What is interactive voice response (IVR)? - Definition and benefits

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Meaning of interactive voice response

What is IVR?

Interactive voice response or IVR is an automated technology for business phone systems that assists callers through a pre-recorded menu of choices. It uses the caller’s input through the telephone keypad or their voice response to identify issues and provide solutions.

Depending on the information provided, the IVR can either provide basic information or route callers to live agents who can offer more customized assistance.

Ever called a business phone number and been answered by an automated greeting followed by a pre-recorded message? That’s the interactive voice response— it lets a customer and the computer-powered phone system have a simple conversation that gives people the answers they need.

IVR being used to collect information for the ACD to route a caller to the agent most capable of handling his concern
Employee taking a call from a customer

Transactions through interactive voice response

What is an IVR used for?

IVRs are typically used by contact centres or businesses to route calls based on the caller’s responses to the recorded menu. These answers can help the system determine which resource the caller wants to access or contact— for example, the billing department, the technical support team, or a human operator that can help them with a complex issue.

It’s also occasionally used to cascade information to the person calling the company. Think instructions, promotional material, or service updates. It can even be used to let a customer know that the system will record calls for quality assurance and ask whether they want to proceed with the interaction.

It used to be that interactive voice response was only used to organize call centre call queues. But IVR systems have changed quite a bit since their inception. Now, they are primarily used to automate simple processes and give callers convenient self-service options. This ensures that call centre agents don’t need to deal with questions and complications which have fairly simple or straightforward solutions.

The following are just a handful of self-service processes supported by IVR today:

  • Account balance inquiry
  • Access to account information
  • PIN number setting or password change
  • Looking up information such as product price, company directory, and the like
  • Filling up lead forms and responding to surveys
  • Making modest payments or fund transfers

What is IVR payment?

IVR payment is a  feature that allows customers to pay fees, bills, and the like over the telephone. In order for this to work, you need to integrate your IVR system with third-party payment gateway applications which include security and compliance measures for protecting your customers' sensitive information.

Interactive voice response technology

How does an IVR work?

If you were around when IVR technology was in its infancy, you’d know that it used to be extremely difficult to set up.

Everything you needed to make it work was expensive, and there’s no guarantee that you can make them work together. You usually had to have the following before you could get old-school interactive voice response to work:

  • IVR software. Take note, this wasn’t usually part of a communications platform (on-premise or cloud-based phone system).  It needed its own service (PSTN or VoIP phone system) and hardware to function. 
  • A database (this is where the information the system can deploy is pulled from). 
  • A dedicated infrastructure that can support several servers, among other things.
A team of agents receiving calls routed to them through the ACD from the IVR

From there, you had to install the interactive voice response or IVR software on a separate computer. Said computer needs to also have a telephony card incorporated—this is specialized hardware that gives you the ability to integrate hardware components into it.

Does this all sound complicated? That’s because it was. It was so complex that specialists had to be hired to set it up and configure it. It probably didn’t help that each system usually has its own proprietary programming language.

Luckily, we don’t have to worry about that kind of thing anymore. And it’s all thanks to the rise of cloud computing.

These days, cloud contact centre solutions like RingCentral have IVR or interactive voice response integrated into their systems from the get-go. All the things you need to have this technology working smoothly— the telephony, the databases, and the servers—are all taken care of by the provider, through the cloud.

What does this mean for you? How about -

  • No more need to get separate software. 
  • No need to build in-house infrastructure. 
  • No need to hire specialists whose sole purpose is to maintain and manage the IVR.

In summary, all of that translates to reduced costs when compared to traditional IVRs.

The fact that it’s already integrated into your communications solution means that it works beautifully with other essential contact centre features like automatic call distribution (ACD).

Need an example? See how a simple IVR works with the other call centre features below:

  1. As soon as a call is received by the phone system and greeted by its auto-attendant, your IVR kicks in and presents a phone menu to the caller.
  2. The caller uses the IVR phone menu to navigate the system. They are given a series of options which they can select using either dual-tone multi-frequency tones (DTMF tones) or voice response through speech recognition.

    Quick Glossary:

    DTMF is the technical term for using a phone’s touch-tone keypad to select responses to IVR systems. Many IVRs still use this exclusively.

    Newer cloud contact centres have included voice response through speech recognition, which allows people to use their own voices to respond to the system, in their IVR.
  3. Each choice the caller makes through the menu helps determine whether or not their concerns can be resolved through the IVR self-service process. If self-service isn’t feasible, then the call gets categorized by the interactive voice response system (this is known as the qualification phase—it triggers skills-based routing). IVR allows agents with the right skills for handling the caller’s concerns to be identified by a pre-defined protocol that ensures the ACD routes the call to an available qualified live agent.

The best part? The transition from one feature to the next is seamless.

The user-friendly drag-and-drop interface of RingCental’s IVR menu and call flow

Interactive voice response phone tree

What is an IVR menu?

