What is IVR? (Interactive Voice Response)

If you’ve phoned any large organisation, chances are that you will have encountered IVR at some point. Short for Interactive Voice Response, it’s a technology that is almost always included in VoIP providers‘ packages. IVR allows telephone callers to interact with a company’s computer system using their voice.

There are a few perks to IVR that can make investing in it worthwhile. Depending on the business type, it might save you money (which is crucial in a phone system, as their monthly costs can add up), and increase your business’ efficiency. Read on to understand what an IVR system is, its perks and benefits, and whether it’s a good idea for your business.

What is interactive voice response?

It’s very likely that you have used interactive voice response (IVR) before, even if you weren’t aware of its name. IVR is the system that allows a customer to interact with a business on a phone call without the need for a live human operator on the business’ end.

For example, if you make a call to a doctor’s office and have to use the keypad to input your birthday, or call the bank and are asked to repeat one of a few phrases (like “order new card,” “open savings account,” or even “other option”), you’re engaging in an IVR-backed process.

How does IVR work?

IVR is the tip of the spear when dealing with a calling customer. It will be the first thing a customer encounters when they call a business, and helps funnel them down the right path. For example, you don’t want new customers and those who need customer support both going down the same pipeline, as these are two entirely different processes.

Initially the IVR response will be quite broad. For instance, like above, it may ask the customer something quite broad, like “are you calling as a new or returning customer?” But upon selecting one of those options, it will likely ask a few more questions to funnel the customer down the right path. A returning customer might need to renew a subscription, request a repair, or just have a general question, and all of these responses would send them down different paths.

This allows the business’ call centre to have smaller dedicated teams for each kind of call. It also lets the call itself start with the phone operator already having a bit of context about what the caller needs.

Key features of interactive voice response

IVR isn’t the most robust feature within a VoIP system, but it has grown over the years and can definitely come with some great features of its own.

Intelligent call routing

Rather than every call going to the first operator who is available, the IVR system will gather enough information about each callers’ requests in order to best direct them to the worker who can best support their needs. You don’t want someone calling about buying a new product being directed to the customer support line, for example, and IVR circumvents this.

Self-service

If a customer’s reason for calling is simple enough, they may not even need to talk to a human at all. If they need a simple fix to a problem, they can do this through the IVR system entirely, meaning the human operators have less of a workload and can deal with more complicated issues.

24/7 service

Of course, the fact that some tasks can be completed without human input on the side of the business means that some of the more rudimentary tasks a customer may need completed can be done outside of business hours.

If a customer simply needs to cancel a reservation, or request a password-change email, these could all be done at any time of day, as long as it’s a simple enough request.

Integration with other software

The more involved IVR systems are able to integrate with other business software, like CRM software. This means if you’ve got an incoming call from an important customer, or one you think is potentially about to leave, you can bump them up the call queue to give them faster and better service.

History of IVR

IVR has been around for a surprisingly long time. The first IVR systems first started appearing in the 1960s but it wasn’t until the 1980s they become widely adopted in business. And while the early systems were quite basic, using pre-recorded messages and collecting information from callers using touch-tone keypads, modern systems have become extremely sophisticated.

Today the latest IVR systems can understand natural language, use speech recognition software and even generate personalised responses (see below). They are used by organisations in different sectors for many different applications, including customer service, answering frequently asked questions and collecting information from callers.

What are the latest developments in IVR?

Recently there have been a number of key developments in IVR. These include:

Natural Language Processing (NLP)

Best described as where computer science meets human language, Natural Language Processing (NLP) is key to the latest IVR systems. For example if a user phones up their bank to ask ‘what is my balance?’, the IVR can understand the caller is asking about their account balance using NLP.

NLP technology can also be used to generate personalised responses to caller enquiries and can even remember the person’s name and preferences if they have called before. NLP can also be used to route calls through to a customer service representative in the correct department.

Voice biometrics

We’ve all become used to fingerprint and face recognition on our smartphones as a unique way of identifying us, rather than having to remember a password. However, our voice can be used as a unique identifier too. Voice biometrics are used in IVR in two main ways.

Active voice authentication

This is where the caller is prompted to speak a particular word or phrase which can then be stored electronically. When the person calls, their voice is then compared to the ‘voiceprint’ stored on the system. Generally, voice biometrics are considered much more secure than traditional security methods, because it is more difficult to spoof a voice than guess a password or PIN.

Passive voice authentication

With this technology the caller’s voiceprint is analysed as they interact with the IVR system. This makes it much easier for the customer to use because they don’t have to remember a particular word or phrase. However, it is considered less secure than active voice authentication.

Voice biometrics technology is deployed in IVR to improve security and increase personalisation and convenience for callers and call centres. For example, it can be used to authenticate callers before they speak to an agent, route callers through to the correct department as well as personalise the customer experience.

Cloud-based IVR

Importantly for many businesses, IVR doesn’t necessarily require a massively outlay in new hardware. Many IVR systems are now hosted in the cloud with organisations typically paying a monthly fee for the services they use.

Cloud based IVR systems can offer many benefits including greater flexibility, scalability, security and cost-efficiencies though may not suit every type of organisation, especially those who may want greater control of the systems they put in place.

Conversational IVR

Artificial intelligence can be combined with natural language processing to provide a more natural and engaging experience when customers call. Conversational IVR systems can understand natural language queries meaning callers can speak in a more natural way – for example in complete sentences and phrases, rather than using just one word or, worse still, having to fumble with menus or buttons.

Conversational IVR systems can also understand the context of the systems, keeping track of what has been said before and using this information to answer questions or provide relevant tailored information.

By making the conversation more natural and engaging, Conversational IVR can help to reduce the time callers need to speak to live agents, helping to reduce costs and drive greater business efficiencies.

IVVR (Interactive Voice and Video Response)

Increasingly IVR is being extended to video as well as voice. For example, callers can view videos that provide information about products and services or walk them through a particular process they are having trouble with.

For resolving complex issues, it may also be possible to have a live video chat with an agent. Video chat can be used as a way of providing identity verification which is much more secure than traditional methods.

Who uses IVR?

IVR is now used by a wide range of companies and organizations. For banks, IVR is a way of extending telephone banking to 24 hours a day as well as potentially providing additional levels of security through voice biometrics, while pharmaceutical companies can use the technology to gather the large volumes of data required during clinical trials.

For example, the person taking part in the trial will respond to questions asked in their preferred language and their responses will be recorded and then processed as text in the database. This should reduce any potential for error caused by a live agent transcribing answers.

Other applications include company call centres and settings where the user may feel uncomfortable talking to a person (for example answering questions about drug use or sexual behaviour).

Businesses less likely to use IVR are the more personal experiences, like hotels and law firms, where the questions are a bit more specific and might lead to more in depth conversation.

Read more about the best telephones systems for hotels on our page.

Is IVR right for my business?

It depends. If you receive a high volume of calls, then an IVR can certainly reduce the number of queries your live agents have to deal with, in turn helping to save money.

Unlike chatbots which are generally used on websites to provide automated text-based answers to commonly asked questions, IVRs can seem more personal, which can lead to a better customer experience. However, much depends on how the technology is implemented.

If the system is poorly designed requiring the user to press multiple buttons on their keypad or doesn’t recognise their accent, then they are likely to find it very frustrating to use.

On the other hand, if it feels more natural to the user – similar to speaking to a real human being – then it is likely to have much greater levels of engagement and satisfaction.