What is IVR? The ultimate guide

IVR technology can be a game changer for businesses. Discover what an IVR system is and how it creates better customer experiences.

By Cristina Maza, Contributing Writer

Published September 30, 2020
Last updated January 7, 2022

The customer service industry is continually evolving. It seems like every day, there’s a new communication platform your agents should use to stay relevant to your customers and ensure customer satisfaction. Yet there is one thing that remains constant: Consumers still prefer to use the phone over any other customer support channel. (Yes, even Millennials would rather pick up the phone than trawl the Internet for answers.)

But when call volume is high, it can lead to stressed-out agents—not to mention longer wait and resolution times, which can quickly turn any happy customer into a frustrated one. That’s where interactive voice response (IVR) phone systems come in. IVR enables you to offer exceptional over-the-phone customer support in a way that’s both time-efficient and cost-effective.

Read on to learn what IVR is, how it works, and why it creates better customer experiences.

What is IVR?

IVR definition: IVR is an automated phone system that answers incoming calls, gathers information from callers, and directs them to the right agent or self-serve option.

Your IVR system is your company’s first point of contact with customers who pick up the phone and call your support team. It’s in charge of collecting information from customers and getting them to the right place so they can resolve their issue as quickly as possible.

How IVR works

IVR manages inbound calls by obtaining information from a customer—such as their account number or the type of problem they're having—and using it to route their call to the appropriate agent.

IVR systems get that information by prompting callers to select an option using their phone’s touch-tone keypad. You’ve likely experienced this yourself when calling a business and hearing an automated menu (“For billing, press 1; for our business hours, press 2…”).

That’s an IVR menu. Some IVRs use advanced voice recognition technology so callers can say their problem into the phone’s speaker instead of selecting numbers on their keypad.

IVRs can also direct callers to prerecorded answers for common questions such as, “What time do you open today?” Instead of waiting to talk to an agent, customers can quickly find the information they’re looking for from an automated IVR system, allowing agents to focus on more pressing or complex customer issues.

Given this functionality, IVR technology is a cost-effective solution for support teams—you can resolve more issues without needing to make additional hires. Your IVR phone system may also increase customer satisfaction by providing immediate answers to basic, frequently asked questions and freeing up more agents to handle the more urgent, complicated matters.

Benefits of IVR

5 customer support benefits of an IVR system

Customers have increasingly high standards for support. According to the Zendesk Customer Experience Trends Report, 65 percent of consumers expect customer service to be faster than it was five years ago.

That’s why IVR phone systems can be a game-changer. They help customers resolve their issues swiftly without needing to be transferred between departments. IVRs can even provide 24/7 support for common problems and prioritize callers based on their customer status.

  1. Faster resolution time

    For our Zendesk Customer Experience Trends Report, we asked consumers: “Which are the most important aspects of a good customer service experience?” Not surprisingly, a resounding majority said, “I can resolve my issue quickly.”

    IVRs boost issue-resolution speed. They’re like Siri or Alexa, but for buyers. Your customers call in, they tell the system what they want, and voilà—they get the information they need quickly from the best source available.

    If you’re experiencing an exceptionally high call volume, you can set up your IVR system to split calls into different groups or categories and assign different agents to each group. Through this division of labor, IVRs reduce hold times and increase issue-resolution speed.

    You can also use your IVR to set up prerecorded responses to FAQs (such as, “What are your business hours?” and “What’s your business address?”). Customers can get answers to simple questions quickly without ever needing to speak to an agent.

    You can even use an IVR phone system to schedule a call back if your customer needs to speak to an agent and no one is available immediately. Customers are usually relieved to know that their questions will be answered even if they decide not to wait on hold.

    IVRs don’t just save time for customers. By deflecting and fielding simple questions, these systems also give agents more time to solve complex or pressing issues. It’s a win-win for everyone involved.

  2. Higher first-contact resolution

    Customers want their questions answered quickly without having to jump through too many hoops—68 percent of customers say they get annoyed when their call is transferred between departments. IVR helps avoid that scenario by routing calls to the appropriate agent right off the bat. This can also improve the first-contact resolution (FCR) rate, or the number of queries that were satisfactorily answered the first time.

    Say, for example, a customer has questions about a recent invoice they received. All they have to do is press the correct number on their keypad when prompted by the IVR system (e.g., “Press 1 for questions about your bill”).

    To maintain a high FCR rate, adjust your IVR phone system to fit customers’ changing needs. Maybe you’ve released a new product, and customers are calling to learn more about it. With IVR, you can improve FCR by routing those callers to the agents who know the new product the best.

