Article | 10 min read

IVR: Interactive Voice Response definition, benefits and steps

IVR technology can be a game changer for call centres. Discover what an IVR system is and how it improves phone support.

By Cristina Maza, Contributing writer

Last updated May 31, 2023

If you’ve ever called customer support, you’ve probably heard an IVR system rattle off your options: “For billing, please press 1; for our business hours, please press 2; to hear your account balance, please press 3; to reset your password, please press 4…”

It’s one of the earlier customer service technologies still in use today and helps support teams provide better and more cost-effective phone support. Read on to learn how IVR works and why it’s an essential part of creating better customer experiences over the phone.

What is IVR?

Interactive voice response (IVR), or a phone tree, is an automated phone system tool that answers incoming customer calls and offers options for next steps via a menu. It uses these responses to route customers to the right agent or department, provide recorded responses to frequently asked questions, deflect calls by allowing callers to switch from a live call to a text message and more.

Standard systems can only be operated by a keypad. However, some IVRs also have natural language processing capabilities that use advanced voice recognition technology so callers can speak instead.

IVR technology is a cost-effective solution for call centre teams and improves the employee experience by deflecting incoming calls and allowing agents to focus on high-level tasks.

Your IVR phone system can also increase customer satisfaction by providing immediate answers to basic, common questions and freeing up more agents to handle urgent, complicated matters. It also saves customers time because an IVR can ensure they get a callback and don’t have to wait on hold for an extended period of time.

What is the purpose of IVR?

IVR use cases

IVR serves a few different functions but all enable call centre agents to be more efficient and customers to get help faster. The primary purposes of IVR are to:

  • Handle simple questions or requests so agents can focus on complex issues.
  • Lower operational costs by reducing the number of calls agents have to accept.
  • Route callers to the appropriate department to increase first-contact resolution rates.
  • Enable callers to get a callback so they don’t have to wait on hold.
  • Deflect calls by allowing callers to switch from a live call to a text message.
  • Greet customers and collect key customer details upfront.

If your company chooses an IVR system, it will serve as the first point of contact for customers who need support.

How does IVR work?

IVR deflects inbound calls by greeting callers and offering them a menu of options. The caller can make their selection using the keypad on their phone. Depending on their selection, the IVR system may prompt the caller to enter additional information, such as an account number or PIN.

How IVR works

The standard IVR process works like this:

  1. A customer calls the customer support team.
  2. The IVR system greets the customer with a set of options, such as which department they want to reach.
  3. The customer chooses the relevant option.
  4. The IVR provides responses to simple questions, routes the caller to the appropriate agent or enables the caller to schedule a callback or move to another channel.

An advanced IVR may also have features like:

  • After-hours call forwarding
  • Overflow
  • Call recording
  • Mute and hold
  • Warm transfer
  • Customisable greetings
  • Conferencing

Common IVR menu options

The IVR menu can be as slim or robust as your organisation requires. However, some popular menu options include:

  • Type of service: determine if a caller needs help with billing, shipping or support issues.
  • Text back: switch calls to text.
  • Language: allow callers to choose their preferred language.
  • Sales: immediately route callers who are interested in purchasing your product to a sales representative.

AI can lend a hand

IVR is just one technology you can use to field inbound communications. Explore other ways to free up your team’s time so they can focus on issues that require expert solutions.

6 benefits of using an IVR system for customer support

6 benefits of using an IVR system, peace signs

Customers have increasingly high standards for support. According to the Zendesk Customer Experience Trends Report, 65% of consumers expect customer service to be faster than it was five years ago. Call centres can use an IVR phone system to meet buyers’ evolving needs and expectations.

IVRs can help customers resolve their issues swiftly – no matter when they reach out for support – and ensure they’re connected to the appropriate department the first time around. They also help agents prioritise calls, streamlining the support process.

1. Resolve issues faster

Many consumers say that quick resolutions are the most important part of good customer service. Fortunately, IVRs allow you assist callers faster. IVRs don’t just save time for your customers – they save your staff time, too. By deflecting and fielding simple questions, these systems give agents more time to solve complex or pressing issues.

If you’re experiencing an exceptionally high call volume, you can set up your IVR system to:

  • Split calls into different groups or categories
  • Assign agents to each group
  • Setup pre-recorded answers to FAQs
  • Schedule a callback if no support agents are available
  • Use intelligent routing to organise tickets by priority

As a result, IVRs reduce hold times and increase issue-resolution speed. It’s a win-win for everyone involved.

2. Increase first-contact resolutions

Customers want their questions answered quickly without jumping through too many hoops: 68% of customers say they get annoyed when their call transfers between departments.

IVR helps by routing calls to the appropriate agent right off the bat. This can also improve the first-contact resolution (FCR) rate – the percentage of customer tickets that are resolved by agents on the first attempt.

Tip: set up relevant IVR menu options so customers are routed to the department with the training, knowledge and tools needed to resolve their issue.

3. Provide 24/7 support

Round-the-clock support is a key aspect of a good customer service experience. But not every business has the ability to offer live support 24/7. That’s where an IVR system comes in.

