Interactive Voice Response Starter Guide: Learn the Basics

Through our research, we selected Nextiva as the best business phone service for most companies in the area of interactive voice response. Nextiva offers savings of up to 30% for new customers.

When you want to serve your customers more efficiently through your call center, using interactive voice response (IVR) technology is a proven option. IVR delivers automation, allowing customers to fix some problems on their own. However, your automated phone system must run smoothly, or customer frustration levels will rise quickly. We’ll discuss the key components of using IVR.

The 13 Best Business Phone Services for Interactive Voice Response

We studied the best business phone services when seeking models that offer interactive voice response capabilities. Your business phone service can help with IVR setup while managing your calls and offering communications services like texting, faxing, and video conferencing.

  • Nextiva — Best for most
  • RingCentral — Best for hybrid or remote work
  • Ooma — Best for small businesses needing an easy setup 
  • 8×8 — Best for affordable, high-security calling services
  • Aircall — Best for brands with a consistently high call volume
  • Avaya — Best for using toll-free numbers
  • Dialpad — Best for gathering real-time analytics
  • Google Voice — Best for brands already using Google products
  • GoTo Connect — Best for getting a wealth of features in a basic plan
  • Grasshopper — Best for solopreneurs and microbusinesses
  • Net2Phone — Best for international business calls
  • Talkroute — Best for small teams on-the-go
  • Webex Calling — Best for SMBs who need enterprise features

How Basic Interactive Voice Response Works

Screenshot of Nextiva's Interaction Voice Response web page.
An IVR system answers calls for the company and automatically routes them to the appropriate department based on customer responses.

Interactive voice response is a call routing system that allows callers to enter responses to automated questions. The system uses the responses to determine which department should field the call or whether a self-service option would help the customer. 

IVR is the technology used to route the calls to the proper destination. Interactive voice response can involve using spoken word responses from the callers, who answer automated questions from the IVR system. It also can involve having callers press buttons on the phone to select menu options. The steps the interactive voice response system follows can include the following.

  • Answering the call: When a customer calls your company’s general phone number, the IVR system answers the call rather than a member of your customer service team. The system generates an automated greeting.
  • Gathering basic information: The IVR system may then ask the customer for some basic information, like what language the system should use or the customer’s account number.
  • Reason for the call: The IVR system asks the caller a series of questions about the reason for the call. Depending on the setup of the system, callers can use oral responses or can touch phone buttons to select an answer from a menu.
  • Routing the call: Once the IVR system determines the reason for the call, it then routes the call. It may automatically forward the call to the correct department. It may also give the caller the ability to solve the problem with self-service options.
  • Automated solution: If the IVR system believes it can help the customer solve the problem, it gives the customer the desired information. This might include providing an account balance or reading a list of the business’s hours. 
  • Sending the call to a human: If the IVR system cannot help the customer solve the problem, it routes the call to the proper customer service department. A team member can then answer the call and speak to the customer.

The IVR system consists of software that manages automated interactions with customers. It merges your company’s actual phone system with technology to manage incoming calls. 

The software pulls information from your company’s database to be able to verify customer information. If the customer provides a date of birth as a means of identification, for example, the IVR must be able to verify that the DOB is accurate.

How Advanced Interactive Voice Response Systems Work

Screenshot of Nextiva's conversational AI web page.
Advanced IVR allows customers to speak to the system in a normal, conversational manner.

Advanced IVR technology can bring a host of benefits to your company’s customer service response team versus using a basic system.

With Nextiva, for example, the software can use Conversational AI to make the automated interaction with customers seem more natural. The idea is that customers may be able to receive answers to their questions faster when the interaction with the IVR system feels more like a natural human conversation.

To create an advanced IVR system, the process starts with deploying high-level voice recognition capabilities. If the IVR system cannot understand natural conversation from the caller, the artificial intelligence won’t work properly. 

With advanced voice recognition, the system can understand full sentences, allowing for open-ended questions. Such interactions may help the IVR system determine the reason for the call faster than using a series of menus. 

Rather than hiring call center team members who can speak multiple languages, consider including multi-language support in the advanced IVR. Perhaps you can solve the majority of multi-language customer issues through advanced IVR rather than through human interactions, saving money.

Advanced AI inside the interactive voice response system can deliver answers to common questions without needing to involve a human. It could even help customers schedule appointments. The advanced system could ensure the customer connects with the correct doctor for the appointment by recognizing the doctor names that the customer says.

Benefits of IVR Systems for Businesses

Screenshot of Nextiva's interactive voice response system home dashboard.
Making use of IVR systems saves time for both the customer and the company’s customer service team.

By automating many aspects of routing calls, IVR saves time for your customer service team. This is a significant benefit of deploying this technology.

Interactive voice response saves time by routing calls and by gathering some basic information from the customer before the customer service rep speaks to the customer. The customer service rep saves time by having information about the customer on the computer screen before the actual conversation begins.

Because the IVR system can handle many calls simultaneously, there’s never a worry of customers being unable to make contact. Instead of having a department of receptionists become overwhelmed with a sudden influx of calls, the IVR system routes them to various departments, spreading out the calls.

Even though an expense exists for implementing IVR, the system may be cheaper than hiring enough employees to handle all the calls. By siphoning off a large chunk of inbound calls to the IVR system, you can have fewer people on your customer service team. Ultimately, fewer calls require a human touch when deploying interactive voice responses.

