Customer Service Representative (CSR) working with customer from inbound IVR system

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These days, customers do not have time to wait or waste. When a customer calls, they want their inquiries or issues resolved as soon as possible. Many times, it’s nearly impossible to keep up with high call volumes without some help, and that’s where IVR software comes in.

In this article, we’ll answer the question, “What is an interactive voice response system?” And show you why it’s a vital tool for effectively managing phone calls and routine automated processes.

What Is An Interactive Voice Response (IVR) System?

Interactive voice response (IVR) is a telephone technology that interacts with callers and provides automated phone system capabilities. IVR systems often integrate with databases, deliver information, route calls, and automate actions over the phone. It manages inbound calls for customer support teams and enables customers to directly interact with a computer-aided assistant before speaking to a call center agent.

When a client places a call to your call center, the interactive voice response system kicks in. The IVR can collect information about the customer’s inquiries using different menu options while providing pre-recorded messages or dynamically generated audio to guide the conversation. If the caller needs to speak with a human rep, the IVR application automatically routes calls to the appropriate agent.

How Does an IVR System Work?

IVR System Diagram for Customer Service Automation in Call Center

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An IVR system typically works in three ways. It can rely on your telephone’s touch tones, voice, and speech recognition, or it can be AI-driven. Let’s go into each of these methods in detail.

Via DTMF Tones

Telephone touch tones or DTMF times are the core technology for interactive voice response systems. Recall that the IVR system prompts callers to choose numbers corresponding with their preferred menu options. For instance, the caller may press “1” on the keypad to select their preferred language or key in their ID number.

The IVR system relies on this keypad selection to provide relevant responses or directs the caller to the next step. Despite technological advancements, DTMF tones are still the most used part of interactive voice response systems as most people are familiar with them. Other technologies are usually added on as the call continues.

Via Voice Recognition

Voice recognition technology improves the user experience for IVR systems. Instead of going through a repeated series of menu options, the caller can respond to the IVR’s prompt using voice commands to save time.

Via Artificial Intelligence

AI combines accurate speech recognition, advanced natural language processing, and other customer information for better output and a positive customer experience. The AI-based interactive voice response system can provide faster and more relevant responses to customers’ inquiries by skipping the standard menu options.

Benefits of an IVR System


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An IVR System Can Reduce Costs

If you’re looking to cut down operational costs for your business, you should consider adopting IVR solutions. Unlike telephone-based customer service that can cost as much as $12 per contact, an IVR typically takes less than $1 per contact, translating to more than 80% cost savings.

It Can Increase Your Business Inbound Call Capacity

IVR systems help businesses to manage incoming calls in real-time. Instead of linking all callers to live agents, this technology can attend to bulk inquiries and pass important phone calls requiring human-to-human interaction. This reduces wait times for phone calls and boosts productivity.

Allow Clients to Self Serve and Increase Their Customer Satisfaction

Customers stay in control of the conversation, which can create an overall better customer experience. They can use the self-service options to find relevant responses to any questions they have. So, there’s little or no need to wait long hours to resolve an issue.

An IVR System Can Improve Your Conversion Rate

In this case, an IVR system is an effective way to qualify leads and prospects and boost conversions. This technology can interpret a caller’s responses to know if they are ready to convert and automatically link them up with a sales representative or contact center to seal the deal.

Example of an Interactive Voice Response System

“Dear Customer, good afternoon, and thank you for calling Continental Message Solution.

If you want to change your preferred language at any time, press 0.

To schedule an appointment, press 1

For plans and pricing inquiries, press 2

To cancel your plan, press 3

To speak with a live agent, press 4 or stay on the line.”


Innovative businesses continue to leverage automation and IVR technology for cost-effective data-driven communication that improves customer experience. Interactive voice response systems are also useful for telephone surveys and attendance call-off automation.

Ready to learn how interactive voice response systems can work for your business? Please browse our website to see different use cases and learn more about custom IVR services.