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What is Interactive Voice Response (IVR) and How Does it Work?

Published 25 February 2023
Last updated 25 April 2024
What is Interactive Voice Response (IVR) and How Does it Work?
What is Interactive Voice Response (IVR) and How Does it Work?

Have you ever called a business and heard a pre-recorded message asking you to press a number for more information? If so, you’ve likely interacted with an IVR system.

But what is IVR, and how does it work? In this article, we’ll dive into the details of this technology and explore its benefits for businesses and customers alike.


What is IVR?

IVR (Interactive Voice Response) is an automated phone system that allows callers to interact with a computerized system using voice and touch-tone keypad inputs.

It is a widely used system in telecommunication services. It enables customers to interact with a computerized system through voice or keypad inputs, thus eliminating the need for direct human intervention.

IVR systems are used for various purposes, such as customer support, sales, surveys, and payment processing.

They can be customized to meet the specific needs of a business and are often integrated with other software systems to provide a seamless customer experience.


What is IVR in a call center?

IVR in a call center is designed to help businesses manage high volumes of incoming calls more efficiently.

In a call center, Interactive Voice Response technology is typically used to greet callers with a pre-recorded message that provides instructions on navigating the system.

Callers can then choose the appropriate option by pressing a number on their phone keypad or speaking a command.

By automating the initial steps of the customer interaction process, IVR systems can help reduce the workload for call center agents, allowing them to focus on more complex customer inquiries.

IVR in call centers can also help reduce customer wait times, improve call routing accuracy, and provide a more consistent customer experience.

Also Read: Understanding What is Call Centre and The 10 Best Call Center Software for Business 2023


How does an IVR work?

An IVR system uses voice recognition and touch-tone keypad inputs to interact with callers.

Here’s a basic overview of how an IVR system works:

  1. The caller dials the phone number associated with the IVR system.
  2. The IVR system answers the call and plays a pre-recorded message, such as “Thank you for calling XYZ Corporation. For customer service, press 1. For technical support, press 2.”
  3. The caller selects the appropriate option by pressing a number on their phone keypad or speaking a command.
  4. The IVR system uses voice recognition software or DTMF (Dual Tone Multi-Frequency) tones to identify the caller’s response.
  5. The IVR system then provides the appropriate information, such as playing a recorded message or routing the call to a specific department or agent.
  6. The IVR system may prompt the caller for additional information, such as an account number or order ID, if necessary.
  7. Once the interaction is complete, the IVR system may offer the caller the option to end the call or speak with a customer service representative.

Note: IVR systems can be customized to handle many customer interactions, from basic inquiries to more complex transactions such as placing an order or scheduling an appointment.


What is the IVR menu?

An IVR menu is a pre-recorded message played to callers that provides them with a set of options to choose from.

IVR menus are typically used in call centers and automated phone systems to help route calls to the appropriate department or agent.

When a caller reaches an IVR menu, they will hear a pre-recorded message that presents a list of options.

Once the caller has selected, the IVR system will either play a recorded message with relevant information or route the call to the appropriate department or agent.

IVR menus can be customized to handle a wide range of customer interactions, from basic inquiries to more complex transactions such as placing an order or scheduling an appointment.

By allowing customers to select the appropriate option, IVR menus can help reduce wait times and ensure that calls are routed to the right place, improving overall customer satisfaction.


What are the benefits of IVR?

There are several benefits to using an IVR system in your business. Here are some of the main advantages:

1. Increased efficiency

An IVR system can help increase efficiency in your business by automating many routine tasks.

For example, an IVR system can handle simple customer inquiries or regular transactions such as bill payments or appointment scheduling, freeing up your staff to address more complex issues.

2. Improved customer service

An IVR system can provide a better customer experience by allowing callers to quickly and easily access the information they need. With an IVR system, callers can get the help they require 24/7, even outside business hours.

IVR systems can also be customized to provide personalized responses to common inquiries, which can help improve customer satisfaction.

3. Reduced costs

By automating routine tasks, an IVR system can help reduce customer service and support costs.

For example, an IVR system can handle high call volumes without requiring additional staff, reducing the need for costly overtime or hiring other staff.

4. Increased flexibility

An IVR system can be customized to meet the specific needs of your business.

You can create custom scripts and menus that provide callers with the information they require in a format that is easy to understand.

