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

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Interactive voice response meaning

What is IVR?

Interactive voice response or IVR is an automated business phone system feature that interacts with callers and gathers information by giving them choices via a menu. It then performs actions based on the answers of the caller through the telephone keypad or their voice response.

The choices of the caller decide the actions of the IVR —  it can provide information or, if the issue is more complex, route callers to a human agent who can better handle their needs.

If you ever called a business phone number and had been answered by an automated greeting, which proceeded to interact with you via some pre-recorded message, then you know what an IVR is.

IVR is used to collect information so that the ACD can route this caller to the agent with the right skills to handle his concern
Employee taking a call from a customer

Interactive voice response transactions

What is the use of IVR?

Normally, IVRs are used by companies or contact centers to route calls based on the choices made by the caller. Through these choices, it can determine if the caller wants to contact the billing department, the technical support team, or simply wants to talk to a human operator.

It’s also used to provide information like promos, updates, or other important information or instructions.One example is to inform callers that the system will record calls and will ask if they want to proceed.

Traditionally, it was only used to organize call queues of call centers. IVR systems, however, have come a long way since they were first developed and are now often used for automation of simple processes to provide self-service options to callers. This is to resolve simple customer needs and queries that are normally handled by call center agents.

Some examples of processes that IVRs can do now include:

  • Inquire about account balance
  • Access account information
  • Set PIN numbers or change passwords
  • Look up information (product price, directory, etc.)
  • Fill up lead forms and surveys
  • Make small payments or transfer funds

What is IVR payment?

This is an IVR feature that allows customers to make payments for bills, fees, etc over the phone. This is usually achieved by integrating your IVR system with third-party payment gateway applications that have security and compliance measures in place to protect customers. For more information, contact RingCentral.

Interactive voice response technology

How does an IVR work?

In the past, IVR technology was a real pain to set up. The requirements are not only expensive, but making them work together used to be pretty complicated. In fact, traditional IVRs needed the following before they could work:

  • IVR software. This is separate from the main communications platform (on-premise or cloud-based phone system) and needs its own set of hardware to work. It needed a telephone service (PSTN or VoIP phone system), 
  • A database (to pull information from) 
  • Its own infrastructure to support it including several servers.
A group of agents receiving calls routed to them from the IVR via the ACD

The interactive voice response or IVR software hads to be installed in a separate computer and you needed a telephony card, which is special hardware that lets you integrate hardware components to a computer, to get it to work.

And to top it all off, it also required a specialist to configure and set it up because it was a complicated piece of technology, usually with its own proprietary programming language.

Of course, that’s all in the past. The only ones who think these are still cool are call center software providers stuck in the past.

Modern cloud contact center solutions like RingCentral have IVR or interactive voice response automatically integrated into their system, also described as voice portals. All components you need to make the technology work— like telephony, databases, and servers—are handled by the provider in the cloud.

This means there’s no more need for separate software, in-house infrastructure, or specialists whose only job is to maintain and manage the IVR. That should significantly reduce costs compared to traditional IVRs.

Since it’s integrated, it also works wonderfully with other essential features like automatic call distribution (ACD).

Here’s how a simple IVR works with the other features of your call center:

  1. Once a call is received and greeted by the auto-attendant of the ACD, your IVR kicks in and presents the caller with the phone menu.
  2. The caller interacts with the IVR phone menu. Callers are presented with a series of options. Most IVR systems use dual-tone multi-frequency tones or DTMF tones to interact with your caller, which is just the technical way of saying that it uses the caller’s telephone touch-tone phone keypad.

    Newer cloud contact centers have also adopted voice response through speech recognition in their IVR features, which allows callers to interact with the system using their own voice.
  3. As the caller navigates the menu, their query or purpose for calling can be resolved through the IVR self-service process. If not, the call will be sorted into a category by the IVR. THis is the qualification phase, which will then trigger the skills-based routing feature. IVR allows the system to identify the agents that have the skills to handle the caller’s needs. The ACD then routes the call to an available qualified live agent.

