Interactive Voice Response (IVR) Explained for Business Owners

When it comes to making and receiving calls, it’s very straightforward. You dial a number, choose your option from a menu, and get through to the right person.



What happens behind the scenes is called an interactive voice response, often shortened to IVR.



It’s what powers “press 1 for sales; press 2 for support” and so on.



It’s a relatively simple technology that helps customers get through to the best person to help with their queries.



What Is IVR?



An interactive voice response (IVR) is a   phone system feature  that helps callers navigate to their desired destination through preset menu options.



By choosing the right option, callers get matched with the respective department, individual, or queue.



Inside an IVR, you can configure special rules for who picks up each call based on skills, call volume, or period of time.









How an IVR Works in 6 Steps



1. Caller interaction



The first step in an IVR is someone making a call. A customer dials your number and gets connected to the IVR system.



They’re greeted with a welcome message and presented with a series of options. This menu can be one or several layers deep.






For example, you could offer:




Sales.



Support.



Accounts.




But you could also offer submenus inside each of those options. So, when someone presses 3 for accounts, they get a second menu. 



This could include:




Make a payment.



Query an invoice.



Request a copy of an invoice.




The option pressed by the caller on their keypad routes the call to the relevant department.



2. Input recognition



The option your caller chooses is recognized by the press of a button on a touch-tone keypad. This technology is called dual-tone multi-frequency signaling ( DTMF ). 



Your IVR interprets option 3 as your caller wanting to speak to accounts and routes the call accordingly.



Another method of input is for callers to speak their options. Some IVRs support speech recognition (voice recognition technology). Here, callers can either say the number, department name, or reason for calling. 



Your IVR recognizes this speech input and routes the call to the right individual or team.



With a modern IVR, such as an intelligent virtual assistant ( IVA ), you can respond to customers using artificial intelligence and natural language processing.



3. Call routing and queuing



When an option gets selected, the IVR routes the call to the individual, department, queue, or message you’ve configured in your IVR application.



Any of the following could be on the other end of an option:




Individual: A single person assigned due to skillset, experience, or timing.



Department: A group of agents dealing with high call volumes for a specific issue.



Queue: Comfort messages and hold music played when agents are busy.



Message: Automated recordings to answer self-service FAQs (such as opening times).




In some queues, you might want to offer a callback option. Here, the caller can opt to leave the call but keep their position in the queue to receive a callback. 



An example call flow to build different user actions with Nextiva


When it’s their turn, your  call center software  triggers an outbound call. The caller carries on with their day without the need for long wait times.



4a. Information retrieval



On the back end of your IVR, you can integrate into databases and lines of business systems so you can retrieve information without the need for human input. 



This saves customers from waiting for a live agent to become available and frees up agents for inbound calls that need human interaction. By looking up information such as account balances and opening times, your IVR conveys this information using pre-recorded messages.



4b. Self-service transactions



As well as retrieving information, customers can use your IVR to complete simple transactions, such as making bill payments and updating their account information.



Without the need for call center agents, customers can choose the relevant option to make a payment, enter their unique identifier using their keypad, and enter their card details to complete the transaction in a  PCI-compliant  manner.



If something goes wrong or your customer needs help, they can exit the payment menu and get connected to an agent.



5. Error handling and escalation



You can’t expect customers to navigate your IVR correctly every single time. They’re calling because there’s an issue they want to resolve quickly. 



If a caller makes an error or misses an option, you can enable options to help them:




Press 9 to repeat the menu.



Repeat the menu automatically if no option gets selected.



Press # to speak to an agent.




If a customer gets stuck in a self-service option, you can enable your IVR to automatically escalate the call to a human agent.






6. Analytics and reporting



As each interaction (self-service or human) gets tracked on the back end, your IVR becomes a source of data for behavior and call volumes.



You can use this data to see how well your IVR is performing. For example, if callers choose self-service options but always need human assistance, you need to work on your menu options, messages, and processes.



You can also see which options get selected the most and reorder your IVR menu to present the most common options first, making the call faster for the majority of your customers.



What Are the Benefits of an IVR?



When thinking about the benefits of an IVR system, it’s important to consider not only the benefits to your business but also the benefits to your customers. 



Top 5 IVR benefits for businesses




Cost-effective operations: Reduces the need for a large customer service team, as many inquiries can be automated. Lowers operational costs by automating routine tasks.



Better customer experience: Provides  24/7 customer support  without the need for round-the-clock staff. Reduces wait times by routing inbound calls to the appropriate department or agent.



Increased productivity: Frees up employees to handle more complex tasks by automating simple inquiries and transactions. Streamlines call handling, allowing agents to manage more customer calls in less time.



Scalability: Adjusts to handle varying call volumes without the need to hire more staff. Can expand to include more options and functionality as your business grows.



Data collection and insights: Gathers data on customer preferences and behavior, which can inform business decisions. Provides valuable analytics on call volume, resolution rates, and customer satisfaction.




Top 5 IVR benefits for consumers




Convenience: Allows customers to get information or complete transactions without the need to speak to an agent. Offers services outside of normal business hours, accommodating different schedules.



Faster service: Reduces time spent on hold by directing callers to the right information or department quickly. Provides immediate responses to common questions.



Perfect for self-service: Gives customers control over their interactions, allowing them to solve problems independently. Includes options to perform tasks such as bill payments, account inquiries, and appointment scheduling.



Personalized support: Delivers personalized experiences by integrating with CRMs to recognize repeat callers and tailor services. Offers personalized greetings or information based on the caller’s history. 



Multilingual support: Improves understanding and comfort for customers who prefer to communicate in their native language.




Challenges To Overcome When Using an IVR (And Solutions)



Overly complex navigation



Have you ever called a business, listened to all the options, and had no idea which one to press?



If your IVR menu is too long, unclear, or results in a confusing user experience, it can lead to hang-ups, unhappy customers, and failure to renew.