With IVR, you can use pre-recorded responses to answer frequently asked questions without tying up your support agents or needing to increase headcount. This comes in handy during:

  • Holidays
  • Emergencies
  • Peak hours
  • Product launches

By providing 24/7 support, you can make sure your customers are informed and less frustrated when agents aren’t available.

Tip: create IVR scripts in advance for anticipated questions related to holiday closures, hours of operation, etc. This will ensure they’re ready to implement at a moment’s notice.

4. Triage calls

There are many ways to prioritise calls and your business should determine which calls to push to the front of the queue. According to our CX Trends Report, 61% of consumers will stop buying from a company after a single bad customer service interaction, so you simply can’t afford to make high-value customers wait.

Some of the top benefits of an IVR include the ability to:

  • Prioritise calls from VIPs
  • Route callers to a specific group based on their area codes
  • View tickets for callers waiting in the queue
  • Route calls based on priority rather than the time of arrival
  • Run triggers to change the call priority or destination group when a customer enters the queue
  • Send callers to the first available agent until the maximum queue waiting time is met

Here’s an example – imagine two customers call your support number at the same time.

Customer #1:

  • Is patiently waiting for help integrating a data analysis app
  • Subscribes to your lowest-tier subscription – valued at £20 per month – and has been with your company for a couple of weeks
  • Behaves calmly and doesn’t seem to be in a rush

Customer #2:

  • Is a business owner who’s threatening to cancel their subscription
  • Is highly aggravated because their software crashed and they’re losing thousands of dollars every hour they can’t access the system
  • Has been with your company for eight years and their buy-in has grown to approximately £6,000 monthly

Who would you help first? Customer #2, right? That’s because their needs, history and behaviour align more closely with the established markers that determine the urgency of a call.

Customer service representatives need a system for prioritising calls based on potential impact to ensure high-value customers feel heard and cared for when an issue arises.

When using an IVR system, you can also win over displeased customers by:

  • Tagging VIP customers so they’re instantly placed at the beginning of the queue and assigned to the most capable agent
  • Using call history to determine how quickly you should route a call to an agent
  • Relying on automated responses whenever possible so callers can avoid inconvenient wait times

5. Verify customers so agents don’t have to

Contact centres that automate customer support generally have faster response times and higher customer satisfaction scores.

For example, if a customer calls your support team regarding an issue with their online order, your IVR phone system can automatically capture customer details and the reason for their call. The agent who assists them receives all this relevant context – meaning the customer doesn’t have to repeat themselves – and can offer a solution more quickly.

Tip: If a caller uses your IVR software to request a text back, you can also use contextual information to select a relevant knowledge base article that answers their question.

6. Decrease incoming call volume with an effective IVR menu

IVR menu options

Create a custom IVR menu to reduce incoming call volume and save agents time.

Voicemail or callback: prompt callers to leave a message or receive a callback when dealing with long wait times.

Number or department: forward calls to a specific phone number when an issue requires specialist knowledge.

Secondary IVR menu: use a recorded message to direct callers to your website for information or offer more options.

Text back: switch a phone call to a text message to reduce inbound calls and provide digital resources.

Answer FAQs: answer frequently asked questions automatically with pre-recorded solutions.

IVR menu options

Agents can also use advanced call transcription and quality assurance capabilities to offer better support. Call centre software can not only track customer conversations in real time but also gather crucial insights that you can use to improve internal call centre processes.

For example, you can use the reports Zendesk compiles to monitor agent productivity and general effectiveness. This data can help you improve your customer service and the overall customer experience.

Here are some of the key metrics you can monitor when you utilise IVR:

  • Quality scores: see how your team is performing
  • Satisfaction rates: ensure customers are consistently satisfied
  • Knowledge base: learn which articles customers read most often and leverage that information to help decrease call volume

IVR software app integrations

Use a multi-level IVR system to greet callers with an automated message, gather information from callers upfront, inform them of their options using an IVR menu and route calls based on their inputs.

Be sure to choose an IVR solution that integrates with your customer service software so you can track and manage phone conversations alongside your other support channels.

You can also install apps and integrations so your IVR can go beyond simple use cases and help your team process payments, track shipping and more.

Top-rated call centre integrations

Here are a few of the top-rated integrations available in the Zendesk Marketplace.

  • Dialpad: make calls and send messages in Zendesk.
  • Quickie PLUS: organise and bookmark tickets for faster agent access.
  • Harvestr: create a customer feedback loop to understand client needs and create new products.
  • FlowEQ: build decision trees and automations to help agents resolve tickets quicker.
  • CloudAgent: gain access to the necessary tools to streamline inbound and outbound call centre operations.

AI can lend a hand

IVR is just one technology you can use to field inbound communications. Explore other ways to free up your team’s time so they can focus on issues that require expert solutions.

AI can lend a hand

IVR is just one technology you can use to field inbound communications. Explore other ways to free up your team’s time so they can focus on issues that require expert solutions.

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