    IVRs automatically route callers to the appropriate agent based on the customer’s issue. Say, for example, a customer has questions about a recent invoice they received. All they have to do is press the right number on their keypad when prompted by the IVR (e.g., “Press 1 for questions about your bill”).

    To maintain a high FCR rate, adjust your IVR system to fit customers’ changing needs. Maybe you’ve released a new product, and customers are calling to learn more about it. With IVR, you can improve FCR by directing those callers to the agents who know the product best.

  3. 24/7 support

    Round-the-clock support is a key aspect of a good customer service experience. But not every business has the employee bandwidth to provide 24/7 service.

    Remember those prerecorded responses to FAQs? Yep, that’s your answer to 24/7 support.

    Here’s an example: Last weekend, your Internet went down. Unfortunately, you live in one of those towns that has only one local Internet provider, and—you guessed it—they’re closed on the weekends. Annoyed and impatient, you called their customer service number anyway. You were immediately directed to a prerecorded message that explained exactly why the Internet was out (a downed pole in your neighborhood). The message even gave a timeline for when the company expected repairs to be completed.

    The goal is to leave the customer feeling as if they always have recourse. Even if you don’t have support agents working 24 hours a day, your customer wants to know that you take their needs seriously, and an IVR can help you make that clear.

    Say a customer needs to cancel their credit card after experiencing a security breach. A 24-hour call center that uses an IVR phone system can let them do that even if there’s no one currently working. Your customer doesn’t have to wait until Monday to cancel their card when they know someone has accessed it without their permission. Knowing that they can count on your business any day at any time reduces the customer’s stress and increases brand loyalty.

    With IVR, 24/7 service is possible, no matter how big or small your company is.

  4. Call prioritization

    Imagine that two customers call your support number at the same time. Customer #1 pays for your lowest-tier subscription, valued at $20 a month. Customer #2 pays for your VIP package, valued at $250 a month. Which one would you help first?

    Customer service representatives need a system for prioritizing calls based on potential impact. After all, 58 percent of consumers stop buying from a company after a single bad customer service interaction. You simply can’t afford to make high-value customers wait.

    With an IVR system, you can assign priorities to specific phone numbers. When a VIP customer calls support, they’ll instantly be placed at the top of the queue and assigned to the most capable agent.

    You can also use call history to determine how quickly you should route a call to an agent. Suppose a customer has already called five times that day needing urgent support. In that case, it’s wise to direct them to an agent as quickly as possible to avoid frustration and improve the overall experience. But if the customer has called once and indicates they’re looking for an answer to a routine question, you can use an automated response for their query.

    With an IVR phone system, you can set up intelligent routing based on criteria that meet your company’s and customer’s needs. This makes your valuable customers feel valued and cared for, increasing their satisfaction.

  5. Omnichannel customer service

    IVR can help support an omnichannel customer experience strategy, too. When businesses take an omnichannel approach to CX, they consolidate information from a variety of support channels—including the phone, live chat, and email—and use it to inform the way they interact with the customer. This enables support teams to reference the customer data they need when they need it, regardless of the channel they’re using.

    For example, imagine a customer calls your support team regarding an issue with their online order. Your IVR phone system captures the customer’s details and the reason for their call, and then routes them to a knowledge base article about tracking, exchanging, and canceling orders. But the article doesn’t help the customer resolve their issue, so they’re connected to a live agent via chat. The agent who assists them receives all the relevant context captured by your IVR—meaning the customer doesn’t have to repeat themselves—and can offer a solution more quickly.

    The ability to move interactions seamlessly from one channel to another is what an omnichannel customer service experience is all about. A customer may choose to reach out via phone, but they might be given the option to receive their response in an email or a messaging app, and context won’t be lost along the way.

    An omnichannel customer strategy allows agents to provide a faster and more personalized experience, leading to happier customers. According to the Zendesk Customer Experience Trends Report, companies that provided omnichannel support had faster response times and higher customer satisfaction scores.

IVR and personalized customer support

While an IVR phone system has many benefits, there can be pitfalls as well. If the questions aren’t specific enough, there are too many questions, or the technology you use has poor voice-recognition capabilities, your customers could get frustrated.

That’s why an interactive voice response system that offers some level of customer self-service and personalization is so important. High-quality voice-recognition technology is also key.

Our phones aren’t going anywhere anytime soon, so for an easy and cost-effective way to respond to more inbound calls, consider implementing an IVR system.

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