Interactive Voice Response (IVR) systems have long been a key component of call centers, contact centers, and customer service operations. But as new technologies emerge, the world is changing, and so are customer expectations. Today, let’s dive into IVR systems: what they are, how they impact the customer experience, and whether artificial intelligence could soon replace IVR.
What is an IVR (Interactive Voice Response) System?
An Interactive Voice Response (IVR) system is an automated phone system that allows users to communicate with a computer system by voice or phone keypad. When you contact a company’s hotline and hear a recorded voice prompting you to dial a number for a specific choice, you are using an IVR system. This system provides a branched menu of pre-recorded responses intended to assist callers through a variety of options and send them to the proper resources or most appropriate call center agent.
A Brief History of IVR
While it’s challenging to pinpoint the exact date when IVR (Interactive Voice Response) was invented, as the technology evolved gradually, several key milestones highlight its development:
1930s
At Bell Labs, the Vocoder machine was developed to synthesize sounds resembling the human voice. This invention marked the first step toward creating voice interfaces.
1960s
With advancements in computer technology, it became possible to use synthesized speech to interact with users, laying the groundwork for interactive communication systems.
1970s
The first commercial IVR self-service systems emerged, allowing customers to access information and perform simple tasks independently.
1980s
IVR systems saw widespread adoption in banking, telecommunications, and other industries, where they became integral for customer service and operational efficiency.
2000s
With advancements in digital technology and internet connectivity, IVR systems in the 2000s integrated with CRM software and other databases, enabling a more personalized interaction with customers. This decade also saw the emergence of speech recognition, allowing customers to interact with IVR using natural voice commands instead of pressing buttons.
Key Functions and Benefits of Interactive Voice Response (IVR) Systems
The main functions of IVR systems include:
- automated customer service
- answering frequently asked questions (FAQs)
- providing information on products and services
- routing calls to appropriate agents or departments
- processing payments
- recording messages.
These functions offer companies a range of benefits, the primary one being reduced customer service costs. Through IVR menus, businesses can also collect data on inquiry reasons, providing a foundation for analytics and product or service improvements.
For customers, the most notable advantage of IVR is self-service options and 24/7 access to certain information. It all sounds ideal, but…
How IVR Systems Impact Customer Experience
In preparing an answer to this question, I reviewed a wide range of blogs, articles, and forums on the topic. Looking at the technology strictly from a customer’s perspective, the conclusion does not favor IVR menus.
Why Do People Dislike Interactive Voice Response Systems?
I’m sure you can answer this yourself, recalling your last experience with an IVR. For me, the answer was best summed up in one headline from a popular industry blog:
Forty-three things that can go wrong with an IVR system—imagine that! This means there are at least 43 factors that can negatively impact customer experience. It’s no surprise that over 60% of callers immediately press zero, like lab rats hoping for a reward.
“I want to speak a real person!!!”
Exactly. Today, IVR systems often either cannot resolve customer issues or require excessive time or effort (remember the CES? If not, I highly recommend reading the article linked).
In an age of the internet and omnichannel options, there are now many alternatives to IVR for self-service. FAQs are available on every website, and any information about products, services, or order status can be obtained through chat bots. All I want from an IVR system is to get connected to the right agent as quickly as possible.
Related Reading: Advantages of AI chatbots for contact centers
Conflict of Interests
A conflict of interest arises: on one hand, companies aiming to reduce costs through service automation, and on the other, customers demanding hyper-personalized service, who are no longer satisfied with repeatedly listening to generic IVR menu options.
Artificial Intelligence to the Rescue
With the advent of Artificial Intelligence systems, service automation has reached a new level. The contact center industry, always highly sensitive to technology, was one of the first to integrate new technologies into customer service processes. The integration of AI into IVR systems was only a matter of time.
What is AI-based IVR?
AI-based IVR is an interactive voice response system that handles customer inquiries more naturally and effectively thanks to natural language processing (NLP) and advanced voice analytics. AI-IVR can better understand, interpret, and respond to requests, coming closer to the experience of a natural conversation with a human.
AI-powered IVR: How Does It Work?
An AI-based IVR system doesn’t prompt you to press phone menu buttons; instead, it “listens” to your request. Here’s a breakdown of the process:
- Speech Recognition Software converts incoming analog signals into a digital format.
- Voice Analysis breaks down your voice into individual sounds (phonemes).
- The program analyzes each sound fragment and matches it to words in its database, finding the best match.
- Once AI interprets your request, the system searches its database for the correct response or information.
- The system provides a personalized answer to your query.
These intelligent IVRs also leverage machine learning, allowing gradual improvement. Each interaction helps it “learn” common questions and answers, becoming more efficient over time.
Will AI-Powered IVRs Replace Traditional IVR Systems?
Both outsourced and in-house contact centers are optimistic about AI-driven tools. However, these solutions are costlier than traditional IVRs with pre-recorded responses. Implementing intelligent voice self-service systems is beneficial for large businesses with high call volumes, especially in sectors where customer experience quality is paramount, like banking, insurance, and e-commerce.
Still, certain functions may remain with traditional IVR systems, such as call routing to automatic call distribution (ACD) systems and feedback collection (e.g., NPS surveys and satisfaction ratings). These tasks don’t require complex language comprehension and can be efficiently managed by conventional IVRs.
You might find this interesting: Will AI Replace Call Center Agents?
Conclusions
Modern customers expect quick, personalized responses to their inquiries. To stay competitive, companies will need to integrate AI-based IVR systems into their contact centers. This will enable a more natural and intuitive interaction with customers while automating a large portion of routine tasks.
Despite advancements in new technologies, traditional IVR systems will continue to be used. However, companies will need to optimize their IVR menu settings and develop more effective usage strategies.
As a leading developer of contact center software, Global Bilgi offers comprehensive IVR solutions. If you need services for IVR menu setup, visual IVR creation, outbound IVR services, or IVR integration with CRM systems, contact us through the feedback form. We will help you unlock the full potential of interactive voice response (IVR) systems to create a multichannel, personalized service experience.
