Hosted IVR: How it Works, Benefits, and Top Providers

Written by

Tyler Webb

SMB Cloud VoIP Research Analyst

Tyler Webb is a Content Writer and Editor specializing in Cloud VoIP for two years. He has researched, written, and contributed to over 100 articles within the business telecommunications space.

April 24, 2023

Hosted IVR: How it Works, Benefits, and Top Providers

Today's customers value a personalized experience. They want to know that the brands they buy from are ready to listen to their immediate needs and provide them with answers, quickly. A call center’s hosted IVR system provides this experience.

IVR systems help your customers contact you during your business hours, ask for directions, book reservations, or pay a bill.

No matter what type of business you run, you should consider using self-service IVR to communicate with your customers. Today, we'll outline what hosted IVR is, how it works, and why you should add it to your business.

Discover Hosted IVR solutions from top providers

Jump to↓

What is Hosted IVR?
How Does Hosted IVR Work?
The Pros and Cons of Hosted IVR
Does My Business Need Hosted IVR?
Top Hosted IVR Solutions
Hosted IVR Personalizes Customer Service
FAQs

What is Hosted IVR?

Hosted IVR (interactive voice response) is a telephony menu and routing system that provides interactive responses to callers. It helps businesses organize the callers that contact their organization, determining their needs and routing them to the right queue.

IVR SYStem

Through the IVR menu system, the business can direct callers to the right department and the right person within the department as quickly as possible. That way, customers get the answer to their questions with fewer delays, enhancing their interaction with the organization. These systems often integrate with ACD, or automatic call distribution, which helps get callers to the information they need without the need for human input.

IVR platforms are often built into business VoIP systems, unified communications platforms, or call center software. This makes IVR easy for brands to implement, regardless of the type of phone system they use. Many IVR applications also offer IVR customization options, like drag-and-drop call flow designers, allowing each company to utilize the technology for its own goals and customers.

Natural language understanding (NLU) and text-to-speech functionality enable the software system to interact smoothly with the customer, providing the information they need and helping them navigate to the right destination without frustration or repetition. Without IVR, problems such as transferring people to the wrong department or mistakes in directing calls become more common, which can harm the impression of the business.

How Does Hosted IVR Work?

Hosted IVR works by building a routing voice menu that inbound callers use to reach a variety of users, departments, and actions in your phone system. Within your call center (CCaaS) or unified communications (UCaaS) software, you can connect these capabilities via an IVR call-flow designer.

call ivr flow genesys

When callers contact your designated IVR business phone number, they hear a menu with preselected choices to reach the information, user, or action they need. For example, your IVR may give them options to Press 1 for Store Hours or Press 2 for Customer Service. After a customer inputs their selection via keypad or speech recognition, the phone system routes the caller to the right queue, action, or submenu.

Companies typically organize IVR call flows to handle inbound callers’ most common needs. Some IVR options may provide auto attendant self-service–like bill pay, appointment setup, and password retrieval–so customers never need to interact directly with an employee.

Many CCaaS systems integrate hosted IVR with an advanced automated call distribution system (ACD) that uses AI to detect the caller’s needs and route them to the optimal agent. This is called intelligent routing and can navigate callers based on agent skills or availability.

Advanced call center software includes intelligent virtual assistants (IVA) that act as visual or app-based multichannel routing systems. Essentially a mobile IVR system, virtual agents allow customers to connect with agents via not only voice but SMS text or web chat.

What Are the Pros and Cons of Hosted IVR?

Hosted IVR software offers many benefits for businesses and their customers.

Pros

Below, are the pros of hosted IVR:

Reduce Communication Errors

With a computerized system that automatically receives a customer’s input and routes them to the right queue or agent, a company can reduce human routing errors that stem from speech misunderstanding or incorrect input.

This avoids queue overflow and keeps customer wait times as low as possible. Further, it boosts customer experience, improves first-call resolution, and builds stronger relationships with your customers.

Efficient Call Transfers

Automatic transfers route callers to the right agent instantly, saving time compared with manual routing. Agents don’t have to worry about forwarding calls but can instead focus on their call queues, providing more focused and personalized service. This improves agent morale and customer satisfaction.

Omnichannel Routing

Employee Productivity

With the IVR system, companies save time because employees no longer need to act as receptionists who answer the call, learn the caller’s needs, and transfer them. Computerized IVR systems and automations handle services previously performed by humans, such as providing business hours or basic account information.

Since IVR systems and automations are available around the clock, they provide availability that real humans can’t match.

Analyze Call Data

Call center and UCaaS software often integrates with call center analytics systems, making it easier to gather data about your callers and better understand their experiences. Visualize customer journeys within the system and the number of calls that were answered or missed by the employees in each department. Call recording features also help employers better understand the customer care callers receive and collect information about where customers are calling from.

Call recordings and analytics helps businesses build stronger marketing campaigns and improve the level of service that customers receive from the organization.

