What is IVR (Interactive Voice Response)?

Man on phone that's using interactive voice response (IVR).

What is IVR?

IVR (interactive voice response) is a system used by businesses to automate customer service calls. It uses computer integration with callers’ voice or keypad input to process their queries. IVR is highly customizable for a company’s specific needs. It can allow for customers to process routine requests 24/7 without speaking to a human agent, use AI to understand complicated queries based on context, and also prioritize calls that offer more value.

In these ways, IVR improves the customer experience and saves time and money for all parties, adding value for both the company deploying it and the user.

How Do IVR Systems Work?

IVR simplifies the customer service process for caller and company.

IVR, whether hosted or on-premise, works by providing callers with menus that unfold around their choices to usher them forward. Each option a caller selects opens the door to a new set of choices.

Without IVR, customer service calls can waste a caller’s time and cost a company money.

How Does IVR Work for the Caller?

When a caller calls into an IVR, they will be presented with a voice or keypad input prompt menu. The caller can either choose the option that best matches their intent, or ask for a live agent. IVRs may be able to execute a large amount of caller requests without ever routing them to a live agent. Depending on the type of IVR a company is using, and if it is integrated with AI, a caller may not even realize that they are talking to a robot. There will be no wait times, and the experience will be more convenient for a caller than with a traditional receptionist.

How Does IVR Work on a Technical Level?

At its core, IVR works by using computer telephony integration, a technology that links computer systems to phone systems. IVR may also integrate speech recognition and some types may be able to recognize a callers’ emotional tone.

In order to implement IVR, a company will need to be able to accommodate computer telephony integration systems, but can work with an external IVR provider such as 8x8 to install and customize the optimal IVR plan.

Set-up can include visual IVR with drag-and-drop features that make creating IVR architecture easy.

Capabilities of IVR Systems

Call Routing

IVR systems make it easy to route calls. Whether the routing is triggered by the IVR itself or by a human agent, the transfer is automatic and fast.


Customers unable to stay on hold can opt to receive a call at a scheduled time, avoiding unnecessary burden on the call center from repeat calls while increasing convenience for the customer. This callback dialing can be human or automated and can even leave a voicemail.

Automated Self-Service Capabilities

IVRs can be configured with sophisticated self-service capabilities, allowing callers to process routine requests of any complexity over the phone, such as checking an account balance, changing a billing address, or changing the shipping speed of an already-placed order. These automated self-service capabilities free up agents to process non-routine requests.


IVR software can offer a highly customized experience depending on the company’s and the customer’s needs, for example with text-to-speech or speech-to-text conversion.

How IVR Solutions Add Value to Businesses and Customers

IVR Improves Customer Relationships

IVR is easy and convenient for callers. Given the frustration callers can experience with traditional customer service calls, it is easy to see that IVR may improve a company’s customer relationships. There are also many particular features and aspects of IVRs that can accomplish this as well.

Better Customer Service Experience

Outbound IVR improves the customer service experience. IVR can answer a customer’s call after one ring, avoid overly re-routing callers, and offer consistency in customer service.

24/7 Customer Connection

IVR systems are on 24/7, allowing customers to get their needs met and questions answered around the clock.

Personalization to Build Customer Trust

IVR is able to gather information about callers, such as the type of music they prefer, to personalize their experience and build customer trust.

IVR Makes Companies Better

The robotic IVR processor is much less error-prone and cost-heavy. Where traditional call systems use human agents, interactive voice response systems centralize the labor into an automation that can understand users’ requests and funnel them onward with ease.

Rather than having to train many live agents to take specialized requests, companies can instead use IVR to handle basic requests and train a small, select group of agents to handle more complex queries.

Money is Saved on Labor and Gained in Customer Access

IVR improves profitability—IVR systems both reduce customer support costs and increase customer access. IVR is especially cost-effective for higher call volumes but also works great for small businesses. IVR can be integrated with Salesforce and other third-party platforms to further reduce operational costs.

Incoming Calls Can Be Prioritized in Real-Time Based on Profit Potential

IVR, with CRM integrations, can identify high-priority calls.

CRM can recognize the difference between first time callers and repeat callers, prioritizing as necessary.

Improved Efficiency

IVR may significantly improve efficiency within a company. For example, call routing saves time employees might spend repeatedly transferring customers throughout the company.

Reduced Human Error

IVR reduces the possibility of human error in incorrect transfers or contradicting statements. These mistakes can cause a company to lose a caller’s trust, costing money and time.

IVR Best Practices

IVR systems can be complicated or simple, with many bells and whistles or just bare bones. In either case, it is important for companies to know how to get the most out of their IVR systems, as an IVR is often a customer’s default and most-used line of contact with a company. To that end, 8x8 has provided several tips.

Refine the Caller Experience Using Call Recording, Surveys, and Analytics

Caller experience is not a fixed endpoint. The better the customer experience gets, the more customers will expect. By gathering customer data and feedback through built-in call recording, customer surveys, and analytics, companies can regularly refine their IVR towards caller experience.

Keep Menu Options as Simple as Possible

Companies should streamline their customer-facing IVR menus so that callers can easily and intuitively navigate to the destination they need. The more complexly tiered an IVR menu structure is, the greater the potential to confuse and frustrate callers. Callers will greatly appreciate an IVR system that only asks customers to follow one or two simple prompts before matching them with the answer to their query.

Know Your Customer Base

It is very important for a company to understand its audience’s needs when setting up an IVR system. No matter how streamlined and elegant an IVR is, if it incorrectly assumes that a group of callers primarily wants to do routine tasks over the phone instead of online, it will fail.

Without a comprehensive understanding of the range of customer queries and those queries’ intent, it is not possible to create a truly effective IVR system.

Prioritize Voice Recognition

When given the option between basic IVR systems without speech recognition functionality and advanced IVR systems with voice recognition technology, companies should always choose the latter.

Speech recognition allows callers to simply state what they want without listening to an entire menu’s worth of options. Without speech recognition, this listening can grow from tedious to infuriating as callers are asked to listen to the entirety of multi-tiered menus, having to call back if they make a mistake and press the wrong button. The no-speech-recognition scenario as well is much more likely to cause callers to ask to speak to a human agent.

Other Call Center Software

IVR is a fundamental capability, but not the only important part, of a comprehensive call center software suite.

Learn more about Inbound, Outbound, and Call Center Solutions.

Kevin Vinh Nguyen