Call center IVR: Everything you need to know

For decades, interactive voice response (IVR) systems have been a key part of contact centers, changing how businesses communicate with their customers over the phone.

With the contact center software market projected to reach nearly $137.75 Bn. by 2030, driven by changing customer needs and digital advancements, it’s important for businesses to understand what IVR is, its key features, common uses, benefits, and how the technology needs to evolve to fit into the future of customer service.

What do we mean by call or contact center IVR?

An IVR is an automated system that interacts with callers, collects information, and routes calls to support teams or the appropriate agent within the contact center. Over the years, the technology behind IVRs has changed. Legacy IVRs use a Dual-Tone Multi-Frequency or touch-tone keypad (press 1 for this, press 2 for that) method where customers hear pre-recorded messages and then press a number on the phone’s keypad that corresponds to the menu of options given to them.

As voice recognition technology has advanced, keyword-driven IVRs have allowed customers to resolve their issues more conversationally using one-word answers or short phrases.

5 must-have IVR features for call centers

Not all IVR systems are created equal. There are some essential features that can make a big difference for both businesses and customers.

1. Voice recognition

Customers need more than one option or one word to explain their query, whether the issue is routine or complex.

Basic IVRs restrict customers to a pre-selected menu of options. Many customers will press any number on their keypad in the hope of reaching a person so they can explain the problem in their own words, in their own time, and feel like they’re understood.

More advanced systems have introduced voice recognition to handle spoken responses, making interactions smoother and reducing frustration, especially for customers who prefer talking over pressing buttons.

For voice recognition to be effective, these systems must leverage spoken language
understanding (SLU), not just off-the-shelf speech recognition. SLU uses AI to correct speech recognition errors, ensuring that every caller is understood, regardless of what they say or how they say it.

2. Automated call routing

If your IVR can’t complete a task or fails to understand or help customers, calls should be passed over to your agents. This process should happen quickly to route calls based on the caller’s input, directing them to the right department or agent. Often, this happens without context, meaning customers have to re-explain an inquiry they might have already tried to explain 5 times to your IVR.

For your IVR to be effective, it needs to work with your agents through well-designed handoff protocols so your agents can seamlessly pick up where the IVR left off. This saves time, improves first-call resolution rates, and ensures customers are connected to someone who can best handle their inquiry.

3. Customizable menus

Customizable IVR menus allow businesses to create tailored options and responses that fit their specific needs. This flexibility ensures that customers get a personalized experience, as no two businesses are alike. For example, a retail store may prioritize order tracking, while a bank might focus on account services.

Customizable menus ensure that the IVR system is useful and relevant to each caller. However, asking a customer to select an option from an IVR menu assumes that they think in terms of your business logic. By upgrading your IVR to an intelligent and lifelike voice assistant, you can allow customers to state their inquiries in their own words instead of picking from a menu. For the best results, a voice assistant should ask clarifying questions and guide callers through common transactions without the need to speak to a person.

4. Self-service options

Routine self-service questions make up as much as 60% of calls handled by an agent. An IVR can handle routine queries like checking account balances, making payments, or scheduling appointments.

When your agents are freed up from handling routine queries, they can spend more time handling complex queries, customer interactions that drive revenue, or highly sensitive matters where human touch and emotional awareness are critical to resolving the issue effectively.

5. 24/7 availability

Round-the-clock customer support is now a necessity, not just a bonus. IVR systems provide a cost-effective way to offer 24/7 support without the expense of hiring and training additional agents. However, for after-hours automation to work well, your IVR must accurately understand and respond to a wide range of customer requests. Without the right technology in place, self-service can quickly turn into a frustrating experience for your customers.

Common call center IVR use cases

An advanced IVR should be able to manage high-call volume FAQs and routine inquiries to alleviate the pressure on your contact center teams. Here are some common ways an IVR can be used to handle inbound calls:

• Call routing
• Outage or service updates
• Offer support during peak periods
• Call deflection
• Automate customer service
• Pros and cons of IVR in call centers

An IVR system can create a number of benefits for both contact center agents and customers when it’s capable of handling a wide range of tasks. However, if the system’s features are limited, it can create more issues than it solves. Below, we’ll explore the pros and cons of using IVR in call centers.

Benefits of IVR in call centers

Using an IVR system in a contact center can have several practical benefits:

• Increased efficiency: IVR helps route incoming calls quickly to the right department or agent, reducing wait times and speeding up issue resolution.
• Cost savings: By handling routine inquiries automatically, IVR solutions reduce the need for agents to address basic tasks, which can lower your operational costs.
• 24/7 availability: IVR systems can operate at any time, allowing customers to access information and support outside regular business hours.
• Scalability: IVR can easily scale to manage more calls during busy periods without requiring extra call center agents.

Limitations of IVRs in call centers

The biggest challenge with IVR systems is that many are built on outdated technology and legacy systems that struggle to meet developing customer expectations.

While more recent IVRs aim to create more conversational experiences during customer calls, most systems still fall short of delivering humanlike, natural interactions. Speech recognition is often inaccurate, which leads to:

• Unnatural conversational flows
• Decreased first contact resolution
• Miscommunication and frustration
• Misroutes to the wrong departments
• Customers end up stuck in long queues
• An increase in call abandonment rates

Another issue is that IVRs often force customers to choose from limited options based on the system’s logic rather than letting them express their needs freely. Even when speech recognition works, it doesn’t solve the underlying problem of inflexible and outdated design.

IVRs were developed at a time when customers had lower expectations for on-demand services and immediate responsiveness. Today, customers want seamless, intuitive experiences—whether they’re interacting online or over the phone.

With the rapid rise of conversational AI and technology that can support accurate listening, contextual understanding, and humanlike responses, legacy IVR technology is becoming increasingly outdated, often struggling to meet the growing demands for more efficient and personalized customer interactions.

Does IVR future-proof customer service for call or contact centers?

With the rapid evolution of generative AI technologies like ChatGPT, it has become clear that the future of customer service involves at least some degree of automation.

IVR can help improve customer service in call or contact centers, but it isn’t enough to fully future-proof operations on its own. Voice AI offers an alternative to traditional IVR by answering calls with a simple, open-ended question like “How can I help?” However, if your current IVR already includes some self-service features, replacing it entirely might not be the best approach. Instead, consider using Voice AI to enhance your existing setup by adding more self-service capabilities.

Embracing voice AI will enable your organization to address call abandonment, enhance customer experiences, handle complex issues, and streamline operations. This approach ensures prompt call answering, reduced call volume, and scalable customer service.

The next step in IVR evolution: Why businesses should learn about conversational AI technology

Traditional IVRs have focused on automating repetitive and straightforward contact center tasks. Conversational AI solutions powered by generative models can handle a broader range of customer queries and improve the complexity of interactions it can handle to create natural, human-like conversations that don’t feel rigid.

Conversational AI empowers companies to optimize staffing and deliver personalized experiences at scale, with insights from real-time customer data that help create interactions that leave a lasting, positive impression of your brand. By automating routine and complex tasks, it can handle a variety of functions, including:

• Call routing
• Authentication
• Answering FAQs
• Processing payments
• Managing accounts
• Making reservations
• Multilingual interactions
• Troubleshooting issues

This approach enhances customer loyalty while allowing your team to focus on more strategic, high-value interactions.

Innovative organizations implementing voice AI will boost satisfaction and loyalty by proactively addressing customer issues and routing calls accurately, while agents benefit from a more manageable and rewarding workload.

Discover how PolyAI can help you deliver effortless CX at scale with a conversational platform that lets your customers speak naturally, interrupt, change topics — and always have a fantastic customer experience.