What is IVR?

Interactive Voice Response system (IVR) is an automated telephony system that interacts with callers through prerecorded voice menus or instructions. It collects caller input in the form of dialpad presses and routes the call to submenus or call center agents as the case maybe to solve caller queries. 

ivr system Freshcaller


Why your business needs IVR 

Every call center has to confront two major hurdles in their day-to-day operations. One, the call volume is highly volatile in nature, often unpredictable during holiday seasons. 

Two, staffing more call agents without a clear picture of the call traffic is expensive. Overstaffing creates the situation of resources remaining idle while understaffing can lead to poor customer service. 

To address these two issues, your business needs a cost-effective, scalable and reliable solution. It is here that IVR comes in as a problem-solver. 

An IVR system arms a business with several capabilities that will lighten the load for agents while simultaneously maximizing customer service efficiency.

Segmentation of calls

Segmenting calls based on their purpose will help route callers quickly to the specific department or function that is most appropriate to solve their queries. To make the segmentation of calls more useful for callers, multi-level IVR menus can be created new customers, existing customers, FAQs, choice of language, connection request to agent and so on.

Self-service customer service

IVR doubles up as a self-service customer portal that callers can use on their own without an agent’s intervention. It gives them the facility to access customer support resources at any time of the day or night, on weekends, holidays, even on a real-time basis at their own convenience. To cite an example, AlfKa, an online education platform, was able to reduce their average call handling time by automating their responses to FAQs with an IVR system. 

Bulk call handling

A single agent can attend only to a single call at the same time. An IVR phone system can handle countless number of calls concurrently. Its bulk call handling capability helps a call center  maintain key call center KPIs like Average Handling Time, Average Abandonment rate, resolution rate, etc. in a healthy state. 

Prioritizing complex calls

An IVR gives the agent time to attend to complex calls that require deeper inquiry and interaction with the caller. IVR also ensures that the call is not related to any commonly asked queries which can be solved with canned responses. It gives time for agents to prepare for complex calls that might require extensive information collection, step-by-step instructions and so on. 

Setting up IVR

How IVR systems are set up

There are three ways how an IVR system can be set up -- onsite, hosted on third-party premises and on cloud. A brief overview of all the three modes of IVR deployment are as below:

Onsite deployment

On-site deployment a.k.a on-premise deployment is the traditional model for setting up an IVR system. The IVR phone system is set up within the organizational data center along with any other telephony systems that the business is already using.


The entire IVR logic, customer data, software & hardware are housed within the organization’s physical premises. This gives the business complete control over the hardware and software of the system. 

Hosted deployment

In hosted deployment, the telephony hardware and software are on-site systems that are owned by the business but located in a third party's location. The business remains responsible for buying licenses, relevant software and devices required to run the call center along with the IVR system.


However, the deployment and subsequent maintenance will be managed by the third-party. A recurring management fee or similar consideration is usually paid for the services rendered by the third-party. 

Cloud deployment

Modern-day IVR systems are devoid of any hardware or software requirements. They are hosted on the cloud and can be launched immediately, almost an on-demand. The IVR logic, software and the relevant hardware, including data centers are owned and managed by the solution provider.


The solution provider takes care of rolling out software updates and maintaining the hardware. The business pays the solution provider a recurring periodic fee for using the IVR phone system.

business Benefits of IVR

The business benefits of IVR

Customers have little patience to wait until they get connected to a call center agent. They want instant redressal, instant information and real-time support. From the business’s point of view, this can be quite a challenge to surmount. 

Especially if the calls are of of low-value comprising of repetitive queries in large volume that do not require the exclusive time and attention of an agent. But, these low-value calls are important. After all, every business is committed to serving its customers in all aspects. 

An IVR system helps automate the call handling process by acting as a self-service platform for callers. It helps them find instant solutions to their queries with key presses on their devices. For a business, this translates into fewer call time spend responding to frequently asked questions. 

Some other benefits of an IVR system include:

business benefits of ivr interactive voice response system
Canned responses for FAQs

According to Microsoft’s 2018 State of Global Customer service, 66% of customers prefer using self-service first rather than engaging with an agent. IVR systems with their canned responses to FAQs can act as a self-service portal for callers. They help in saving time for both the callers as well as agents. 

