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by Daniel Harris,
Market Research Associate
Last Updated: October 20, 2016

Interactive voice response (IVR) systems are a foundational technology for inbound contact centers. They allow callers to complete tasks over the phone, either via voice response or numerical keypad input.

IVR software can dramatically streamline the performance of a contact center—particularly when used in conjunction with customer relationship management (CRM) software. But it isn’t the best fit for all business models. IVR systems offer complex, specialized functionality, and are packaged in different ways by different vendors.

That’s why we’ve written this guide to help you better understand which systems will work best for your needs. In it, we’ll cover the following topics:

What Is IVR Software?
Benefits of Using IVR Software
Common Functionality
IVR Systems vs. Auto-Attendants
Best-of-Breed Systems vs. Contact Center Suites

What Is IVR Software?

IVR software accomplishes two major goals:

  1. It helps callers help themselves through “self-service.” These systems provide automated menus that allow callers to complete tasks without assistance from support agents.
  2. In conjunction with an automated call distribution (ACD) system, an IVR system helps route callers to the right support agent when their needs can’t be met by self-service options. (An ACD system parks incoming calls in a queue until agents are available to answer, and then distributes calls to agents using rules that factor in agent skills, performance metrics etc.) For instance, if a caller says or enters the numerical option for “billing” using the IVR system, they’ll be routed into the call queue (controlled by the ACD system) for an agent in that department.

IVR systems follow a branching menu structure known as a “menu tree.” The top-level menu may include options for, say, “support” and “billing.” If the caller selects “support,” they’ll be funneled into a submenu that contains numerous self-service options for support issues (e.g., instructions on how to reset a device). If these options don’t meet the caller’s needs, the caller will be routed to a support agent.

Branching Prompts in an IVR Menu Tree

Branching Prompts in an IVR Menu Tree

As mentioned, the IVR menu tree also assists in call routing through integration with ACD systems, which use callers’ spoken or touch-tone responses as they navigate the IVR system to route calls to the right agent.

Benefits of Using IVR Software

Customers may not know what the term “IVR” means—but they do know what they like and don’t like, and many perceive IVR technology as annoying and difficult to use. So why does your call center need an IVR system in the first place?

The answer is that IVR can cut down on the number of calls agents have to handle by enabling callers to resolve certain issues through self-service options. By reducing the overall number of calls your contact center handles, you can slash your top expense: personnel.

Moreover, even though consumers tend to dislike IVR technology, they probably aren’t thinking through the alternative: a drawn-out interaction with a support agent. When we interviewed call center benchmarking expert Bruce Belfiore about IVR design best practices, he noted that some consumers (particularly younger callers) prefer to avoid interacting with a support agent whenever possible. These callers actually prefer IVR and other self-service technologies.

Additionally, even if an IVR system isn’t able to fully meet a caller’s needs, it can still automate the initial steps of collecting information and routing the caller to the right group of agents. Without an IVR, these steps would need to be handled by human workers—increasing the number of transfers (and, most likely, the caller’s level of frustration) before getting the call to the right agent.

Simply think back to the times you’ve been bounced around like a ping-pong ball between multiple contact center agents who couldn’t answer your question, and you’ll quickly realize the value of IVR.

Common Functionality

The following list of IVR capabilities includes standard offerings of most systems. This list also includes more advanced capabilities offered by niche vendors or enabled via integrations with other contact center applications:

Visual IVR designer A drag-and-drop graphical user interface for designing IVR call flows (the branching menus through which callers pass as they select options for support, sales, billing etc.).
Automated speech recognition (ASR) Allows callers to speak responses instead of using touch-tone input. Frequently requires the use of third-party ASR software, though many IVR vendors partner with ASR vendors to deliver a complete solution. Some systems allow for voiceprint authentication (comparing audio data from a call with a model of the caller’s voice) to verify caller identity.
Text-to-speech (TTS)/common data speaker Text-to-speech enables the system to read information from databases out loud for customers (payment history, account balances etc.), as opposed to simply playing recorded prompts. Also assists in the development of IVR menu prompts. A common data speaker is a more basic capability that only allows highly structured data, such as dates and numbers, to be converted into speech.
Multilingual support Enables the IVR menu structure to play prompts and recognize spoken responses in multiple languages.
Data retrieval from Web server Allows customer data to be retrieved from a Web server in order to verify response input (e.g., checking a spoken account number against a stored account number) and otherwise assist agents.
Computer telephony integration (CTI) Data collected from the IVR system (e.g., a customer’s name) is displayed on an agent’s screen to help the agent better assist the caller.
ACD integration Data collected from the IVR is used to prioritize calls within queues and to distribute calls to various agent skill groups (if the ACD system offers skills-based routing). Users can also enable options such as hold music and estimated wait times to keep callers on the line.
Customer satisfaction surveys IVR surveys can collect voice or touch-tone responses from callers about their levels of satisfaction with the agent or the IVR system itself. These responses are fed into contact center reporting tools for visibility into key performance indicators.
Outbound IVR/notification system Outbound notifications such as surveys, appointment reminders and account alerts can be delivered to customers via voice, email, fax, SMS text etc. Voice notifications include IVR self-service options that can help the caller resolve the issue (e.g., pay an unpaid bill).
Visual IVR Allows customers to navigate a visual representation of an IVR menu on a website or within a native app running on a desktop, laptop or smartphone. This is a new technology many vendors don’t yet offer, though a handful of niche vendors specialize in adding visual IVR capabilities to solutions from major contact center vendors.

Visual IVR designer in Five9

IVR Systems vs. Auto Attendants

Businesses frequently think they need an IVR system when they actually only need an auto attendant. IVR systems are sophisticated solutions that are offered on a stand-alone basis or as components of integrated contact center suites. Auto attendants, on the other hand, are standard components of office phone systems.

The basic difference between an auto attendant and an IVR system is: An auto attendant merely routes callers to extensions in a business’s directory, whereas an IVR provides callers with automated self-service options. Auto attendants also tend to lack advanced features such as speech recognition. Nearly every office with a phone system uses some kind of auto attendant, but in most cases, only contact centers use IVR systems.

You can consult our guide to auto attendants for more information on what they do and how they differ from IVRs.

Best-of-Breed Systems vs. Contact Center Suites

Vendors offer IVR systems two different ways: as “best-of-breed” systems sold on a stand-alone basis, or packaged within integrated suites of contact center applications.

Stand-alone IVR solutions are designed to be integrated with systems businesses have already deployed, such as:

By opting for a stand-alone IVR, organizations can avoid replacing the above systems, which frequently represent significant expenditures. PBX integrations allow IVR data to be used in call routing and enable call recording, among other capabilities.

Integrating an IVR and a standard business phone system can provide benefits, such as improved call routing. However, IVR systems usually need to be integrated with a suite of dedicated contact center applications in order to maximize those positive results.

In a contact center environment, data collected by the IVR can be pushed to agents’ computer screens or fed into reporting tools. The IVR integrates with the ACD system to provide sophisticated call routing. Finally, customers who don’t want to interact via voice have other options with a multi-channel contact center solution.

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