can use an IVR application to provide the following tasks and outcomes.

Provide A Personalized Customer Experience

An IVR allows a company to record its IVR prompts, as opposed to a simple “press 1 for sales.” Greetings, hold tones, and the audio prompts can all get given a personalized touch to ensure a consumer has a better customer experience, along with providing brand recognition.

Provide Pre-Recorded Messages

An IVR can provide a personalized service, though, some businesses don’t have the time to record each prompt, one-by-one. Most IVR phone systems come with pre-recorded messages, meaning the phone system can get implemented without wasting any time and a call center can get to work.

Collects Information On Telephone Traffic

Due to a consumer selecting their intended destination via the IVR, the system knows how best to handle the routing. The system is fully automated and there is no chance for the system to collect the wrong information, thus delivering the caller to the wrong location, unless the caller enters the wrong prompt that is. Combined with call recording, the system can monitor which call agent is preferred by the caller, again offering a personalized experience.

Prioritization Of Incoming Calls

As the IVR is collecting information from the caller, the system does have the ability to queue the incoming callers. A consumer can get made aware of where they are in the queue, along with the expected answering time of their call. If some specific numbers get given priority, they will go to the front of the queue.  A regular customer who spends thousands of dollars with the company should have more priority than a first-time caller looking to check opening times. With CRM integration, priority can get assigned and a call agent’s time won’t get wasted.

IVR Allows A Company To Build An Image

IVRs are available to any size company, from small start-ups to international conglomerates. An IVR can give a company the chance to appear more prominent and thus more established than it is. There can be routing for multiple departments, even if there are only 3 or 4 people in the actual office. An IVR gives a sense of professionalism that consumers appreciate.

Why Should A Company Use An IVR?

The above details what a company can use an IVR system for. The next question to answer is why, though, some of the benefits are somewhat apparent. Some benefits of an IVR include the following.

Assist A Consumer, First Time

It can be very frustrating for a customer to call in with a query or complaint that needs resolving, for the issue never to get fixed because they don’t speak to who they need to. An IVR can help ensure that a customer receives the assistance they need from the person who is best qualified to help.

Customer Service Becomes More Efficient

Following on from the point above, customer service becomes more efficient with the use of an IVR platform. An agent that is adept at dealing with specific issues can get placed at the end of a routing path, to ensure that no matter the problem, the right person is dealing with it. Consumers massively appreciate excellent customer care and an IVR can help with delivering it.

Reducing Costs

An IVR is not just about benefiting consumers. The system can work in place of a receptionist or a call center agent who routes calls manually. An IVR’s automated attendant doesn’t need a salary, a pension, health benefits, or a holiday. That fact, combined with the relatively low costs of implementing such an auto attendant system, will provide an outstanding ROI or return on investment. That’s not to say a call center agent doesn’t have worth, but they can get better utilized in a role of more importance. One noteworthy point is that a third-party hosted IVR will save even more money than one a company puts in place on their premises.

Visual IVR


The above refers to the popular audio Interactive Voice Response system, though there are other kinds available. Visual IVR, also known as Video IVR, adds a visual interface to an IVR solution. Smartphones and computers can utilize this IVR service in the same way that an audio call would with the traditional IVR.

Visual IVRs are most commonplace on websites and apps and allow a customer to navigate their way through the platform until they reach their intended destination, in the same way, that pushing the telephone keypad prompts of a traditional IVR does. These systems can also have automated surveys included, so once the customer reaches the endpoint, and comes into contact with an agent, that agent has all the information needed to assist with that specific case. The alternative is that a consumer will go through the process of selecting their desired options to then speak to who they need to and relay the same information they had just put into the app.

An IVR system already brings faster resolution to a consumer and a visual IVR can take that a step further. With the use of a visual IVR, a consumer can, on occasion, resolve the issue without having to speak to an actual call agent, freeing up the call agent to deal with more pressing matters.

The self-service capability can also be a financial benefit to a company, due to the need for fewer call agents.

One final note of worth that a visual IVR can provide is an extra level of security. A consumer won’t necessarily feel comfortable offering their confidential information with IVR dialogue to a live chat agent. A website or app that uses visual IVR can use encryption to ensure the data that gets transferred is secure.

Smart IVR

Smart IVR is another type of IVR that a company can use to increase automation further. A Smart IVR allows a consumer to avoid contact with a call agent at all. A smart IVR works with self-service tasks, such as checking an account balance or paying off a bill via IVR payment systems, as two examples. The more accessible these tasks are that don’t require assistance from a human, the better an experience a consumer will have. There is no reason that there can’t be an option to consult with a live agent, if necessary. A mix of systems working side by side, such as a traditional, visual, and smart IVR, will give a company a high level of customer support.

Outbound IVR

There are multiple forms of IVRs, though the last one to gain an honorable mention comes in the form of an outbound IVR. These systems are for contact centers that call out, as opposed to those that receive calls. Outbound IVR allows a company to engage with customers automatically through a variety of communication mediums. With CRM integration, a call agent at an outbound contact center can contact a potential consumer, whose details are listed, using the IVR to select a means of contact.

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Is An IVR Always The Answer?

The above makes an IVR seem like the end-all solution to providing quality customer support. That’s not wrong, though IVR can get misused, thus negatively impacting business. Some ways a company can wrongly use IVR include the following.

Long Unnecessary Menus

IVR brings a variety of menu options to a business, and with the implementation of the new software, a company can get overwhelmed. The automation means are limitless, though too many prompts can drive a consumer away, instead of making life easier for them. Of course, the idea of an IVR is to provide prompts to help direct a customer, but too many will have the opposite effect. Ideally, there should be no more than four options on an IVR menu.

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Lack Of Clear Voice Prompts

One of the main benefits of an IVR is that it can save on costs for companies. However, there is saving costs while improving service and then there is skimping on quality to save costs. Pre-recorded voice options allow a business to use automated voice, instead of wasting time recording the audio prompts. A cheaper pre-recorded selection will offer low quality audio clips that some consumers may struggle to understand.

Over Informative

The script used in the IVR can, like unnecessary menus, be too overwhelming for consumers. A minimal level of information should get provided, with more detailed information available from the call agent, if it’s required. IVR testing may be necessary to find the balance of enough information, without overcomplicating things.

Lack Of Management

IVR routing takes some setting up to get right, but if this time isn’t dedicated, the system can become an unoptimized mess. The point of an IVR is to get a customer efficiently to the endpoint. Without management, a customer can end up waiting in a queue for their call to get transferred, and though this helps with prioritization, it shouldn’t get to a point where every member in the line hangs up. Losing out on business due to call volume is an embarrassing way to lose potential customers.

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Pushing Adverts And Playing Irritating Music

There is one thing worse than being stuck in a long queue…that is getting stuck in a long queue while a constant advert is playing in the background. The same can get said for low-quality repetitive music. Consumers, especially those who have a complaint, do not want to hear this, and if they don’t hang up, they will be further agitated by the time they get to a call agent.

IVR Done Right Is An Excellent Tool

The above may seem like a negative note to close on, though these are simple things a company can take effort to avoid. A contact center offering an IVR experience can offer a personalized service that cuts down on-call time, by getting a consumer to where they need to be, thus allowing them to solve the problem in record time. That response time reflects well on a consumer who will be sure to pass on details of their positive customer experience. Additionally, the fact that a company can save on costs only further backs the need for a call center, big or small, to implement an IVR solution.

However, a company should not stop at a traditional IVR software. Voice IVR, Smart IVR, and other IVR technology variants can all work in tandem to further boost a company’s customer serviceability.

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