Interactive voice response systems can provide benefits for nearly any type of company. Even for a B2B company, where consumers don’t call your business regularly, you may be able to have IVR help with routing sales calls from your business clients. IVR also could provide product explanations to people who don’t need to speak to a salesperson.

You may be able to set up the IVR to collect information on inbound calls, such as the caller’s phone number and name. This information could help you create a sales lead from the inbound caller, even if the caller simply seeks product information from the IVR.

Benefits of IVR Systems for Customers

Although customers might prefer to speak to a human over an automated attendant, this option doesn’t always deliver the best result. 

The IVR system answers the customer’s call and begins working on the problem immediately, which is better for customers than sitting on hold. It’s also better than having a call ring and ring and ring with no answer because all your customer service team members are already on calls.

Customers like the idea of being able to connect with your company at any time on any day of the week. With an IVR system handling the calls, you don’t need to have specific customer service hours. When customer service employees are not available, the IVR system can simply record a message from the customer. The customer doesn’t have to worry about calling back during normal business hours.

When connecting with an interactive voice response system that can provide answers to common questions, customers can resolve their problems faster. Rather than having to wait on hold to speak to a human to find out the business hours for your company, the IVR system answers this question within a few seconds.

Importantly, an interactive voice response system can give your business clear branding that your customers trust. The IVR always answers the phone in a professional manner, allowing your customers to feel comfortable about the interaction with you.

How To Set Up an Interactive Voice Response System

Screenshot from Nextiva's IVR system with a call flow visual builder feature on display.
Making use of business phone services software simplifies creating the framework for how the call flows through IVR.

Although the process of setting up interactive voice response with your phone system can be challenging, it’s easier when you rely on business phone services software.

A system like Nextiva would allow you to use a series of drop-down menus to set up the system and customize it to your business. For example, you could use the software to quickly create your initial menu of options for the inbound call. 

The software’s menus also provide the ability to set the flow of the calls as customers make selections. You should be able to do this through drag-and-drop actions in the software, making the process as easy as possible. Choose to route calls to a certain department, to a particular extension number on your phone system, or to a voicemail system.

As part of the setup process, you can decide whether you want to use a natural-language voice-enabled IVR or a telephone touch-tone IVR. (With some business phone services, you pay extra to use a speech-enabled system.)

Certainly, performing the setup process for your IVR system can take a lot of time and testing. It’s not a project that you want to try to rush through with little thought given to it. 

Think about the organizational structure that you want from your interactive voice response system. It may help to create a flow chart, allowing you to visualize the system’s flow before starting the software’s building process.

Even better, Nextiva uses a process called Call Flow Builder to help you direct the flow of calls with your IVR. This works similarly to creating a flow chart on your own, giving you a visual representation of how customers can interact with your IVR. 

With the Call Flow Builder, you create a number of actions for each menu selection the customer makes. You even can set up different call flow processes based on whether the call occurs during normal business hours or on the weekend. Through the Call Flow Builder, you can make the process as detailed or as basic as you like.

Always look at the system setup and the flow of the call from the customer’s perspective. You want the calling system menus to make sense to the customer and to be easy to follow. Adding unnecessary complexity to the system only causes confusion and unhappy customers. 

To help with visualizing your system from a customer’s point of view, go through your completed flow chart as if you are a customer calling in to the system. Look for missing menu options and areas that are overly complicated.

Common Errors to Avoid in an IVR System

Screenshot of Nextiva's IVR call flow setup process with various features to select from.
Extensive testing of any IVR system is vital to ensure customers receive a smooth experience that they can trust.

Errors in the IVR system could cause numerous problems, ranging from unhappy customers to outright fraud. Some of the downsides of deploying an interactive voice response system that has errors in it include the following.

  • Fraud: If a caller is trying to steal someone else’s personal information, that caller may enter fake information into the IVR system. If the fraud works, the system may automatically reveal information that it shouldn’t. The IVR system’s verification process must be foolproof.
  • Input errors: If the system is unable to understand oral commands from the caller, this could lead to a misrouted call. You may want to give callers the option of touching buttons to enter selections if the oral responses are not working.
  • Menu errors: In a large company, the number of potential combinations for menu choices could be in the thousands. It’s important to test all possibilities to ensure the system is working as expected. Customer frustration grows quickly when an automated system makes an error, as the customer feels helpless.
  • Reaching a human: If the caller is unable to eventually reach a human at the end of dealing with the IVR system, the caller would consider this a significant failure. The IVR system cannot drop the call or send the caller to a dead end. Try to set up the system so it always defaults to a human operator if the system runs into a snag.

You do not want errors to leave your customers frustrated and angry. Before beginning to use the interactive voice response system with your company, it’s important to test it thoroughly. Double-check every possibility, behaving as you would expect a customer to behave, before implementing the IVR system.

Final Thoughts About Interactive Voice Response

As you decide on which software to use for your IVR system, it’s important to consider the cost of the system versus its benefit. The IVR software must ease the burden on your customer support team to be considered successful. If it isn’t saving time for team members by routing customer calls efficiently, for example, it’s not really helping you.

Ideally, the interactive voice response system you select will fit in nicely with your other call center services. Rather than forcing your team members to learn how to use multiple systems, try to find a system that can handle all customer service needs.

Deploying an IVR system should eventually lead to better performance and lower costs for operating customer service. Better customer service and better business performance often go hand in hand, so the selection of your IVR system requires careful consideration.

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