Cons

Although the benefits are clear for many business owners, hosted IVR solutions have a few drawbacks:

Customers Prefer Live Agents

Some customers do not like the experience of feeling as though they must ‘talk to a machine’ and may prefer live chat vs chatbots or automated IVR. Brands will have to be able to balance these consumer needs with their desire for efficiency. This is why your IVR call flow should include a ‘select 0 to speak with an operator’ option for those who want to skip over the automated menu options.

Menus Are Confusing

There may also be some customers who have trouble successfully using automated menus and lists. For example, some customers may struggle to keep track of all the different menu options or determine what category their precise need fits into. Others may become increasingly frustrated if they find themselves engaging with multiple menus, or if your IVR menu includes mistakes.

Businesses that want to address these shortcomings should focus on creating short, efficient menu options as well as options for reaching an operator at any time.

IVR (interactive voice response) call flow

Constant Upkeep

Make sure you take the necessary time to invest in your system. If you do not, your IVR system may cause problems via poorly organized menus or other inefficiencies that will cancel out IVR’s benefits. Taking the time to research effective IVR menu options, investing in a quality voice recording, and otherwise creating a high-quality IVR system can result in a tremendous difference in the customer experience.

Frustrated Customers

Brands also need to make sure that any potential buyers that contact their organization feel the personalized service that the brand is trying to create. If customers call, feeling ready to buy, but then get directed to endless menu phone trees, they may begin to feel ignored or not prioritized. The IVR system needs to take into account active buyers and be able to direct them to the best sales representatives so they can receive the personal attention they need to complete their purchase.

Does My Business Need Hosted IVR?

To determine if your company needs hosted IVR services, consider your inbound call traffic and how well your current call routing system meets your customers' needs.

Consider also your employees’ efficiency. Think about whether or not your employees waste time answering basic questions and if an IVR system can help them use their time more effectively.

Further, consider the three questions below to determine if hosted IVR will benefit you.

Does your business need a better system to manage call flow?

If your company struggles to effectively and efficiently manage incoming calls, then you may need an IVR. If your employees find themselves regularly wasting time answering mundane phone calls, when they could be completing tasks that would more directly impact the business’s revenue, then self-service may be the solution. Similarly, if the employees find themselves inundated with regular calls and struggling to get the potential customers to the right department, then a computerized call tree may be a great investment.

Do you need to improve inbound call efficiency?

If your callers often struggle to get the answers they need from your employees, then an IVR can help. If callers regularly get transferred multiple times between different departments and feel frustrated by their struggles to reach the people who can actively help them, then having a computerized system that will direct them exactly where they need to go can improve the level of customer care and create a better impression for your brand.

Do you want to enhance your business’ professionalism?

If you also want to take your business to the next level, increasing your appearance of professionalism and the level of service for customers, then an IVR system may be the most cost-effective solution. With an IVR platform, even small companies can make their organizations appear bigger and more developed through multiple lines and mailboxes dedicated to providing customers with a high-quality experience. Rather than have a single employee try to answer all the questions that come in, cloud IVR services make it simple for brands to automatically direct callers to the best-suited employee.

Hosted IVR Personalizes Customer Service

IVR offers personalized experiences for customers throughout their call, connecting them quickly to representatives that can handle their needs.

If you want to help your business grow, you should consider the potential benefits of using IVR or auto attendants. This technology is an essential part of any enterprise VoIP system.

FAQs

Below, we've answered some FAQs related to hosted IVR.

How do I set up my IVR system to maintain a positive user experience?

To create the best possible experience for your customers, imagine your IVR call flow from the caller’s perspective.

Your callers do not want to listen to an extremely long list of menu options and then remember them. Instead, you want to limit your options to about 4-5 at a time. This helps everyone make the selection most applicable to them.

If you end up creating broad categories to meet this limitation, then you can connect certain menu selections to a second tree, or submenu. This will further help customers reach the representative who has the skills and insight to help them the most.

Also, remember that some people might struggle to communicate with your IVR system. To make sure that all customers feel heard, include an option to reach a live agent directly. This can cut down considerably on the frustration that some customers may feel.

How do I avoid frustrating customers calling my business?

You want to make sure that the options you create reflect the experience that you want for your customers. Consider the unique needs of customers calling different departments.

For example, customers contacting the sales department want to feel prioritized because they're about to make a purchase. You want to help these leads reach a live sales representative quickly. Customers thinking about making a purchase do not want to be passed through a computer system like an anonymous caller. Instead, they want to know that their needs and purchasing decisions matter to the company. On the other hand, someone interested in opening hours can just use the computerized system.

Molding the construction of your IVR tree can help you identify the diverse needs of your callers.

What are my options for setting up hosted IVR?

The best way to set up hosted IVR is through a cloud-based phone system, such as a UCaaS platform or call center software.

UCaaS and CCaaS providers typically require a monthly subscription service, which includes the phone system, multiple communication channels, and a suite of advanced features–including IVR.

The provider handles the software installation and maintenance in return for a fee. That way, the company managing the IVR will take care of the system and any problems that may happen.

Tyler Webb

Tyler Webb is a Content Writer and Editor specializing in Cloud VoIP for two years. He has researched, written, and contributed to over 100 articles within the business telecommunications space. Covering topics including UCaaS, contact centers,...