What is Interactive Voice Response (IVR)? Examples & How it works

With the strong development of automation trends in service industries, Interactive Voice Response – IVR (tentatively translated as Interactive Voice Response System) has become an indispensable part in improving customer experience, reducing operating costs and optimizing workflows.

In this article, FPT.AI will explain in detail how Interactive Voice Response works, the types of IVR and the benefits that IVR brings to businesses in the current digital age.

What is Interactive Voice Response?

Interactive Voice Response (IVR) is a system that uses pre-recorded messages or Text to Speech technology to provide information or guide users to resolve requests without the intervention of call center staff. If the request is too complicated, IVR will automatically route the customer’s call to a specific department. Interactive Voice Response is commonly used in customer care centers, automatic payment systems or product information checking services.

Types of Interactive Voice Response

Interactive Voice Response can be classified by the way the user interacts with the system and the call is handled. Here are three common types of IVR:

• Touch-Tone Replacement IVR: This is the most basic type of IVR system, requiring the caller to press keys on the phone to select options from a menu. For example, after listening to a recorded message, the caller can press “1” to get information about opening hours, “2” to learn about the store location.
• Directed Dialogue IVR: This type of Interactive Voice Response system provides questions or input using the caller’s voice. The system will ask specific questions to gather information, for example, “Do you need information about opening hours or address?” and the caller can respond with “Opening hours”.
• Speech Recognition IVR: This is the most advanced IVR system, using voice recognition technology so that callers can answer questions and perform commands without having to press keys. The system will process and understand the caller’s request through speech recognition and natural language processing (NLP) technology.

How the Interactive Voice Response system works

The structure of the IVR system includes:

• TCP / IP network: Provides internet and intranet connection, helping IVR applications to access and exchange data from databases or servers.
• Database: Stores necessary information that callers need such as information about products, services or company schedules.
• Web / application server: Is where many different applications can run such as applications for contact centers, automated sales calls or speech to text systems. These applications are typically written in VoiceXML to create dynamic voice interactions with users.

The workflow of an Interactive Voice Response system is as follows:

• Phone Call: The customer calls the organization’s customer service number.
• Greeting: The system greets the customer with a pre-recorded voice and provides a menu of options.
• Information Entry: The customer selects an option by voice or by pressing a key on the phone keypad.
• Redirect: The system directs the customer to the appropriate representative or department.
• Response: The IVR system can provide pre-recorded answers to frequently asked questions, or allow the customer to switch to receiving text messages.

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Applications of Interactive Voice Response in Business

Interactive Voice Response is widely used in many industries to improve customer care processes and optimize services. Specifically as follows:

• Automated customer support: Helps customers quickly find necessary information about products, services or order status without having to call support staff.
• Automated payment: Customers can pay bills over the phone without the help of staff, thereby reducing the load on service centers.
• Transaction notification and order confirmation: Interactive Voice Response can automatically send notifications to customers about transaction status or order confirmation.
• Call management and staff allocation: IVR can automatically distribute calls to appropriate departments based on caller preferences, helping to reduce waiting time and increase staff efficiency.

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Advantages and Disadvantages of Interactive Voice Response

The biggest advantage of Interactive Voice Response systems is the ability to respond to customers automatically, helping customers reduce waiting times and helping businesses save resources by reducing the intervention of call center staff.

IVR allows customers to access information or make requests at any time of the day. Calls are processed quickly, minimizing human errors and ensuring accurate information is provided.

However, businesses must carefully consider when implementing and integrating Interactive Voice Response into their customer care process because this system relies on pre-recorded audio messages and has only one fixed processing flow.

Users must select options to navigate through menus (for example, press 1 to reach customer support, press 2 to pay bills). This can sometimes be frustrating for users who can’t find the right option or need more support from a real person.

Ideally, businesses should only implement IVR when they have low call volumes or need to handle simple interactions like paying bills or booking flights.

What is Smart IVR? Comparing Smart IVR vs traditional IVR systems

Smart IVR is an advanced version of IVR, integrating modern technologies such as generative AI, natural language processing (NLP), machine learning and voice recognition to understand and handle repetitive tasks for humans. This system provides a smoother experience because users can speak freely without having to follow rigid options.

In addition, Smart IVR can integrate with data sources or back-end systems to provide personalized solutions. Smart IVR is often used in industries with high call volume, requiring automatic handling of complex requests from customers, such as banking, healthcare and retail.

FPT AI Engage integrates advanced Smart IVR technology, allowing customers to interact naturally and seamlessly by voice, no longer having to wait long when needing instructions for card activation or card unlocking. This virtual assistant will automatically analyze and route calls to the right support department, with an accuracy of up to 92%.

Thanks to that, Sacombank not only enhances customer experience in the digital age but also optimizes operational processes, maintaining a competitive advantage in the modern market.

In conclusion, with the continuous development of technology, especially in the field of artificial intelligence (AI) and natural language processing (NLP), the future prospects of Interactive Voice Response (IVR) and Smart IVR are very open. These systems are becoming more and more intelligent, recognizing voices more accurately, understanding the context of the call and providing a closer user experience.

Contact FPT.AI now if you need more in-depth advice on virtual assistant solutions integrated with IVR technology to improve services, optimize costs, increase customer satisfaction and maintain competitiveness in the global market.

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