IVR Systems Buyer's Guide: Best IVR Solutions for 2024

What is Interactive Voice Response (IVR)?

Interactive Voice Response (IVR) is an automated VoIP phone system feature using pre-configured call menu prompts to collect customer input via touch-tone keypad or spoken responses, either connecting the caller to the best available live agent or resolving the issue without a representative.

IVR, sometimes called a virtual receptionist, enables 24/7/365 customer self-service, improves call center efficiency, and frees up agents by eliminating manual call management.

Single or multi-level IVR auto attendants automate routine business processes like customer data collection and basic customer service requests.

If the caller’s issue requires live agent assistance, IVR ensures customers connect only to fully-prepared, qualified representatives that can review their IVR input before accepting the call.

How IVR Works

IVR works by evaluating customer responses to call menu prompts and then automatically guiding callers through custom call flow paths based on their answers.

The step-by-step IVR call management process is:

Step One: Call Flow Configuration

A call flow is the predetermined path the IVR system guides a call through to connect callers to the most helpful support information or the right agent.

The call flow path begins with a pre-recorded (or text-to-speech generated) greeting that collects the most basic caller information (desired language/agent/department, contact/account information, issue type, etc.)

Based on their responses, callers may be immediately sent to a representative/receive an automated response, or they may be guided through another IVR sub-menu and respond to additional call menu prompts (multi-level IVR).

During the call flow path configuration, admins create and set call routing and call forwarding strategies, set up call queues, voicemail boxes and ring groups, build call forwarding paths, and set business rules.

Step Two: Collecting Customer Input

When a customer places an inbound call to your business, the IVR system automatically plays the greeting and begins collecting customer responses.

Customers can respond to IVR prompts via:

1. Dual-tone multi-frequency (DTMF) touch tone responses (“to continue in English, press 1”)
2. Verbally spoken responses (“to speak to an agent, please say ‘representative’”)

Step Three: Analyzing Customer IVR Input

The IVR system then analyzes customer responses and follows preset call flow paths to route the caller to the ideal destination.

IVR processes DTMF responses using dial tone pitch recognition, and evaluates spoken responses with AI Speech Recognition, Natural Language Processing (NLP), and keyword analysis.

Speech recognition allows IVR telephony to identify key trigger words/phrases, ensuring customers get the most appropriate response.

For example, let’s say the IVR prompt is “Please state the reason for your call” and the customer responds with “I need to access my account balance.”

NLP instantly identifies “account balance” as the key phrase and automatically responds with, “Your available account balance is $1,524.”

Some IVR providers offer more advanced Artificial Intelligence features like customer sentiment analysis (evaluating caller mood) intent analysis (evaluating what the customer wants to get from the call), and machine learning (IVR technology continually analyzes all IVR input and automatically adjusts itself accordingly, essentially getting “smarter” with each call.

Step Four: Automatic Call Distribution

Once the IVR system determines where the call should be sent to, it initiates the Automatic Call Distribution (ACD) process. ACD automatically sends callers to their ideal destination or places them in the correct queues/call flow paths.

ACD eliminates the need for manual call transfers from a live agent.

Step Five: Resolving the Customer Interaction

Once the call is sent to the ideal destination, customers can resolve their issues entirely with automated virtual agents or by speaking to a live representative.

If no agent is available to take the call, the IVR system can be configured to:

• Send the caller back to the main IVR menu
• Forward the call to another call queue, phone number, agent, or call flow path
• Send the call to voicemail
• Disconnect the call
• Let the customer schedule an automated callback

Benefits of IVR

In addition to obvious IVR benefits like a better overall customer experience and increased team productivity, IVR advantages include:

• 24/7 Customer Self-Service: IVR provides on-demand, 24/7/365 customer self-service, allowing callers to reach out on their own schedules instead of being limited to standard business hours.
• More Prepared Live Agents: Agents can review all customer IVR input before accepting the live call, giving them to locate account records and customer interaction history, pull up knowledge base information, review data from integrated CRM tools, and transfer the call to another, more qualified live representative if necessary. IVR platforms enhanced with AI conduct real-time customer sentiment analysis provide automated Agent Assist CTI screen pops from internal wikis
• Increased Call Center+Efficiency: IVR streamlines the customer journey and improves workflows via intelligent routing strategies, remote call forwarding, simultaneous ringing/call blasting, and real-time IVR call path editing to adjust to staffing/call volume fluctuations. IVR also keeps more live agents available to place outbound sales calls and prioritize VIP/high-priority customer service needs–increasing employee engagement and decreasing employee turnover rates
• Stronger Customer Security: Some IVR systems include advanced security features like voice recognition, account passwords, and biometric data to ensure sensitive customer information is protected even in entirely automated interactions  account passwords to ensure sensitive customer information  maybe
• Lower AHT: IVR shortens Average Handle Time (AHT) by eliminating/decreasing customer hold times, giving agents instant access to essential interaction data, and creating a more efficient call queue process with estimated wait times and the option to schedule an automated callback
• Increased FCR: IVR dramatically increases First Call Resolution (FCR) rates by automating the majority of customer service interactions and connecting callers to the most qualified available agent without endless call transfers
• Cost Savings: IVR eliminates the need to hire additional agents, decreases the average cost per call, doesn’t require the purchase of additional on-premises hardware, and is accessible on desktop and mobile devices (as well as compatible VoIP phones.) IVR also boosts customer retention rates, can increase upselling and cross-selling opportunities, and simplifies the expensive, time-consuming refund process to be more cost-effective

Essential IVR Features

The most important IVR features are:

• Custom Greetings: Use text-to-speech or record and upload IVR scripts and menu prompts (some providers offer professional recording services)
• Drag-and-Drop Call Flow Design: Intuitive, easy-to-use call flow design tool with a drag-and-drop interface lets admins create and edit custom business rules and routing strategies, set the maximum number of rings/transfers, set maximum hold/wait times, and add/edit call groups
• Call Forwarding: If an agent doesn’t answer at their primary phone number, call forwarding automatically sends incoming calls to additional agent phone numbers/extensions/devices without disconnecting the caller–ideal for mobile and remote teams
• Call Routing: Choose from a variety of call routing strategies like skills-based routing, time-based routing, priority routing, relationship-based routing, list-based routing, round robin routing, intelligent call routing, language-based routing, and more
• Call Transfer: Manual/automatic cold (immediate) or warm transfers (the first agent gives the new agent essential information about the call before completing the call transfer)
• Call Queueing: If all agents are busy, customers are transferred to call queues and provided with estimated wait times, real-time call queue position updates, hold music, and/or custom announcements until connected to a support team member
• Ring Groups: Custom agent groups (by department, skillset, schedule, etc.) receive inbound calls via sequential ringing (list-based routing) or simultaneous ringing (all phone numbers in the call group ring at the same time, the first agent to answer gets the call.) Ideal for increasing first call resolution rates and eliminating hold times
• Call Scripting/Internal Wikis: Create custom agent call scripts and canned responses and set trigger rules for real-time, in-call Agent Assistance. Create searchable internal wikis for agents–databases containing information about company products/services, policies, escalation matrixes, etc.
• Automated Callbacks: Instead of waiting on hold or in a call queue, customers can schedule an automated callback to receive a call from a qualified representative at their chosen date/time (callbacks are automatically placed in outbound agent call queues)
• CRM Integrations: Live CTI CRM screen pops automatically display integrated CRM data like agent notes, interaction history, order/account information, account value, etc.
• Call Recording+Transcription: On-demand or automatic call recording with pause-resume recording to protect sensitive client data, plus searchable recording transcripts ideal for evaluating call center agent performance and identifying customer service trends
• Outbound IVR: Automatically place outbound calls that play pre-recorded messages (voicemail drop), send alerts/appointment reminders/billing reminders, etc. Ideal for customer surveys, political campaigns, nonprofits, etc.

IVR Best Practices

IVR best practices include:

• Keep call menus short and simple: Avoid lengthy IVR greetings (aim for under 1 minute), directing callers to IVR sub-menus instead. Your initial IVR call menu should only include essential information like language options, business hours/location, and easy-to-follow prompts free from business jargon
• Offer a live agent connection: Always give customers the option to speak to a live human agent at any point during the IVR process (by pressing a button or saying “agent”)
• Review IVR analytics and recordings: Frequently listen to call recordings and generate reports to identify less successful call menu options and roadblocks, popular topics, missed call ratios and customer hangups,  customer journey trends, popular call times, effective routing strategies and call groups, etc.
• Edit call flow paths: Edit and optimize IVR call paths–especially in real-time–according to current call volumes, specific incidents, available number of agents, etc.
• Consider outbound IVR: Outbound IVR is ideal for sales teams, improved lead list penetration, mass customer alerts, automated callbacks, and voicemail drops (when paired with outbound auto dialers)

How to Choose an IVR System

Follow the below step-by-step process to ensure you choose the best available IVR application for your team, customers, and overall business needs.

Step One: Evaluate Business Needs

First, define how an IVR system will help you achieve your short-and-long-term business goals.

Will you use IVR software to:

• Automate entire customer service interactions vs connect callers to live representatives?
• Manage basic customer support interactions (bill payment, account updates, etc.) or use resolve high-level issues?
• Be a feature of a call center software platform or omnichannel contact center solution, or as part of a basic VoIP business phone system?

Step Two: Consider Pricing+Value

Next, set a budget according to the desired number of users and included features.

Consider cost savings associated with annual vs monthly payment options, volume discounts, available add-ons (IVAs, chatbots, etc.), overall scalability, and contract lengths.

Step Three: Review Features+Compatible Integrations

Ensure potential IVR systems offer APIs and integrate with existing hardware and third-party business software (video conferencing applications, team collaboration tools, CRM platforms, VoIP desk phones, etc.) Prioritize “must-have” IVR features and evaluate providers accordingly.

Step Four: Evaluate Provider Security+Support

Look for IVR systems with a 99.9% minimum uptime guarantee, PCI and GDPR compliance, and call encryption. Prioritize providers with 24/7 customer service across multiple customer support channels (voice calling, email, live chat, etc.)

Step Five: Request A Demo

Finally, request a free trial or demo from your top 2-3 providers–a hands-on experience will give you a better understanding of the platform’s ease of use, learning curve, feature quality and overall functionality, reliability, and more.

IVR Use Cases by Industry

IVR has a wide variety of use cases, offering benefits to customers and small businesses in remote and in-person workplaces in industries like:

Popular IVR use cases by industry include:

• Healthcare: Appointment management, billing and health insurance, completing patient forms, vaccination and prescription management, HIPAA-compliant medical record management, healthcare staff scheduling, outbound healthcare alerts
• Banking and Financial: Account balance updates, suspicious activity/fraud alerts, card activation, credit card statements and billing, debt collection, etc.
• Education: Outbound campus alerts, online and in-person enrollment, tuition payment collection/reminders, admissions and application management, faculty scheduling, classroom attendance and grade submissions, test results, etc.
• Software/Tech: automated and live agent IT support and customer service, system-wide server alerts, product registration
• Retail: Order confirmation and tracking, delivery management, sales and promo alerts, customer service, brick-and-mortar shop location/hours, subscription management, refund/return management, etc.
• Service Providers: Appointment management, customer survey and review collection, service renewal or maintenance service reminders, update contact information, field service management, etc.

IVR System FAQs

We’ve answered the top IVR FAQs below.