What Is IVR System (Interactive Voice Response)?

What Is IVR System (Interactive Voice Response)?

The growing demand for IVR systems is driven by the convenience of faster first contact resolution and richer customer experience. These days, IVR systems are implemented in practically all areas of business and their respective applications, such as finance, retail, telecom, etc. While it’s hard to imagine the business context without IVR, there is still a lot to learn about how this technology works.

What Does IVR Stand For?

IVR is short for interactive voice response. It is a technology that allows a computer to communicate with a telephone caller and instruct them to select an option from a menu. The database of selections generally consists of prerecorded messages called “prompts”. The caller’s input consists of touch-tone keypad entry or the use of voice. Depending on the complexity of the menu, the caller can be asked to choose a number or provide their name, account number, etc.

How Interactive Voice Response Works

An IVR system interprets the input and performs an action based on the predefined algorithm and newly gathered information. It often involves routing the customer to the appropriate employee within the contact center.
After completing the initial assessment of the caller intent, the IVR software determines a further course of action. Efficiency and quick response make it possible to outperform the decision-making process of a human being. For example, a bank customer can say “check account balance” and receive a response instantly.

How a call moves through the IVR system.

Sometimes, there is no human interaction unless there is no suitable selection within the menu. Then, the caller is transferred to a live agent to resolve the issue.

Uses of IVR

Organizations can utilize IVR to fit a variety of situations. This will ease various processes within the company and allow employees to focus on more complex tasks. A relatively low-cost IVR system can serve the following functions but the potential applications are even wider.

Intelligent Call Routing

An IVR system can transfer a caller to a department that addresses their specific needs. It can also pre-qualify leads and route them to a relevant staff member to seal the deal.

Extended Customer Service Hours

Since most customers are looking for routine information, the system can handle the calls outside of business hours. Also, detailed step by step instructions often eliminate the need for human agents.

Payment Processing

IVR can simplify the process of collecting payments or providing account information. With just a couple of steps, a caller can finalize the transaction.

Appointment Maker and Reminder

A bot can be configured to schedule and change appointments. Additionally, it can be used to remind your customers of appointments or inform them if you’ve made changes yourself.

Phone Surveys

Automated IVR phone surveys can provide quick feedback from your customers. Despite limiting the survey to just a few questions, such as how satisfied they are with customer service, you receive important insights.

Password Reset

The system can be set to authenticate users and allow them to change their account passwords.

What Are the Business Benefits?

IVR systems have made their way into different aspects of not only customer service but enterprises on the whole. They contribute to businesses on different levels, such as sales, marketing, financial operations, accounting, etc. More specifically, here are our top five benefits an IVR system brings.


Reduction of Operational Costs

First, businesses save on personnel. Employing an automated IVR system is not nearly as expensive as having operators that direct calls to the appropriate agents.

Increased Company Efficiency

It takes a lot less time for an IVR to address customer issues. It is arguably more skilled and informed, whereas live agents sometimes consult with colleagues or make mistakes.

Higher Customer Satisfaction

The less time you spend on resolving customer issues, the happier they are with your company. When your IVR is reliable and easy to use, your customer will gladly use it again.

Improved Consumer-Brand Relationship

With IVR, calls never go unanswered. If you adequately map the phone tree, interaction with your brand will leave a positive, memorable impression.

A Holistic Approach to Customer Experience

If you conduct phone polls or surveys, you can easily expand what you know about customer likes, interests, demographics, etc.

Artificial Intelligence & IVR

A natural language processing (NLP) system integrates AI into IVR to perform a spoken language analysis. This creates smarter self-service applications capable of mimicking human behavior and delivering a conversational response to customers. Conversational IVR allows customers to ask open-ended questions. This eliminates the need to use DTMF or custom grammar files.

The benefit of using this form of natural language understanding and a real-time response comes from the improved customer experience. By intelligently processing natural speech input, IVR and AI can determine the intent behind the customer’s request without a live agent. AI is expected to have a bigger influence on IVR and the voice portal market with larger and richer integrations. Machine learning capabilities will translate massive amounts of data from customer interactions into personalized responses to anyone using your IVR.

Pros & Cons

Departments willing to implement an IVR system need to consider both sides of the argument.
On the one hand, an interactive voice response adds value to the company operations through:

● Ensuring a win-win situation for businesses and customers

● Reducing customer waiting time

● Providing quicker call resolution

● Saving company resources for handling calls

● Making 24/7 customer service possible for less money.

On the other hand, there are some user complaints with IVR systems, which might negatively impact the business. The most commonly found drawbacks include:

● Hard-to-understand voice prompts – it is not always feasible to hire professional voice talent and record in a studio. Therefore, the company might opt for either cheaper recording alternatives or a machine voice, which will deteriorate the quality

● Demanding scripts for prerecorded IVR messages – you need to account for a variety of scenarios during customer interaction. You will need to process and structure vast amounts of information

● The necessity for long menus – despite the recommended limit of four or fewer options in the menu, it is not always enough. But with a longer menu, you face the risk of annoying your callers

● Unwelcoming response from customers – some people expect to speak to a human consultant. Otherwise, they interpret the interaction as impersonal

● Longer turnaround time from survey dispatch – respondents may not be technologically literate or they could simply hang up on the machine.


Many businesses are coming up with inventive applications for IVR systems to increase the efficiency of internal operations. This assistance ranges from customer call routing to advanced inbound requests processing. Thus, IVR can ensure a smoother, faster, and more efficient customer experience. In pursuit of increased customer loyalty and reduced costs, companies are always looking for smart solutions. If you want to adapt to ever-evolving industry standards, consider deploying an IVR system by Voximplant. Not only will it provide almost immediate service to your customers, but you will also free up your company resources for other important tasks.

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