What Is Interactive Voice Response?

What is IVR

Interactive voice response (IVR) is an automated phone system that allows companies to serve customers automatically. 

Over the years, the answer to what is IVR has changed drastically. Developing technology, going from simple call center recordings informing customers of wait times to sophisticated menus enabling customers to get specific answers quickly and even perform transactions. 

In an increasingly instant world, IVR serves its purpose more than ever. A recent Hubspot study found that 90% of customers expect answers to customer service-related questions in under 10 minutes. It’s a difficult feat for any company with call centers.  

In this post, we’ll inform you of everything there is to know about IVRs, including:  

  • What is IVR?
  • IVR uses 
  • How does IVR work?
  • How does it help your business? 
  • How does it improve customer service?  


What Is IVR?

So, what is IVR? Interactive voice response is an automated system created by pre-recorded messages. It allows call centers to answer customers without the need for an agent or live 24/7 service. 

Think about how when calling your local doctor, your call is usually greeted by an automated message prompting you to choose from a menu of options. For example:

  • 1 – Emergency 
  • 2 – COVID-19 information 
  • 3 – Make an appointment

You can select an option and get directed to the relevant department. In its most basic form, this is an IVR. 

An interactive voice response system can do many things for your company, and if you’re a service with large call volumes, it is essential.

In 2022, IVRs go a lot further than stating how long a customer will be in a queue and basic menu options. IVR systems now provide many services, such as access to personal/account information, making transactions, and finding answers to questions. 

From a business perspective, a sophisticated, well-set-up system can:

  • Route calls to the appropriate team member
  • Reduce call wait times
  • Answer customers quickly
  • Provide event information
  • Provide COVID-19 protocols

IVR allows you to serve your customers more effectively. But if you’re still wondering what is IVR exactly, let’s take a look at these uses in more detail. 

What Is IVR Used For?

Traditionally, IVRs were used to hold customers in a queue and direct customers to the correct department. In 2022, they do much more… 

Call Routing 

Call routing is the first and most prominent use of what is IVR. Companies have been using IVRs to handle inbound calls and direct customers to relevant departments for years. 

The IVR system routes inbound calls to the most relevant area, depending on the information a user provides at the menu stage. Customers give this info by touching their keypad or through voice recognition. 

This means customers find answers as quickly as possible, making for a smooth customer experience. Thinking back to the Hubspot study, 90% of people expect a  response within 10 minutes. While this isn’t always possible, an efficient IVR helps relieve the stress on call center agents and assists callers as quickly as possible.

Importance Filtering 

In addition to routing inbound calls to the correct department, interactive voice response helps filter calls in order of importance. This filtering is another huge role IVRs play in providing efficient customer service. 

A well-structured IVR menu can help answer the most important queries first. Thinking back to the hospital example, an emergency call needs to be answered first while non-urgent queries can wait and don’t need to contribute to long wait times. 

Meet Simple Needs (Agent Not Needed) 

The simplest tasks that don’t need a live agent’s assistance can easily be answered through pre-recorded messaging. This helps address questions quickly without putting a customer on painfully long holds. 

Despite this, in a survey conducted by Vonage, 63% of participants stated they were “forced to listen to a menu of irrelevant options.” So, creating an IVR menu that provides only the most necessary options is extremely important. 

Answering the most common options first, then layering down as they become less critical, is the way to create a menu that serves customers effectively. 

Provide Function

Another considerable benefit of IVR here in 2022, with the most advanced systems, is its use to provide function, not just information. 

This includes: 

  • Checking account balances
  • Setting passwords 
  • Making payments 

For customers, being able to perform these functions reduces friction and makes for a more enjoyable user experience. 

The most common example of this would be calling your mobile provider. You’ll be greeted by a menu that allows you to check your balance, update account details, and top up your balance. This IVR is a more advanced system that has become the norm in the mobile phone industry. 

Payments through IVR, however, need to be integrated with online payment gateways to ensure trust and security. 

How Do IVRs Work? 

Traditionally, IVR systems were extremely complex to set up. They needed a specialist, their own infrastructure, software, and database, and then to be integrated with an existing phone system.

Thankfully, with cloud technology, things have become more manageable. With tools such as Ozonetel, you can now set up your own IVR system.

