What is IVR and How Should Businesses Use it?

Small businesses are always searching for ways to optimize their team members' time and your business's money. IVR systems are a great, affordable way to streamline your organization's call processes for both customers and employees. 

There are so many IVR service options available, but it can be rather tricky to know where to start the adoption process and which options are the best for your company. 

Below, we will guide you through all things IVR, from the definition, cover the basics, features you should know about and consider, and more. We will help you make an informed decision regarding IVR for your business.

What is IVR?

Interactive Voice Response or IVR is a technology used in today's top Voice-over-Internet-Protocol (VoIP) solutions that collects information from callers to greet them, guide them, and help them solve specific problems or send them to the correct team member or department. Some IVR services are more basic and may just include automated voicemail messages that can direct calls. In contrast, others offer website components, CRM integrations, bill processing options, and more robust features.

If you have ever called a company and heard "Press one for English," then you have already interacted with an IVR menu. IVR solutions properly utilize information collected from customers to direct calls, verify identity, provide additional details, handle specific requests that do not require a human agent, and more. They can be an excellent solution for businesses looking to save team member (and customer) time, enhance productivity, and streamline business processes.

How Does IVR Work?

IVR should be the first point of contact when calling a company's contact center. The IVR menu will often greet the caller with a company-approved pre-recorded message and then provide several options for where the call can be directed. For example, if the caller is requesting assistance for a sales inquiry, they can simply say "Sales" or press 1, "Service" or press 2, and so on. 

IVR solutions offer multi-level menus to collect as much information as necessary to help the customer. Sub-menus are also commonly utilized to gain additional information on specific products or services your customer is calling about. This way, your IVR can automatically transfer the caller to the particular team that can best assist with the product or service.

IVR is commonly used synchronously with Automatic Call Distribution (ACD) solutions. ACDs use the information collected from the IVR, along with your company's database, to place callers in a call queue (when needed) and can prioritize the call before sending it to the next available agent best suited to help the problem at hand. Together, these tools can reduce wait times and increase the number of customer calls taken per day.

Should I Use an IVR System?

Contact centers are one of the most common uses of IVR systems. However, businesses that are constantly experiencing high volumes of calls would highly benefit from an IVR. Companies utilizing IVR systems most likely cannot imagine a time before IVR adoption and trying to navigate through peak call times without it. IVR is a great investment for businesses wanting to reduce customer wait times, streamline services, offload tedious and time-consuming tasks onto the IVR so their human agents can focus more on other, higher-level tasks.

Today, call volumes have less and less to do with whether or not you should have an IVR or not. In the 2020 Zendesk Customer Experience Trends Report, it was found that 68% of customers are significantly annoyed when they are transferred between departments. The report also found that over 50% of study participants said they would switch to another company after one bad experience. IVR automatically routes calls to the correct person on the first try, so representatives don't have to transfer calls multiple times and slow down support for the customer.

Common Reasons to Use IVR

Your choice of IVR system should be based on your company's call volume and how you want to use IVR within your business. Below are a few of the most common uses for IVR that may help you decide which system to implement.

• Customer Service: Quick-growing businesses often do not have enough customer service or support team members. Since IVR systems can be set up and deployed relatively quickly and are easy to scale, they can significantly minimize wait times for customers. In addition, they alleviate the immediate need to hire additional team members to field simple questions and direct calls. For general customer service inquiries, an inbound IVR solution will usually suffice, but if you expect to require an outbound IVR sometime in the future, it may be better to choose an IVR provider that offers various services; this will help you in the long run!
• Payment processing and collections: Providing automatic payment transactions and collections is a highly desired component of IVR. In addition to outbound collections calls, IVR systems make it easier than ever for customers to call businesses, obtain their billing information or account balances, and then make payments independently. It should be noted that IVR solutions that offer automatic payment processing are usually a little more expensive than those that don't. However, the cost is still lower for many businesses than hiring additional human agents to process payments.
• Marketing and communication: Outbound IVR can be utilized for various marketing purposes. For example, alerting potential customers about a new sale, new product, or upcoming promotions, drawing back existing customers, sending customer reminders for appointments, updates, and more. If marketing is a considerable influence on the adoption of an IVR system, then be sure to search for service providers that specialize in call-center IVR, as well as predictive dialing.

IVR Features to Consider for Your Business

• Cloud or On-Premise: A hosted IVR system means that the IVR system is housed in the cloud. The responsibility for maintaining and managing telecommunications and servers falls on the IVR provider. On the other hand, on-premise IVR integrates with an organization's existing communication system and platforms, so the maintenance of those systems falls on the business itself. Today, most providers offer cloud-based IVR, and unless your company has particular reasons for maintaining the system yourself, a hosted service is typically the best choice.
• Inbound and/or outbound: The two basic types of IVR systems are inbound and outbound. Inbound IVR solutions handle incoming call volume, while outbound IVR make calls on either a total or partially automated dialing basis. Many vendors offer both inbound and outbound IVR services, but inbound-only tends to be less expensive than those that allow for outbound calling. Before you shop around, make sure you're confident on which type of IVR functionality your business could benefit most from.
• Self-service: When an IVR vendor offers "self-service" IVR, it typically means the product/service is intended for primary use for inbound calling. Many providers provide comprehensive IVR services and separate, cheaper self-service IVR options. If your business only needs simple call routing or bill paying, and you don't need the outbound calling function, self-service is probably the best option.
• Dashboard and Analytics: Before choosing and signing with an IVR service provider, be sure to ask for a demo of their software system. Assess their dashboard and ask what options are available for viewing metrics and pulling specific reports. Having a dashboard demo should help you determine how easy it will be to utilize your IVR system and make changes when necessary. Additionally, consider any particular data reports that may be useful for your business and ask the provider about them before making your final decision.

Want to learn more about IVR and other communication tools for customer service? Check out our guide to VoIP for contact centers!