This saves time for both the callers as well as agents. Also, the call center can reserve the agent’s productive time for better purposes like attending to high-priority calls that need hand-holding or step-by-step instructions.

Instant information retrieval for callers

IVR helps a business serve quick and instant information to customers by navigating them to the right menu/option. The system works by taking input from customers given by callers through dialpad presses on their devices. Each key/number/dialpad is programmed to perform a specific function, like retrieving information, requesting connection to a specific extension number, agent, team and so on.


Advanced IVR systems integrated with CRM, billing and other third-party systems can also fetch data/information that the caller might be interested in knowing.

For example:

  • What is my current credit balance?
  • When does my expire?
  • List my last five account charges, etc.
Address high call volume at lower costs

Under the hood, IVR is a computer program - a software that is programmed to work according to predefined rules or to be specific, in response to a phone’s dialpad triggers. Since it is a software that can work unmanned, the cost to attend 50 calls or 1,000 calls or more remains the same. 


There are no additional costs associated with the fluctuating call volume. As a result, IVR systems help keep the call center’s call handling costs consistent and restricted to a bare minimum even when call volumes are unpredictable. 

Use cases of IVR

Business functions where IVR can be a game-changer

Every industry, every business function where phone systems and large volume of calls coexist, an IVR phone system can be a game-changer.  

Customer service

Businesses can automate recurring customer service requests by identifying and segmenting customer calls based on keypresses. For example, customers can choose from menus, the option to raise a complaint, talk to a customer care executive or request a callback. Also, customers can pick the native language in which they are most comfortable in receiving support.

Office administration

Large business houses with globally distributed offices and a diverse range of departments can simplify inter-organization communication with an IVR. An IVR menu can be designed that connects callers to admin, facilities, finance, HR, security and so on. It will help cut down dependencies on personnel and automate the entire administration process.

Account information retrieval

IVR can facilitate quick account information retrieval especially in banking, financial services, and insurance sector. An IVR system can serve customers with instant information of their account balances, information about add-on services, charges for services, last five transactions, report debit/credit card loss and so on. 

Push marketing

Outbound IVR can prove to be beneficial in push marketing where bulk calls have to be made to a large volume of target audience concurrently. The IVR system can also be used to conduct ket surveys or to collect feedback from customers who have just used the product. Outbound IVRs can also be used to connect with customers who have requested demos or automatic callback on the website, social media handle or any another digital medium. 

Order tracking

In eCommerce and in on-demand services, customers need instant information about their order statuses, delivery progress and so on. An IVR system can help customers track their customer support ticket status, online order delivery status, etc. without the restrictions of business hours, geographies, etc. IVR systems can also be used to remind customers about pending bills, services that are nearing expiry, promo offers and so on.

Feedback collection

Evert popular brand collects customer feedback that helps them fine tune their offerings and improve customer service. But, manual feedback collection is not easy either. No customer would be readily willing to quote something favorable or unfavourable when asked. An IVR can aid in collecting feedback consistently by keypad presses for star ratings and CSAT scores. 

IVR Best practices

IVR best practices that will improve call experience

Despite its merits, 82% of customers are dissatisfied with IVR. In fact, 60% of customers would skip it to talk to a real agent (Microsoft Study). If IVRs are meant to make things easy for callers, then why are they skipping it?


Where do IVRs fall short that makes them a liability instead of a lifeline that they are meant to be? What goes wrong in IVR implementation?


Most businesses devise an IVR system keeping in mind how they think the process should work.  They fail to visualize the IVR journey from the caller’s perspective which leads to poor experience. Here are some IVR best practices that will help any business serve their callers right with an IVR. 

Keep minimal menu levels

The maximum number of menu options your IVR menu can have is six. Anything more could be difficult for the customer to remember. Ideally, the number of menus should three or four each with four sublevels directing to a final solution.

Avoid long promos

When your customers are calling for support, the last thing they want is to listen to a long promo message. In fact, not valuing your caller’s time is rated as one of the worst phone support experiences. So it is wise to avoid long promos.

Give option before action

The IVR menu should recite what the menu is for and which key is to be pressed for opting it. For example, Press 1 for a new inquiry. Presenting the option before the action simplifies the task for callers. 