The transitions between each feature are seamless.

An example of RingCental’s IVR menu and call flow with an easy-to-use drag-and-drop interface

Interactive voice response phone tree

What is IVR menu?

The IVR menu is the response system that helps customers navigate the IVR experience. It can be used by the caller by pressing the touch-tone dial pad or via their voice, whichever one is programmed into the IVR.

You’ve probably encountered it a million times. Think “press 1 for customer service or press 2 for technical help.” if you know those lines, then you’re familiar with what a basic IVR menu is.

It’s also called a phone tree because it can have many levels (or branches, if you will). One option can lead to 2 or 3 more options, depending on how deep you program your IVR.

Of course, the recommendation is to keep the IVR menu or phone tree as simple as possible. But it still depends on the needs of your organization.

Interactive voice response system dashboard

How do you set up your IVR?

Setting up an IVR used to be a complicated process. But now that it's part of a cloud-based call center solution, setting up an IVR isn’t as tricky anymore.

RingCentral, in particular, makes it easy even for people with no programming background.

You can customize the IVR platform through an easy-to-understand drag-and-drop interface you can access from your web browser.

This lets you and your team design and customize the IVR menu and call flow in the way you think best serves your customers without relying on a specialist. This, in turn, reduces operational costs.

Interactive voice response advantages

What are the benefits of IVR?

Adopting a modern IVR feature into your contact center can bring your business different benefits and advantages.

Here are some of the most common ones:

Leads to better customer service

Nobody likes wasting their time. But that’s exactly what can happen when someone calls a call center. There’s the long waiting time to get a live agent, the extended hold times because the agent isn’t fully equipped to address an issue, and the constant transference to different departments.

Worst would be times when their concern was not resolved after all that.

When designed right, every step in the IVR has a purpose. Either the IVR is able to provide callers with the information they’re looking for or it can determine their needs so that they can be transferred to the right agent the first time.

This increases first contact resolution (FCR)  and removes the need for customers to call again.

As a result, customers will feel that choosing your company is not a waste of time and money.

The best systems are extremely customizable, which gives you a lot of opportunities to personalize your IVR interactions with your callers. This includes personalized company greetings that you can continuously change.

When you integrate it with your customer relationship management system, you can also match personal information with the caller’s phone number or account number and the IVR can address them by their name.

There's also the option of programming the IVR menu in several languages so that callers can choose the one they're most comfortable with.

The possibilities are virtually endless.

Helps you project a more professional image

In the past, IVR systems were expensive. That’s not even taking into consideration the necessary hardware and infrastructure needed to support it. That’s why a lot of people still associate IVRs with enterprise-level solutions that only big corporations can implement.

With the cloud, that isn’t true anymore.

IVR is now a feature included in most cloud contact center solutions, which are also more affordable than their on-premise counterparts

As a result, you can employ an enterprise-level IVR system that can help you project a more professional image without breaking the bank—whether you have a small or mid-sized business.

Improves agent performance and morale

IVR is not made to replace agents. It’s developed to make your call center agent’s life much, much easier.

With an automated IVR solving a lot of the simpler queries, it would decrease the number of calls agents are handling.

Without a proper IVR, call centers can be overwhelmed by a high volume of inbound calls, resulting in agents receiving calls that they're not equipped to handle. This leads to agents getting frustrated because they don’t know what to do to resolve customer’s concerns. Frustration leads to stress and unhappiness. Next thing you know, you have apathetic and unproductive employees who are on the brink of resigning.

An IVR that’s been set up properly can decrease the calls handled by agents by resolving simple queries. It also works with the skill-based routing feature to ensure that agents only receive calls they have the skills to handle.

This makes for a more efficient, productive and happier call center agents.

Continuous availability 24/7

The best part about IVR is that it's not dependent on humans to work. Once it’s programmed, it will continue to function unless configured otherwise.

