interactive voice response (IVR)

What is interactive voice response (IVR)?

Interactive voice response (IVR) is an automated telephony system that interacts with callers, gathers information and routes calls to the appropriate recipients. An IVR system accepts a combination of voice input and touch-tone keypad selection and provides the appropriate responses in the form of voice, fax, callback, email and other contact methods.

IVR systems can consist of telephony equipment, software applications, a database and a supporting infrastructure. An organization can run an IVRS in house by purchasing the software and hardware required, or it can opt to go through an IVR hosting service that charges a monthly fee.

How interactive voice response works

An IVR application provides prerecorded voice responses for appropriate situations, keypad signal logic, access to relevant data and, potentially, the ability to record voice input for later use. Using computer telephony integration (CTI), IVR systems can hand off a call to a human being who can view data related to the caller on a display.

IVR systems also use dual-tone multi-frequency (DTMF) signals as a line of communication between a phone and a computer. The computer uses a telephony board or card to understand DTMF signals.

IVR software enables an organization to use prerecorded greetings or menu options that a customer can access through a phone keypad. Advanced IVR systems may include speech recognition software to enable a customer to communicate with a computer.

IVR systems are based on the programming language Voice Extensible Markup Language (VoiceXML). VoiceXML consists of several components, including a telephone network, TCP/IP network, a VoiceXML telephony server, a web server and databases that all work together to provide the best possible customer service.

Uses of interactive voice response

There are many uses for IVR systems. The most common use is to automate inbound and outbound calls and to route calls.

The IVR system in the latter case eliminates the need for a switchboard operator to answer incoming calls. This instance often presents a caller with a menu of options and can attempt to answer frequently asked questions.

A chart that shows how IVR systems work
IVR systems typically offer automated menu options, answers to FAQs and contact information, but they can also escalate calls to live agents.

A good example of this is when a customer calls a movie theater to inquire about movie times. The IVR system uses an updated database to present the caller with a list of the latest available movie times, helping to eliminate call wait times and leading to greater customer satisfaction.

Organizations can also use IVR systems in the following ways:

  • bank and stock account balances and transfers;
  • office call routing;
  • call center forwarding;
  • simple order entry transactions; and
  • selective information lookup.

IVR systems can also be used in more complicated ways to simplify processes in other departments.

Sales. IVR systems enable customers to fill out sales order forms with a phone keypad. The computer then sends the completed form to a salesperson.

Marketing. Marketers can use IVR systems to send out surveys to gauge interest in a product or service.

Medical records. Doctors can use an IVR system to transcribe notes and patient records and have a copy of the transcribed records sent to the office.

Benefits of interactive voice response

IVR technology can benefit both large and small businesses in the following ways:

  • Saves time and money. IVR technology can replace humans to answer frequently asked questions or to provide commonly requested information -- such as directions, hours of operation, etc. -- that doesn't require critical thinking skills.
  • Greater customer satisfaction. IVR technology eliminates wait times by responding to a caller immediately.
  • 24/7 service. IVR technology can operate without any interruptions and is available to provide information to callers whenever they need it.

Disadvantages of interactive voice response

It is important to note that there are disadvantages to call automation. IVR systems have been criticized for being too impersonal, for acting as a barrier between customers and live agents, and for taking jobs away from call center agents. These systems are also limited to the type of questions they can provide answers to and can leave callers frustrated and confused when IVR menus are too long.

However, as with all technology, IVR continues to evolve and improve with time to address these limitations.

Many companies have augmented or replaced IVR systems with automated speech recognition technologies that enable callers to speak their requests instead of punching numbers into their phones. These voice recognition systems can frustrate callers if the system doesn't recognize a caller's questions.

Interactive voice response advancements through AI

Despite the downsides, IVR software use is expected to increase in the years ahead thanks to improvements in conversational artificial intelligence (AI) and voice recognition technologies.

Natural language processing (NLP) is being used to improve IVR systems because the technology can better analyze spoken language and, together with natural language generation applications, enables IVR to deliver a conversational response to callers.

In addition, IVR analytics software enables companies to analyze issues with their voice response systems and improve them for better customer service.

Editor's note: This article was written by Karolina Kiwak in 2018. TechTarget editors revised it in 2022 to improve the reader experience.

This was last updated in December 2022

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