Provide adequate interval

There should be enough time interval after the IVR reciting the menu options. The caller might want to recollect the options to pick the right one that is appropriate for them.  Also, ensure that each option is clearly dictated and easily understandable.

Make IVR responses faster

For every keypress input that the caller gives, the IVR should provide a rapid response that is specifically curated to solve the customer query. Unnecessary reciting numbers or statements in a painfully slow pace can be quite a harrowing experience. 

Give the option to ‘Zero out’

There could be times when callers might want to revisit the main menu to pick the right option. Keeping an option to revert to the main menu at anytime would be a wise thing. This option is commonly referred to as ‘zero out’.

Avoid cliches

Cliches like playing “Your call is important to us” script while putting customers on hold endlessly is a terrible practice. A better way of making customers wait without making them feel the irritation is to append the call position. 

Share context

Forwarded calls, be it from another agent or from an IVR system can be tricky to handle if no call context is given. Giving prior context about the purpose of the call from which IVR menu it is originating will help agents solve queries faster.

Option to bypass IVR

Despite its intended benefits, callers might still want to talk to an agent. Ensure that there is an option to bypass the IVR and connect directly to the agent if the caller desires so. This is necessary in emergencies situations where personal intervention is needed.

IVR Technologies

IVR Technologies to keep an ear for

Like with every other technology that is changing with time, IVR is also undergoing a seismic shift in the way it works. The IVR of the future will not be restricted to voices that we hear through phone devices. They will take shape and form beyond that. Here is what we can look forward to.

ivr buyer's guide
Speech IVR or Voice Biometrics

Rapid advancements in voice recognition and natural language processing capabilities will bring speech IVR IVR technology to mainstream usage. In speech IVR, the caller will give voice commands in response to the IVR menu. The system will authenticate the user in the background by comparing their voice-print with the copy in its database. 


Once authenticated, the IVR will pass the caller to the next menu. This can typically prove useful in BFSI and Healthcare industry where customer identity is of utmost importance. The need for keypress may be totally eliminated. However, the success of speech IVR will be largely dependent on the efficiency of the system to pick up regional phonetics and diverse vocal cues. 

Video IVR

The advent of SIP (Session Initiation Protocol) opens up new possibilities in IVR. One among that is the Video IVR which uses extremely advanced technologies like biometrics (Iris scan, finger scan, face recognition, etc.) to identify the caller. 


In some cases, the video itself may be embedded with options like an IVR menu that the user can use to navigate. The caller/viewer can select options from the video to direct themselves to a video demonstration, explainer video or even a call conference with an agent. The possibilities of video IVR are literally endless. 

Text IVR

Short messaging service and instant messaging have become the primary mode of communication for the world as a whole. IVR thrives by collecting input from users through keypad presses. Put A & B together, and we have a new form of IVR that can take inputs from customers through SMS or chat mediums. 


Text IVR is an emerging IVR technology that will allow users to pick options from menus. From fetching information to making changes to preset settings. Text IVR will help users in plentiful ways.

Personalized IVR

According to 2017 Microsoft State of Customer service report, 72% of customers expect a brand or organization to know their contact, product and service information/history. Thanks to data analytics, it is possible to get a granular level view of customers. Analytics can also help dig out popular IVR options that customers are frequently using. 


Such data clubbed with segmentation of calls can be used to create a personalized IVR for specific regions or type of customers. For example, callers calling from Chinese extensions will be provided only with IVR menus for services extended in the country. It will help reduce the overall time spent on the IVR and drive customers straight to the answers that they are seeking.

Freshcaller business phone system

If you’re looking for the best IVR system...

Freshcaller is a call center software that comes with a multi-level IVR feature. You can set up unlimited multi-level phone trees for various business purposes. The interface is easily configurable and can be done without any technical know-how.

If personalization is something that you are looking for then Freshcaller can help you upload pre-recorded messages for each menu option. From welcome message to on-hold music, every aspect of the IVR can be personalized.

Curious to know more? Sign up for Freshcaller.

Why Freshcaller, of all things?

Why Freshcaller, of all things?

Multi-level IVR or Phone trees

Manage a multi-tier inter-linked IVR system

Upload personalized messages

Give a personal touch to your IVR

Assign key presses

Set an action response for each key press.

Forward to voicemail

When calls don't get through, voicemails can help.

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