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What is IVR (Interactive Voice Response)? Meaning and Benefits of an IVR System | TRE Group

What is IVR?


Many users still prefer a phone as a way of communication. But when you get too many calls, you have the problem of waiting for too long to get an answer. An automatic phone system is a solution that deals with this problem and also keeps the high quality of the call for a business.

An IVR (Interactive Voice Response) system is an automatic business phone system that interacts with callers through a pre-recorded voice assistant and allows them to choose and make actions via voice commands or the keypad.

It is a great tool for call routing. You don’t have to talk to the caller directly to send them to the right department. The system does it all for you. 

Most likely you’ve already had experience with IVR when you called a business number and a voice assistant offered you different commands.

A key advantage of an IVR system is that it can be used without any help from a live operator. It eliminates the need for having a big team of qualified agents to do the job and keeps staffing costs to a minimum.

 What is IVR used for?

Statistics show that a lot of customers seek to solve their issues themselves:

  • 69% of the responders said that they wanted to resolve issues themselves without needing human intervention.
  • 63% would start by searching for solutions within a business’s digital channels before deciding to call its customer support hotline. 

Examples of processes where you don’t have to contact a hotline:

  • Office call routing
  • Inquiring about account balance
  • Accessing account information
  • Seeing PIN numbers or changing passwords
  • Looking up information (product price, working hours, etc.)
  • Filling out lead forms and surveys
  • Making small payments or transferring funds

That all simplifies the process for both sides: a caller does not have to spend a lot of time explaining a problem to an operator, and businesses don’t have to hire a large number of employees to redirect calls to qualified agents.

How Does IVR Work?

Interactive Voice Response systems were designed for faster and easier call routing, which provides better experience for the customer and increases productivity for the business.

Here’s an example of how an IVR system works:

  1. Once the system receives a call and a pre-recorded assistant greets the customer, the menu is presented to the caller.   
  2. The client interacts with the IVR phone menu. A variety of options are offered. Most IVR systems operate on DTMF (dual-tone multi-frequency) tones, which are made for manual interaction though the keypad on the user’s phone. Newer IVR systems use speech recognition to accept voice commands, meaning a more comfortable experience for users.
  3. As the customer navigates the menu, some of the problems can be solved through the IVR self-service process. If the question is still open, the system transfers the user to the most qualified agent that has the most experience in that area.

In the past, it worked with PSTN (Public Switched Telephone Network) and VoIP (Voice Over Internet Protocol) systems. This made it possible to leave simple pre-recorded voice responses for customers. 

As technology progresses, IVR systems are improving too. Let’s see what IVR technologies are available nowadays.

There are two main technologies for phone system automatization:

  • Basic. Works using voice recognition and/or Dual-Tone Multi-Frequency signaling (DTMF) technology.
  • Advanced. Based on NLP.

Basic IVR Systems

You’ve probably been offered to press a button to choose a certain option when calling a business number. This is a DTMF system. The caller needs to use the keypad so a signal is sent from the phone to the computer. Most businesses use this system, as it’s simple and doesn’t require much effort.

Advanced IVR Systems

If you want to take your customer service to the next level, you should definitely take a look at an advanced option. It operates on NLP (Natural Language Processing, also known as Natural Voice Recognition) and makes the interaction much more familiar and enjoyable for the customer. 

The system recognizes the speech and understands the caller’s voice commands. This makes it possible to send them to a prepared specialist or solve the problem using voice responses.

The Top 7 Benefits of an IVR System

Moving on to the benefits of using an IVR system. 

The system is beneficial for everyone who is involved in it. The support agent is ready to answer because the system transfers the client to the most qualified operator. The client receives a full answer without waiting too long. The list of advantages keeps going on.

Increase Credibility

Having an advanced business phone system like IVR helps increase clients’ trust. This can be key in a competitive market, especially if the competitors don’t have it.

Setting up an IVR system takes some effort and clients will definitely appreciate it because you will save their time and show that you care about their comfort. People tend to trust companies with innovative technologies more. 

Also, not every company can afford an IVR system, which also makes your business appear more serious in the eyes of a client.

Self-Service Customer Service

As we mentioned earlier, a lot of customers prefer to deal with their questions themselves rather than speaking to someone and wasting time explaining the situation. It`s a great option for someone who experience anxiety or fear of talking to the real agent. You will immediately cover more potential customers.

Waiting to connect to an operator can also be very time consuming, and nobody wants to waste time. Long waiting times can lead to losing customers to the competitors and bad reviews. It doesn’t paint a good picture of a company.

Having an IVR helps with all of that. It provides great customer service in seconds. In addition, it offers clients pre-made solutions to their problems.

Learn More, Save More

Knowing your customers’ needs is half of the success of any business. You can analyze the data to constantly improve the customer service. 

The system collects information about the customer’s question before the call reaches the agent. That way, the agent has more time to prepare the right answer. Meanwhile, the assembled information can be used to analyze your business and make it better.

With IVRs you can prioritize calls based on the caller’s value. When a vip or high-value customer calls, the system will automatically route them to the most qualified agent that can meet their needs. If none of your agents is available at the moment, the system will place the important call in the front of the waiting queue. Your company will never lose a high-value client due to poor customer service or a long answer time.

Continuous Availability 24/7

This is also an advantage because the system allows you to provide service even during off hours or when agents are not available. Not every business has 24/7 customer service, so this can make a huge difference when a client chooses between your company and the other one. 

