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IVR Systems Explained

June 20, 2018

11:27 am

IVR (Interactive Voice Response) is a feature of VoIP phone technology that allows callers and computers to interact through an automated system.

While it has many applications its fundamental purpose is to collect information from a caller. It does this either by them using their number pad, or by using voice recognition to . Based on a particular touchtone or simple voice command, the system routes the caller to the right menu, operator, or sales agent. That friendly automated voice you hear when you call a business? That’s IVR at work.

Simple IVR systems may rely on pre-recorded stock greetings and commands, while more sophisticated technology gives you a broader range of selection, from completely customizable menu options to versatile audio choices.

The type of system you choose will most likely depend on the size of your business. Bigger, multi-faceted brands typically require dynamic IVR systems, while smaller companies may benefit from more streamlined options.

Whatever you choose, most companies find that implementing an IVR system results in time-efficiency and savings. To find the best provider that suits your business, try our quick phone systems comparison form, and get personalized quotes for your company.

How Can You Use IVR?

Phone banking

Increasingly, banks are allowing customers to complete simple transactions over the phone. Rather than visiting the local branch, a customer simply has to call in and interact with the automated system.

Through a series of prompts and menus, the system can accurately identify the customer’s needs and direct him accordingly. For people who need to access info such as account balance or make a transaction outside of normal business hours, IVR phone banks provide real value to banks and customers alike.

Phone surveys

Automated IVR phone surveys can be useful for a variety of businesses. They’re a good way to source customer feedback, which can then inform future brand decisions.

Retail companies, for example, can follow up with recent customers about their shopping experience. Meanwhile, brands that offer in-person customer support can receive feedback on the customer’s phone experience by using IVR.

They can program the system to transfer him to a customer satisfaction survey, either automatically or with permission.

Additionally, some IVR providers offer systems that can be manipulated to assess product knowledge testing among employees, patient satisfaction surveys, or customized for your own use.


While tele-voting has become popularized due to reality television contests, IVR voting is designed to handle more complex services.

Rather than just asking a person to vote for one thing or another during one particular window of time, IVR systems can be customized to deal with each call individually.

They can present different options based on the calling party’s number, the called number itself, date, time, and more. The IVR service can be dynamically designed to address the requirements of the specific contest.

Call centers

For companies with multiple locations, IVR eliminates the need for individual call centers. Instead, one system can handle the demands of all of your customers, whether they’re located in different areas in a particular city, state, or throughout the country.

When someone calls in, he can choose from a menu of options and, if necessary, be automatically directed to a specific location.

Similarly, if you run a large business with a complex infrastructure, customers may have any number of questions when they call.

Dynamic IVR systems can interact with the caller and present different options depending on his individual requests. This ensures that everyone’s needs are met.

Why is IVR Important?

Reduces costs

IVR systems are like virtual assistants. With their ability to answer and route calls, they eliminate the need of a receptionist, or can at least allow your current receptionist to absorb other duties instead.

In addition, with centralized software, you don’t need as much hardware (and in the case of cloud-hosted services, little to no hardware at all). IVR consolidates many of your phone expenses into one low-cost solution.

Boosts company efficiency

Next to costs, efficiency is perhaps the most valued benefit of IVR systems. Agents and employees can spend less time on the phone overall, and more time on other important tasks.

They’ll no longer have to wade through the general, introductory questions asked by a caller. Rather, the system can accommodate these queries and direct the call to the appropriate menu, department, or live agent.

For businesses with heavy call volume, IVR services can handle multiple lines at once. They can address the requests of many people faster than a backed-up call center of live operators.

Improves customer service

With a versatile IVR system that can handle multiple commands, customers will have an easy, pleasant experience on the phone.

By smartly optimizing the system to offer clear, simple options, your callers can be quickly directed to the right place. They won’t have to endure irrelevant menus or get sent to the wrong department.

Good IVR services will direct the customer to the right person, or resolve the question solely through automation, creating a satisfying customer experience.

Greater access for employees / customers

An advanced IVR system can be programmed for call forwarding, which means you don’t have to be tied to the office to receive or make important calls.

The service can put you in touch with customers or clients on your cell or separate, remote landline. It can even patch the call through to a separate IVR service.

IVR Business Case Studies:

Michigan Basic Property Insurance

Michigan Basic Property Insurance Association Logo

Michigan Basic Property Insurance seeks to provide affordable insurance to any property owner, no matter the location.

Previously, its call center was populated by live agents who were frequently inundated with calls pertaining to the same general inquiries regarding bill pay, account info, and policy changes.

Answering callers’ questions was a time-consuming task. However, by implementing an IVR system, MBPI was able to reduce operating costs by redistributing some of the basic, repetitive workload of the operators to the automated service.

Champlain Local Health Integration Network (LHIN)

Champlain LHIN Logo

Champlain LHIN’s hip and knee replacement program sought to provide better access to services pertaining to hip and knee replacement surgeries among local patients. Using an intake service, patients could choose which hospital and doctor they wanted for their operation.

LHIN desired to measure the success of their intake service based on customer feedback, but their manual, pen-and-paper forms were time-consuming and often ignored by patients.

By replacing the forms with an outbound IVR system (patients received calls with automated surveys), they significantly improved their response rate among patients, and implemented changes much faster than before.


What is the meaning of IVR?

IVR stands for Interactive Voice Recognition. It's a feature of automated phone services that enables callers to have their queries answered, or be directed to the right department, automatically, and without the need for human intervention.

How does IVR work?

IVR works by using voice recognition or number entry to collect information and intent from callers and assist them, based on instructions set out by the company phoned.

Let's say a caller contacts your business, and you have set up IVR. They will be asked what their call is regarding, by an automated message. If they have contacted your company with an account query, the caller will say the word ‘account'. The phone system will then automatically route their call to an employee who can assist them. It may even ask them further information before routing the call, based on their response, such as their customer details.

This process can empower your employees by providing them with all the pertinent information they need, before they even speak to the caller. It also removes the need for a human receptionist to route calls to the right recipient.

How do you use IVR?

To use IVR in your business, you'll need a VoIP phone system. Although IVR might seem complicated, your VoIP provider will be on hand to help with the initial set up of options and paths, redirecting information, and any surveys you wish to include. If you wish to change these in the future as your business changes, your VoIP provider will be on call to assist you.

What is IVR self service?

IVR self service is a way for your customers to use your business phone number to access information on their own, with no need for employee assistance. This can be a huge time saver for your staff.

In this scenario, lets say that your customer wants to check the status of a parcel. All they have to do is call, quote a reference number, and the IVR system will give them the required information, such as the parcel location.

IVR self service can be used 24/7, improving customer satisfaction rates.

How much does an IVR system cost?

The cost of an IVR system depends on the sort of package your company opts for, and the provider that you have your service with.

The most expensive option is to host everything yourself in-house. The cost of this, including equipment, entertainment, staff and ongoing costs, can quickly run into the thousands. However, with a hosted VoIP system, where the equipment is hosted off site and owned by a third party, you can drastically reduce your costs.

IVR systems can be purchased on a ‘per minute' basis, typically starting at around 10 cents per minute, or can be included as part of the VoIP bundle itself, which typically works out at somewhere around $25 per month.

To find out how much you could save with an IVR system, and for bespoke quotes for your business, try our comparison tool.

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Jack is the Content Manager for He has been writing about a broad variety of technology subjects for over a decade, both in print and online, including laptops and tablets, gaming, and tech scams. As well as years of experience reviewing the latest tech devices, Jack has also conducted investigative research into a number of tech-related issues, including privacy and fraud.