You can also easily change your IVR system as your business needs change without needing expensive reconfiguration.

5. Better data collection

IVR systems can collect data on customer interactions, such as call duration, call volumes, and other metrics.

This data can be used to improve the IVR system over time and provide valuable insights into customer behavior and preferences.

6. Improved analytics

Many IVR systems provide detailed analytics on call volumes, call duration, and other metrics.

This information can be used to improve your IVR system over time and provide valuable insights into customer behavior and preferences.


What are the challenges addressed by managed IVR?

1. Eliminate busy signals for customers

Managed IVR systems allow customers to interact with the business anytime without experiencing busy signals.

This addresses the challenge of customers needing help to reach the business due to high call volumes or limited availability.

2. Empowering the customer with self-service

Managed IVR systems provide customers with self-service options, which allow them to resolve their inquiries and transactions quickly and efficiently.

This addresses the challenge of customers waiting for a human agent to assist them.

3. First-time resolution

Managed IVR systems provide customers with the necessary information and resources to resolve their inquiries in a single call.

This addresses the challenge of customers making multiple calls or being transferred to different agents to resolve their issues.

4. Help prevent customers from getting lost on hold

IVR systems help customers navigate the call flow more efficiently, reducing the likelihood of getting lost on hold or transferred to the wrong department.

This addresses customers’ frustration with long hold times and poor call routing.

5. Make a great first impression

IVR systems can be customized to create a professional and engaging customer experience, which makes a great first impression on callers.

This addresses the challenge of businesses needing help to provide personalized and welcoming experiences to every customer.

6. Reduce cost per call

IVR systems are typically less expensive than hiring and training additional staff.

Businesses can reduce staffing costs by automating routine inquiries and transactions while improving service levels.

7. Collect data to gain insights into customers

IVR systems collect data about customer interactions, such as frequently asked questions and customer feedback.

This information can improve the system’s performance and inform business decisions.

8. Design for specific customer journeys

IVR systems can be designed to address specific customer journeys, such as sales inquiries or support requests.

This addresses the challenge of businesses struggling to provide targeted and relevant support to each customer.

9. Seamlessly handle a higher call volume

Managed IVR systems can take more calls than human agents, allowing businesses to scale operations without sacrificing service levels.

This addresses the challenge of businesses struggling to keep up with high call volumes during peak periods.

10. Error reduction

IVR systems reduce the risk of human error, ensuring that customers receive the same level of service regardless of the time of day or agent they interact with.

This addresses the challenge of businesses needing help to provide consistent and accurate service levels.


How to set up IVR?

Setting up an IVR system will depend on the specific software or service you are using.

However, here is a general guide on how to set up an IVR system:

1. Define your objectives

Before setting up your IVR system, you should define your objectives. Determine what you want your IVR system to accomplish.

This may include providing customer support, routing calls to the correct department, or handling transactions such as payments or reservations.

2. Create a script

Once you have defined your objectives, you should create a script for your IVR system. The script should include a welcome message that greets callers and explains what the system does.

It should also have a set of options for callers to choose from. The script should be clear and concise, with easy options for callers to understand.

3. Record your messages

After you have created your script, you should record your messages. Record your messages in a clear, professional voice. Hire a professional voice actor to record your messages.

Your messages should be recorded in a studio environment to ensure high audio quality.

4. Choose a service provider

Once you have your script and messages ready, choose an Interactive Voice Response (IVR) service provider. Select a provider that meets your needs.

Look for a provider with the required features, such as voice recognition, call routing, and analytics.

Many IVR service providers are available, so do your research to find the best one for your business.

One of the best service providers is Mekari Qontak which provides IVR systems in its powerful call center software.

5. Configure your IVR system

After you have selected your IVR service provider, you need to configure your IVR system.

This will involve setting up your options, recording your messages, and testing the system to ensure it works correctly.

The configuration process will vary depending on your chosen service provider, but most providers will have step-by-step instructions to guide you through the process.

6. Monitor and improve

Once your IVR system is up and running, you should monitor it to ensure it works as intended. Use analytics to track call volume, call duration, and other metrics.

Use this data to make improvements to your Interactive Voice Response system over time.

For example, if you notice callers frequently selecting the wrong option, you may need to revise your script to make it more transparent.

Note: Setting up an IVR system can be complex and may require technical expertise. Consider hiring a consultant or working with an IVR service provider who can help you set up and manage your system.