Moreover, employees working hours can be decreased if desired, and even the number of employees can be reduced. An IVR system is beneficial for the operators too.

Improves Agent Performance and Morale

IVR doesn’t replace an agent. It only helps them to work productively and be more organized. It simplifies the communication and explanation process and gets rid of confusion arising from questions employees are not qualified for.

The agent’s performance will be increased because their responsibilities will be properly assigned. Every operator will get a call with only those questions that they are qualified to answer.

Reduces Manual Error

IVRs work strictly by script. If it’s set up well, the system technically can’t make any errors, unlike phone agents, whose performance is far from perfect and depends on the human factor, especially if they are overwhelmed with calls.

The system can be your guarantee of well-coordinated customer service in your company. All callers will always be routed to the right department.

Helps You Project a More Professional Image

Even if you’re a smaller company, having an IVR phone system can make it appear professional and trustworthy in the eyes of the customer. If they are satisfied with the experience, they will most likely start (or continue) using your company services.

Either way, with all of the benefits, an IVR phone system is definitely worth investing in.

Satisfied customers and employees, significant money savings and good reviews will be among the benefits you’ll receive. 

How to Set Up an IVR System

It is important to set up an IVR system correctly, so the client’s navigation is not too complicated. It is also required in order to be an efficient company that doesn’t lose a single client. The system has a lot of benefits, but there are a lot of pitfalls too. That’s why we made these instructions for setting up an IVR and the things you should avoid.

Don’t Create a Complicated IVR Menu

The caller probably has enough questions if they’ve decided to make a call. There’s no need to confuse them even more. Simplify the menu as much as possible. 

Keep everything short, so the customer can get straight to the point of solving a problem or connecting with a live agent. Don’t suggest more than 5-7 options in the menu, the listening of all options will take too long. 

It might also be a great idea to upload an IVR map to your website, so the customers can get all the information about menu options without having to listen to them.

Don’t forget that the menu is the first impression of your company. You can always change the options of the menu if you like. Follow what questions customers tend to ask the live agents the most, maybe they’re worth to be put on the menu.

Empower Callers to Reach a Live Person

Some people are more comfortable with talking to a real person. You should always leave customers this option. Some of the questions will not fit any category from the menu and the help of a live assistant will be needed.

Long Waiting Times are Bad

Nobody likes to wait, especially for an answer on a phone call. You can lose clients if the hold times are too long.

There is a great option that can solve the problem, even if the company is out of available agents at the moment. Create a callback option. The client can hang up, and when one of your agents is available, they will receive a call. 

This saves you from potentially bad feedback and, even worse, lost clients. In fact, a lot of people prefer getting a callback instead of being on hold. This is a win-win option for everyone! 

Move Your Phone System to the Cloud

Make it easy to navigate internally and externally. If you have an on-premises PBX, consider moving it to the cloud to unlock massive new functionality, like an IVR.

Configure Call Routing

There are a variety of different call routing options, so it’s important to configure them all correctly. For example, take a look at the following ones:

  • Direct routing. A customer makes a call and the system offers to choose an agent from a certain department.
  • Self service routing. A client makes a call and is then offered a menu with options that don’t require a connection with an agent. This way, the caller doesn’t have to wait till the available agent answers. 
  • Geographic routing. The system routes the caller depending on their location. This is a necessary option for international businesses.

There are a lot of other different routing options, but now you can see how it plays a big role in customer service.

Integrate IVR with CRM and Different Apps

In the modern world, it’s crucial to keep all important business tools in one place. You can integrate the IVR with other apps that your company uses.

With CRM integration, you can retrieve and collect information about customers more effectively, classifying and unifying the most important.

Continuously Test the IVR

IVR testing can minimize the possible errors and mistakes of the system. You need to constantly analyze, check and update the system. It’s better to have a team that will do this job from both callers and agents sides.

For example, users can go in circles not getting any answer if there is a mistake in the program. Fixing it should be your top priority.

If your customers are not satisfied with a certain question and need to connect to an operator to solve it, simply add the answer to the IVR system.

What is the Purpose of Interactive Voice Response?

IVR is an extremely important feature for any type of business. It serves three key purposes:

  • Improved customer experience. An IVR system provides high-quality assistance for callers. It helps retain clients and promotes your company’s reputation.
  • Better workflow for employees. The system offers greater comfort for agents, as they get only those calls that they are qualified to answer. 
  • Less holding time. An IVR system makes customer service significantly faster, as it decreases the amount of calls that require help of a live agent. The callback feature allows a customer to not hold at all and just wait for the back call at any preferable time.

The system helps significantly improve businesses. Companies can save a lot of money along with delivering better service for their clients.


What is an IVR Number?

An IVR number is a phone number that includes cloud telephony features and assists and routes your customer calls automatically without any manual adjustment. You can manage incoming and outgoing calls through an IVR number and deliver a business message fast and easily.

Does IVR Require Internet?

It depends on the type of IVR system. Simple ones only require a computer that is connected to a phone line through a telephony board. However, advanced systems might require an internet connection and a browser.

What is Smart Interactive Voice Response?

Smart IVR is an Interactive Voice Response system that adapts to callers’ responses in real time. It is very similar to a natural conversation and more comfortable for a caller. This option suits big companies that have very busy call centers.

Who uses IVR?

Any company that is involved with making calls or providing customer service though them is recommended to use an IVR phone system. Depending on how big your company is, there are different options to fit your business needs.

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