The IVR menu is a series of recordings that guides callers through an IVR experience. The callers are steered through available options through the use of their touch-tone dial pads or their voices (depending on which one the IVR has been programmed with). Through it, the contact centre’s system can more accurately direct callers to a resolution they can be satisfied with.

We’re all familiar with the script—“Press 1 for customer service, press 2 for sales, press 3 for technical support, etc” is the basic language you can expect out of an IVR menu.

When there are several levels to the menu, it can occasionally be called a “phone tree” (because it “branches out” based on a given response). One answer can direct the caller to a sub-menu of 2 or more options that themselves lead to other menus. It all depends on how deep you’ve programmed the system.

That said, you wouldn’t want to overcomplicate your IVR menu. Your phone tree has to be as simple as possible; otherwise, it can overwhelm the average client or customer. How complex you’d want your menu to be, however, depends on your company’s needs, and that of the people you serve.

Interactive voice response system dashboard

How do you set up an interactive voice response?

Setting up an IVR can be approached in different ways, though it needs to be reiterated that it used to be a tricky affair. Nowadays, though, you can breeze through it largely due to the fact that it's now a standard feature of a cloud-based call centre solution.

Take RingCentral, for example. Even people with no experience whatsoever in programming could build an interactive voice menu using its contact centre solution.

The IVR platform can be customized via a user-friendly drag-and-drop interface that can be accessed on a web browser.

This visual approach lets you and anyone in your team design and customize the menu’s call flow to your specifications. You don’t need to on a specialist to ensure your customers get the service they deserve. This, in turn, reduces operational costs while sustaining (or improving) quality of service.

Advantages of interactive voice response

What are the benefits of IVR?

Having an IVR as part of your cloud-based contact centre can get your business some real advantages and benefits.

Even the simplest solutions can:

Lead to better customer service

Think about it—for most, reaching out to a call centre can be a massive waste of time. The waiting time in the hopes of getting a live agent can sometimes take up to an hour. Hold times can either be frequent or excessively lengthy if the agent doesn’t have the skills or resources to help the caller. Equally frustrating is being transferred across multiple departments in the quest for answers.

Imagine being made to wait, handed off to various people, and ultimately not getting anything resolved. That’s what it can be like for customers when you don’t have helpful IVR.

Each element of your IVR menu design must have a purpose. The IVR should be able to give callers the information they need. Otherwise, it needs to be able to understand the purpose of the call so it can be sent to the agent who can resolve it during that initial call.

First contact resolution (FCR) ensures customers won’t need to call about that particular issue again. In turn, they won’t feel like they’ve wasted time and money in contacting your company.

What you’ll want is a highly customizable system that allows you to align your customer’s IVR interactions with your brand. Think company greetings and options that change depending on marketing campaigns, seasons, and the like.

It works even better when it’s integrated with your customer relationship management (CRM) system. The caller’s phone number or account number can be matched with an existing customer’s personal information. The IVR can then make use of this to address them by their name and help them feel valued by the company.

Integrating IVR into your CRM is easy with Open RestFull APIs

You can also program the IVR menu in several languages. This makes it accessible to callers who are more comfortable with vernacular outside of standard business English.

There are so many possibilities.

Help project levelled up professionalism

IVR systems used to be pretty expensive even without taking the essential hardware and infrastructure into consideration. It’s no surprise, then, that people still think only big businesses can afford it as part of their enterprise-level communications suite.

That’s not the case anymore thanks to the cloud.

IVR capabilities can be found in most cloud contact centre solutions these days. Incidentally,  these same solutions are much more affordable than the previously-popular on-premise option.

This means that you can use an enterprise-level IVR system even if you’re not a conglomerate. It doesn’t matter if you’re a small business or a medium-sized business. You can effectively project professionalism with cloud-based IVR.

Improve agent performance and morale

Having IVR doesn’t mean you’re replacing your agents. In fact, it’s meant to make life much easier for your call centre agents.

When you have your automated IVR resolving simpler requests like account balance confirmation, your agents won’t have to handle repetitive, less challenging calls. This gives them more time for more complex issues that likely require more of their attention and focus.

A high volume of inbound calls without the benefit of an IVR that’s properly set up can lead to frustration for agents.

Their time could be wasted on tasks and issues that can be easily resolved. This may seem like a small thing, but these simple do add up. When that happens, your staff is prevented from dedicating enough time to addressing more complex situations which in turn forces them to deliver less than stellar work.

These often lead to stress and dissatisfaction. If this isn’t managed, you’ll end up with employees that are unproductive, apathetic, and likely to file for resignation given the chance.

An intelligently-designed IVR decreases the volume of calls handled by agents when it addresses simpler requests. When it’s applied in conjunction with the skill-based routing feature, it ensures agents won’t receive calls they don’t have the resources or skills to handle.

The more efficient and productive your call centre agents are, the happier they’ll be.

Offer 24/7 availability

The thing about IVR is that it doesn’t need humans to work after it’s been programmed. It will keep on operating and won’t change its protocols until you reconfigure it.