How to get IVR for your business?

To get an IVR system for your business, you can follow these steps:

  1. Identify your business needs: Determine what kind of IVR system your business requires based on the customer interactions you want to automate. This will help you choose the right IVR provider with the necessary features and capabilities.
  2. Research IVR providers: Look for IVR providers that offer the features you need, such as voice recognition, call routing, and data collection. Read customer reviews and compare pricing to find a provider that fits your budget.
  3. Choose an IVR plan: Select an IVR plan that meets your business requirements and budget. Some providers offer pay-as-you-go plans, while others offer monthly subscriptions. Consider each plan’s number of minutes, calls, and features.
  4. Customize your IVR system: Work with your provider to customize your system to meet your specific business needs. This includes creating greetings, menus, and call routing options.
  5. Test and deploy: Test your IVR system to ensure it works as expected and resolves customer inquiries. Deploy your IVR system once thoroughly tested and ready to handle customer interactions.
  6. Monitor and optimize: Monitor your IVR system’s performance and collect customer feedback to identify areas for improvement. Use this information to optimize your system and improve customer satisfaction.

What is IVR’s role in customer experience?

IVR plays an important role in customer experience by providing customers with a streamlined and efficient way to access information and support.

Here are some ways that IVR can impact customer experience:

  • Improved accessibility: With an IVR system, customers can easily access information and support 24/7 without waiting for business hours or speaking to a live agent.
  • Personalized service: IVR systems can be customized to provide personalized service to customers.
  • Faster resolution times: Interactive Voice Response systems can help reduce resolution times by providing customers with the information they need more quickly and freeing up live agents to focus on more complex issues.
  • Consistency: IVR systems can help ensure that customers receive consistent information and support, regardless of which agent they speak to or when they call.
  • Reduced frustration: IVR systems can help by providing customers with clear and concise options and directions to help ensure customers find the information they need quickly and easily, without repeated calls or transfers.

IVR examples

A customer calls customer service

When customers call a customer service center, they will hear a pre-recorded message that says, “Thank you for calling XYZ Corporation. If you need help with billing, press 1. For technical support, press 2. For all other inquiries, press 3.”

Depending on the customer’s response, the IVR system would route the call to the appropriate department or provide further instructions for the customer to follow.

A customer calls the bank

Another Interactive Voice Response example could be a call to a bank where the customer hears a pre-recorded message that says, “Welcome to ABC Bank. For account balance, press 1. For transaction history, press 2. To speak with a customer service representative, press 3.”

Again, the IVR system would route the call to the appropriate department or provide further instructions for the customer based on their response.

In both of these examples, the IVR system helps to automate the initial steps of the customer interaction process, making it quicker and more efficient for both the customer and the business.


Understanding speech recognition and natural language processing in IVR

Speech recognition and natural language processing (NLP) are two important technologies in IVR systems used to improve the customer experience.

Here’s a brief explanation of each technology:

Speech recognition

Speech recognition technology allows an Interactive Voice Response system to recognize and interpret spoken words.

This technology uses machine learning algorithms to identify and transcribe spoken words into text, which the IVR system can then process.

With speech recognition, customers can interact with an IVR system using their voice without pressing buttons on a phone keypad.

Natural language processing (NLP)

NLP is the technology that allows an IVR system to understand and interpret natural language commands and queries.

This technology uses machine learning algorithms to analyze the structure and meaning of spoken or written language and then generates appropriate responses.

With NLP, customers can interact with an IVR system using natural language without memorizing specific commands or prompts.

When used together, speech recognition and NLP can significantly improve the customer experience in IVR systems.

On the other hand, this can reduce frustration and improve customer satisfaction, reducing the workload on live agents and improving business efficiency.


Conclusion

In conclusion, the IVR system has revolutionized how businesses interact with customers. It has provided a more efficient and cost-effective way to handle customer queries and streamline operations.

By implementing an Interactive Voice Response system, businesses can ensure their customers receive prompt and accurate responses to their queries and enjoy a better overall experience.

If you want to enhance your customer service capabilities with an IVR system, Mekari Qontak offers powerful call center software that integrates seamlessly with your existing systems.

With our software, you can design and deploy IVR systems quickly and easily and manage customer interactions efficiently.

Visit our website to learn more about our call center software and how it can help you take your customer service to the next level! Get started now!

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