Essentially, IVR systems work by integrating with your phone system to provide an automated customer service menu. These options can then be directed to the relevant department, frequently asked questions option, or a specific function. Basic and advanced systems work in slightly different ways.  


The most basic systems use a combination of dual-tone multi-frequency signaling (DTMF) and voice recognition technology. When a customer chooses from the IVR menu through touch-tone keypad selection, DTMF connects things automatically without the need for a human operator. 

IVR systems that use voice recognition essentially perform the same function, but instead of using the telephone keypad, the system recognizes speech. For example: “If you want to speak to an advisor, press 2” may be replaced with “if you want to speak to an advisor, say ‘connect now.’”  


Advanced IVR systems are a little different and use conversational IVR. Instead of being limited to selecting the words an IVR menu provides, conversational interactive voice response can recognize complete sentences. 

This is an amazing customer experience, to say the least. However, a problem involving the use of IVR systems from a customer perspective is not being understood by the speech recognition system or having a limited menu to select from. 

How Can Your Business Benefit From IVR Technology? 

There are several amazing benefits that IVRs provide for businesses

Reduce Human Error 

With a well-programmed system, the risk of human error is eliminated (providing pre-recorded messages are recorded correctly). 

Meaning you can provide customers with accurate information 100% of the time when they come through your automated system. Misinformation given by a call center trainee can’t happen if a customer query is answered automatically. 

Human error reduction can be especially useful with important information and info related to accounts and personal details. This benefit can save a lot of time and money, not to mention the headaches of fixing human error issues. 

Save Time (Filter Calls) 

Saving time by filtering calls is crucial, both for directing calls to the correct department and filtering in order of importance. 

IVR systems allow you to: 

  • Put urgent calls first
  • Answer non-essential queries automatically 
  • Direct customers to the correct department right away 

Easy To Manage  

Once your system is set up, Ozonetel makes things incredibly easy to manage. By using Ozonetel for your IVR system, you won’t have to spend valuable time managing your system and fixing issues. Everything is taken care of. 

How Do IVR Systems Provide Better Customer Service?

From a customer perspective, things can be incredibly frustrating when it comes to IVR systems. In a 2019 study of more than 2,000 U.S. participants, 63% felt they had to listen to a menu of irrelevant options, and 65% also stated the reason for their call was not explicitly listed on the automated menu.

Stats like these only reinforce how frustrating automated systems can be for customers. However frustrating they may be, there are some significant customer benefits. 

Answer Customers Quickly 

Customers should be able to call you and find the answer/service they need immediately. In the Vonage study, 90% of customers expected customer service questions to be answered within 10 minutes. At times, high call volumes make this a tall order; providing a service that makes this possible certainly isn’t. 

From automated answers to questions to being directed to correct departments with just a few menu options, IVR is vital for a customer-centric business as well as positive customer service interactions.

24/7 Help  

Not all companies have the budget to provide a 24/7 call center, so IVRs are a great way to provide round-the-clock assistance. An automated message stating when your operators are available is essential, but having a detailed and automated frequently asked question option is fantastic. 

In a world where customers expect help quickly, whenever they need it, a system that helps them all hours of the day, day in and day out, is a sure-fire way to increase customer satisfaction.


A well-structured advanced IVR menu says a lot about your company in terms of credibility. 

Think about every time you call a reputable company — you expect to be greeted by an automated message, right? Chances are, the best companies you deal with give you answers extremely quickly and make relevant services very easy to access. 

Your IVR systems are not only a chance to serve your customers in the best way possible but also to show your professionalism and company credibility.  


Now that you know what IVR systems are exactly, what they do, and how they do it, it should be apparent what they can do for your company.

As we move into an ever-more-connected world, customers expect a constant level of help whenever they need it. Providing an amazing interactive response system is not just an option but essential for delivering fantastic customer service and maintaining company credibility. 

To summarize, you now know:

– What Is IVR?

– How IVRs work?

– What IVRs do?

– What IVRs can do for your business

If you need any help and assistance regarding what is IVR further, how to set them up, and what they can do for your business, please contact us today. 

Ozonetel packs all the tools you could ever need to improve service levels within an affordable, easy to integrate, quick to set up call center solution. Contact us to learn more

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