This means, unlike us humans, it doesn’t need sleep or rest. Customers can call your company even in the middle of the night and there will be an automated message to greet them, and depending on how it's programmed, it can even process simple transactions.

Reduces manual errors

Speaking of being unlike humans, IVRs are automated so it's not prone to errors. Compare this to when you employ a human receptionist to handle inbound calls to your company.

Aside from the possibility of being overwhelmed by high call volumes, manual handling of incoming calls can also lead to mistakes where calls are routed to the wrong department or agent.

When your contact center is equipped with an IVR system, all calls follow the same logical sequence programmed into the phone menu. This reduces the need for humans to make judgment calls, which ultimately is responsible for many call handling mistakes.

By automating how your business receives calls, you’re getting the benefit of knowing that each caller is getting the same IVR  experience every time.

Interactive voice response applications

What is IVR’s role in customer experience?

Customer experience is all about the overall quality of your customer’s exposure to your company.

It’s important that you keep the customer’s experience positive to sustain your business. Happy customers tend to turn into loyal customers. Beyond that, customers with a positive experience with your company can become ambassadors for your brand, which in turn can lead to more customers.

Now, what is IVRs role in all that?

Well, if you think about it, your IVR could be their very first direct interaction with your company. It can therefore set the tone of your relationship with them whenever they have queries and concerns that need to be resolved.

A good and well-structured IVR system can start your customer off on a positive note.

To give you some examples, here are some ways you can use RingCentral’s IVR feature to increase positive customer experience.

Self-service transactions and processes

One of the fastest ways to improve customer satisfaction is to deliver what the customer needs as quickly as possible. And what can be faster than when the customer is able to find the answer they need by themselves?

By implementing self-service options for simple processes and transactions, customers no longer have to endure long wait times and hold times, or even deal with agents.

This also has the benefit of removing these simple processes from the agents’ plates. This means they get to take on more complex cases that the IVR cannot handle

IVR helps connect the caller to the agent that can address her concerns

Efficient skills-based call routing

IVRs also helps agents provide better customer experience.

How? By only sending them calls that they're equipped to handle.

This intelligent routing feature of the cloud contact center allows companies to designate skills to their call center agents.

Through a series of IVR menu options,  the caller’s concerns and the skills needed to resolve it can be determined.From that information, the call will be routed to the agent best equipped to handle the concern.

As a result, it reduces the chance of having a caller being matched to an agent who would not be able to answer their questions, which can lead to negative customer experience.

Speech recognition and natural language processing

Advanced IVR is no longer just limited to a touch-tone keypad selection response from the telephone keypad. You can enable speech recognition technology that uses natural language processing. It works like a conversational AI (artificial intelligence) that picks up keywords and terms from the caller’s voice to determine why they’re calling.

This is especially helpful for customers who are visually impaired and may have difficulty navigating the IVR menu via telephone touchpad.

Business hours

Another way you can set customer expectations is by customizing how the IVR handles calls during business hours and after business hours.

If you don’t have enough people to support customer queries after business hours, you can present a different set of phone menus. This will ideally be a limited version of your work hours menu. iIt may not even include an option to talk to an agent — just an automated greeting informing them to leave a voicemail or to call again during business hours.

This way, your customers will not expect the same amount of attention as they would if they called within business hours.

RingCentral IVR integrates with third party applications like Google’s G-Suite, Office 365, Salesforce, Slack, and AWS

Integrations with different apps

Some phone service providers like RingCentral allow you to integrate the IVR with different apps that your company is using. This opens a lot of possibilities. For example:

  • With a customer relationship management system or CRM integration, the IVR is able to retrieve more information and improve classification of customers, which would help the system match him or her to the right agent
  • Back-office systems can be integrated with interactive voice response so callers can get updates on their accounts, purchases, or transactions without the need to talk to an agent
  • Integrations with payment gateways offer automated payment options via phone without talking to an agent.
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.
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