What is IVR? (Interactive Voice Response)


If you’ve phoned any large organisation, chances are that you will have encountered IVR at some point. Short for Interactive Voice Response, it’s a technology that allows telephone callers to interact with a company’s computer system using their voice.

There are a few perks to IVR that can make investing in it worthwhile. Depending on the business type, it might save you money (which is crucial in a phone system, as their monthly costs can add up), and increase your business' efficiency. Read on to understand the perks and benefits of an IVR system, and whether it's a good idea for your business.

History of IVR

IVR has been around for a surprisingly long time. The first IVR systems first started appearing in the 1960s but it wasn’t until the 1980s they become widely adopted in business. And while the early systems were quite basic, using pre-recorded messages and collecting information from callers using touch-tone keypads, modern systems have become extremely sophisticated.

Today the latest IVR systems can understand natural language, use speech recognition software and even generate personalised responses (see below). They are used by organisations in different sectors for many different applications, including customer service, answering frequently asked questions and collecting information from callers.

What are the latest developments in IVR?

Recently there have been a number of key developments in IVR. These include:

Natural Language Processing (NLP)

Best described as where computer science meets human language, Natural Language Processing (NLP) is key to the latest IVR systems. For example if a user phones up their bank to ask ‘what is my balance?’, the IVR can understand the caller is asking about their account balance using NLP.

NLP technology can also be used to generate personalised responses to caller enquiries and can even remember the person’s name and preferences if they have called before. NLP can also be used to route calls through to a customer service representative in the correct department.

Voice biometrics

We’ve all become used to fingerprint and face recognition on our smartphones as a unique way of identifying us, rather than having to remember a password. However, our voice can be used as a unique identifier too. Voice biometrics are used in IVR in two main ways.

Active voice authentication

This is where the caller is prompted to speak a particular word or phrase which can then be stored electronically. When the person calls, their voice is then compared to the ‘voiceprint’ stored on the system. Generally, voice biometrics are considered much more secure than traditional security methods, because it is more difficult to spoof a voice than guess a password or PIN.

Passive voice authentication

With this technology the caller’s voiceprint is analysed as they interact with the IVR system. This makes it much easier for the customer to use because they don’t have to remember a particular word or phrase. However, it is considered less secure than active voice authentication.

Voice biometrics technology is deployed in IVR to improve security and increase personalisation and convenience for callers and call centres. For example, it can be used to authenticate callers before they speak to an agent, route callers through to the correct department as well as personalise the customer experience.

Cloud-based IVR

Importantly for many businesses, IVR doesn’t necessarily require a massively outlay in new hardware. Many IVR systems are now hosted in the cloud with organisations typically paying a monthly fee for the services they use.

Cloud based IVR systems can offer many benefits including greater flexibility, scalability, security and cost-efficiencies though may not suit every type of organisation, especially those who may want greater control of the systems they put in place.

Conversational IVR

Artificial intelligence can be combined with natural language processing to provide a more natural and engaging experience when customers call. Conversational IVR systems can understand natural language queries meaning callers can speak in a more natural way – for example in complete sentences and phrases, rather than using just one word or, worse still, having to fumble with menus or buttons.

Conversational IVR systems can also understand the context of the systems, keeping track of what has been said before and using this information to answer questions or provide relevant tailored information.

By making the conversation more natural and engaging, Conversational IVR can help to reduce the time callers need to speak to live agents, helping to reduce costs and drive greater business efficiencies.

IVVR (Interactive Voice and Video Response)

Increasingly IVR is being extended to video as well as voice. For example, callers can view videos that provide information about products and services or walk them through a particular process they are having trouble with.

For resolving complex issues, it may also be possible to have a live video chat with an agent. Video chat can be used as a way of providing identity verification which is much more secure than traditional methods.

Who uses IVR?

IVR is now used by a wide range of companies and organizations. For banks, IVR is a way of extending telephone banking to 24 hours a day as well as potentially providing additional levels of security through voice biometrics, while pharmaceutical companies can use the technology to gather the large volumes of data required during clinical trials.

For example, the person taking part in the trial will respond to questions asked in their preferred language and their responses will be recorded and then processed as text in the database. This should reduce any potential for error caused by a live agent transcribing answers.

Other applications include company call centres and settings where the user may feel uncomfortable talking to a person (for example answering questions about drug use or sexual behaviour).

Businesses less likely to use IVR are the more personal experiences, like hotels and law firms, where the questions are a bit more specific and might lead to more in depth conversation.

Is IVR right for my business?

It depends. If you receive a high volume of calls, then an IVR can certainly reduce the number of queries your live agents have to deal with, in turn helping to save money.

Unlike chatbots which are generally used on websites to provide automated text-based answers to commonly asked questions, IVRs can seem more personal, which can lead to a better customer experience. However, much depends on how the technology is implemented.

If the system is poorly designed requiring the user to press multiple buttons on their keypad or doesn’t recognise their accent, then they are likely to find it very frustrating to use.

On the other hand, if it feels more natural to the user – similar to speaking to a real human being – then it is likely to have much greater levels of engagement and satisfaction.

Written by:
Chris has been a freelance technology journalist since the 1990s. In addition to editing two consumer tech blogs, TechDigest.tv and ShinyShiny.tv, he also regularly contributes tech/business articles to various publications including The Daily Telegraph, Tech Radar, IFSEC Global and AI Business. A passionate outdoor swimmer, Chris is also a qualified lifeguard.