In other words, it functions indefinitely. It doesn’t matter when customers call you—in the middle of the night, during a holiday, very early in the morning—an automated message will greet them even process simple transactions (if you’d programmed it to do so).

Reduce manual errors

Because the interactive voice response system is automated, it’s not prone to errors. This is in contrast to your company employing a human receptionist to handle all the inbound calls.

A person can very easily be overwhelmed by high call volumes, and having to handle all those incoming calls manually increases the chance of mistakes being made. For example, the receptionist could be so flustered that they route calls to the wrong agent or department.

By equipping your contact centre with an IVR system, you can ensure all calls follow one logical sequence via the phone menu programming. When humans get to make fewer judgment calls in the face of hundreds of calls per day, fewer call handling mistakes are made.

Automating the way your organisation receives calls, gives you the peace of mind knowing that the IVR  experience is consistent for every person that tries to connect with you via phone.

Applications of interactive voice response

What is IVR’s role in customer experience?

IVR is potentially the very first interaction a person has with your company, essentially setting the tone of your customer’s experience with your brand. With customer experience being all about the quality of your customer’s exposure to your company, this initial encounter can make or break the relationship.

You’ll want the customer to have a positive experience with your business. When your customers are happy with you, they’re more likely to turn into loyal customers. In fact, some customers can become brand ambassadors for you if they’re always pleased with your products and services. The more brand ambassadors you have, the bigger your chance of attracting more customers.

Now let’s get back to how an IVR helps you with that.

A good and well-structured IVR system that addresses queries quickly and painlessly can start your relationship with a customer off on the right foot. Remember—if they don’t feel like they’re wasting time and money on you, then you’re earning your trust.

Still not sure how this can be applied to your organisation? Here are a few ways RingCentral’s IVR feature can be used to create positive customer experiences.

Self-service transactions and processes

You can improve customer satisfaction by giving the customer what they need as soon as possible. One good way to do that is by helping customers find the answer they need without having to wait for an operator.

Implement self-service options for simple processes and transactions. When you institute automation of these processes, your customers won’t have to go through the agony of waiting for agents to pick up their call or get back to them. They won’t need anyone at all—all they’ll need is the system.

And, as previously mentioned, this removes simple processes from the agents’ scope of responsibility. That way, they only handle complex cases that can’t be programmed into the IVR.

IVR connects the caller to an agent that can address her queries

Efficient skills-based call routing

Interactive voice response also helps agents make the customer’s experience with the company positive.

How does it do that? It does that by sending them calls that they're equipped to handle—and not the ones they don’t have skills and resources for.

This intelligent routing feature of cloud contact centres gives companies the ability to associate call centre agents with particular skill sets or strengths.

In the qualification phase, the IVR menu options help the system qualify the calls so it could understand the caller’s reasons for making the phone call and, by extension, the skills needed to resolve it.

Using that information, the automatic call distribution (ACD) routes the call to the most qualified agent.

This reduces the chance of an issue being assigned an agent who can’t give the appropriate response, and by extension minimising the possibility of generating negative customer experiences.

Speech recognition and natural language processing

Advanced IVR isn’t limited to a touch-tone keypad selection response from the telephone keypad anymore.

Speech recognition technology uses natural language processing and some contact centre solutions these days let you enable it. One thing to note, though—this is not the same as conversational AI. Conversational AI concerns itself with messaging apps and chatbots. Speech recognition, on the other hand, “listens” to the caller’s voice and picks up keywords that help determine the call’s purpose.

This technology is especially helpful for visually impaired customers or anyone else who might have trouble following the IVR menu instructions for telephone touchpads.

Business hours

You can also set customer expectations by programming different IVR protocols depending on your company’s business hours.

Let’s say you don’t have enough agents who can handle customer queries after business hours. You can provide a different set of phone menus for anyone who gives you a call after you’re done for the day. You can make it so that it doesn’t include an option to talk to an agent and instead limit it to self-service options. You can even limit it to a message stating your hours of operation and a recommendation to leave a voicemail.

When you do this, your customers’ expectations will be managed. They’ll know that they won’t get the same amount of attention after hours as they would if they’d called during your workday.

RingCentral IVR has integrations with third-party applications such as Google’s G-Suite, Office 365, Salesforce, Slack, and AWS

Integrations with different apps

Phone service providers like RingCentral give you the ability to integrate interactive voice response with your favourite business apps through open RestFull APIs. This opens up a whole new world of functionality for you. For example:

  • With a customer relationship management or CRM integration, the IVR has access to more information and therefore improve how customer calls are classified, helping the system match customer queries to the agents who can best help them.
  • You can integrate interactive voice response with back-office systems to give customers updates on details related to their accounts such as purchases or transactions without the need for a live agent to mediate.
  • Integrations with payment gateways make automated payment options possible, allowing callers to engage in transactions over the phone.
Want to know more about how an easy-to-use IVR system can take your call center to another level? Sign up for a personal demo and our solutions specialist will contact you and show you the ropes.