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Interactive Voice Response

Learn about interactive voice response, which integrates computer and telephony technology to create an automated system for callers to access information.

What is interactive voice response?

Interactive voice response, or IVR, is an automated telephone system that combines pre-recorded messages or text-to-speech technology with a dual-tone multi-frequency (DTMF) interface to engage callers, allowing them to provide and access information without a live agent.  If the IVR system cannot retrieve the information that the caller is looking for, the programmed menu options can provide assistance in routing callers to the appropriate representative for help. By integrating computer and telephony technologies, IVR software can improve call flow and reduce wait times, leading higher overall customer satisfaction.

Moviefone was one of the most famous and successful uses of IVR technology in the 1990s. Since the internet wasn’t as accessible then as it is today, movie-goers would call in and provide their zip code to get a list of available movie theaters near them with their respective movies and show times. While Moviefone is a product of the past, its underlying technology is still leveraged, primarily within call centers, to provide customer support and reduced call volume for customer service representatives.

Today, IVR software is also evolving. The development of natural language processing technology expands the range of ways that callers can now interact with computers on the phone. Instead of using a touch tone system, more advanced IVR software enables callers to verbalize their needs on the phone. Then, through speech recognition, IVR system can understand and respond to their inquiries in real-time.

IVR systems improve the customer experience by providing a self-service method for customers to access the information that they need without the assistance of customer support. It also reduces the call volume for contact centers, lowering wait times and operational costs for businesses.

How interactive voice response works

Interactive voice response phone system typically consists of the following components:

  1. A TCP/IP network to provide internet and intranet connectivity.
  2. Databases to supply IVR applications with relevant data
  3. A web/application server where the IVR software applications will live. This server can host multiple applications, which are all written in VoiceXML. For example, there could be applications for contact centers, outgoing sales calls and speech-to-text transcription.

From here, one of three types of IVR systems is typically constructed.

  • Touch-tone replacement: This system prompts callers to use a touch-tone keypad selection to access information. For example, a pre-recorded message may say, “Press one for store hour information,” and the caller would respond with “one.”
  • Directed dialogue: This type of IVR provides specific verbal prompts to callers depending on their inquiry. For example, the recording may ask, “Are you looking for store hours or location information?” The caller may respond with “store hours.”
  • Natural language: This advanced IVR system uses speech recognition to better understand user requests. For example, the system prompt may ask, “what information are you looking for today?” and the caller may reply with “I’m looking for store hour information” or other similar phrases.

Benefits of interactive voice response

IVR technology offers competitive advantages to businesses and advances their automation efforts. Some key benefits include:

  • Efficient call routing: After obtaining relevant information from a given caller, IVR solutions route calls to the appropriate call-center agent, reducing wait times and increasing first contact resolutions.
  • Lower operational costs: IVR systems are incredibly cost-effective. They not only reduce high call volumes for customer service representatives, but they can extend access to information during off-peak hours of the day, such as nights, weekends, and holidays.
  • Error Reduction: When deployed effectively, IVR systems can reduce errors within the customer service process as it does not depend on a human customer service representative to take notes and route incoming calls appropriately.
  • Increased security: Some IVR systems incorporate voice recognition technology to verify the identity of an individual, adding an extra layer of security. This can be helpful for highly sensitive personal information, like social security and phone numbers, checking and savings account information, and lab results from doctor’s appointments.

Challenges of interactive voice response

While interactive voice response can offer benefits to businesses, the technology still has limitations that it needs to resolve and optimize for.

  • Overcomplex IVR menu options: While IVR technology can streamline the call flow within call centers, it can also frustrate callers if the automated messaging system is too complex. Long pre-recorded messages may require callers to wait unnecessarily to select their intended option, resulting in lower customer satisfaction.
  • Long hold times: Despite the advances in technology, long wait times remain a problem on many IVR systems. Callback functionality can alleviate frustration as callers can continue with other tasks in their day until a customer service representative is able to attend to their request.
  • Impersonal communication: When customers are calling a support line, they may already be highly frustrated by a product or service issue. An automated messaging system may exacerbate frustration as a recording does not have the ability to empathize with their current problem.

Poorly deployed IVR systems can lead to high call abandonment rates and negative customer sentiment. Since low customer service satisfaction can harm a brand via negative reviews and public social media complaints, businesses should be thoughtful in their deployment of IVR solutions.

Applications of interactive voice response

IVR solutions have been utilized across a variety of industries, including banking, healthcare, education, and retail. Below we’ll delve more deeply into these use cases:

Healthcare: IVR technology has a number of practical uses within healthcare, such as pre-treatment questionnaires, patient satisfaction surveys, lab and appointment scheduling, post-discharge follow-up, lab results and patient monitoring. This research (link resides outside IBM) also highlights how it can increase overall patient satisfaction by reminding patients to adhere to their medication schedule.

Education: Research (link resides outside IBM) has shown that educational institutions can implement IVR to assist parents in retrieving a status update on their child's performance and attendance in school. Parents can register with the system and then input a username and password to access key information on future calls.

Customer Service: Customer service call centers straddle across multiple industries. These centers are set up to handle a high volume of inbound calls using automated menus and pre-recorded to handle customer queries and complaints.

Finance: IVR can also be leveraged for a variety of tasks within banking and finance. They can provide account information, like account balances and loan application statuses, as well as enable changes to investment portfolios.

Interactive voice response and IBM

IBM Watson® Assistant is a cloud-based AI assistant that solves customer problems the first time. It provides customers with fast, consistent and accurate answers across applications, devices or channels. Using AI, Watson Assistant learns from customer conversations, improving its ability to resolve issues the first time while helping to avoid the frustration of long wait times, tedious searches and unhelpful chatbots.

Watson Assistant optimizes interactions by asking customers for context around their ambiguous statements. This eliminates the frustration of having to continuously rephrase questions, providing a positive customer experience. In addition, Watson Assistant provides customers with an array of options in response to their questions. If it’s unable to resolve a particularly complex customer issue, it can seamlessly pass the customer to a human agent, right in the same channel.

Watson Assistant is designed to plug into your customer service ecosystem, integrating with your platforms and tools, making the customer experience smarter and simpler from start to finish. This makes your customers’ interactions with your business feel more like a meaningful relationship with someone who genuinely cares, and less like a series of random, fragmented conversations with strangers.

IBM also understands that a customer experience isn’t just about the conversation—it’s about protecting sensitive data, too. That’s why we bring world-class security, reliability and compliance expertise to the design of all Watson products. In addition, IBM helps you protect your investment by giving you the flexibility to deploy Watson Assistant on-premises, in the IBM Cloud® or with another cloud provider of your choice using IBM Cloud Pak® for Data.

Take this 5-minute assessment to find out where you can optimize your customer service interactions with AI to increase customer satisfaction, reduce costs and drive revenue.

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