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IVR (Interactive Voice Response)

Author: Anagha Ravi

What is IVR?

IVR (Interactive Voice Response) is a specific technology allowing humans and computers to interact through voice or DTMF tones via keypad. IVR systems are most often used by businesses and call centers to route incoming call traffic.

Most often, callers are asked to select a number from a list of options to be routed to the right department (For example, “press 1 for Sales, press 2 for Support”). However, with advances in voice recognition many business are moving to systems where the caller can simply say what they are calling about and the system can route them appropriately.

Also known as an Automated Attendant, the IVR does not entirely replace a receptionist or attendant, but it can handle a multitude of call answering tasks by routing calls to common destinations based upon caller voice response or key press input.

History of IVR

IVR was first developed in the early 70’s, and the first IVR system was linked to an inventory control database for internal use.  Due to limitations in digital technologies at the time, it wasn’t until the 90’s when rudimentary IVRs began to appear.  Again, due to limitations in digital processing, these first IVRs were limited to DTMF response.  Over time, as processor and memory increased, IVRs were able to perform more complex queries, and to adapt across a broader range of possible business models.  By the dawn of the 21st century, IVR technology became ubiquitous.  It’s hard to imagine life without IVR now.

What does an IVR system do?

The IVR automatically answers all incoming calls from a specified inbound call route, and plays a prerecorded message, giving the caller one or more choices in how to route the call, usually based upon the DTMF tone generated by a key press from 0 – 9.  Most IVRs do not include the symbol keys (#,*), as they are often associated with secure access to other PBX features.  IVR technology like Voice Recognition and Speech To Text, or STT, are becoming more common, and can route calls based upon pre-configured voice commands.

Based upon the key press or verbal input into the IVR menu, an IVR can route the call to a specific extension, a ring group, a queue, a recorded message, or even to another IVR.  If no input, or invalid input, is received after a specified period of time, the IVR can be configured to repeat its prerecorded message, route the call to a receptionist or other destination, or just terminate the call. 

IVR software is not limited to just call answering and routing.  Based upon keypresses or verbal responses, more sophisticated IVRs can access customer account records, authenticate callers, and via a CRM system, can associate these records with the specific call in a queue, making them available to customer service representatives upon answering the call.  Information from customer databases can also be accessed by customers via IVR for common tasks such as account management and payments.

While an IVR can manage the vast majority of call answering and routing tasks, and can automate common customer service features, IVR is limited to what input it can understand.  For a variety of reasons, from DTMF failure on a key press, to misunderstanding the pronunciation or spelling of a voice command, IVR systems sometimes require human intervention, so many give callers an “escape key”.  By pressing a key (usually “0”) users will leave the IVR system and are taken to a human operator. 

Animated graphic of interactive voice response

How does an IVR system work?

The expression “Auto Attendant” and “IVR” are closely linked and the former is somewhat more descriptive of the key function of an IVR system.  The IVR answers incoming calls in the same way as a human attendant would, and handles calls in much the same way.  Essentially, the caller is granted limited access to the phone system to dial extensions and to access secure features, like voicemail and account information, if authorized.  A prerecorded message asks the caller questions, and based upon the caller’s input, routes the call as necessary.

Input from the caller can take two forms. DTMF key presses, or voice cues.  Basic features like dialing an extension, accessing voicemail, and any type of numerical input are generally handled based on DTMF key press input.  DTMF, or Dual Tone Modulation Frequency, are the tones produced when a key is pressed on the telephone keypad.  Each tone is unique and unambiguous, so one tone cannot be mistaken for another.

More complex features can be facilitated via voice cue input.  Using Speech To Text (STT) and Text To Speech (TTS), an IVR system can be “trained” to understand verbal input from the caller.  The components that ‘listen’ to callers are known as Natural Language Processing (NLP) and Natural Language Understanding (NLU).  Based on the caller’s responses, the system can verify the caller’s identity, access a database, and perform database updates, including creating new records, and updating or deleting existing records. This gives the system the ability to authenticate callers, update account information, and even to accept payments, and apply them to customer accounts.  Because voice cues can often be misunderstood, due to variations in pronunciation, audio interference, etc, it is particularly important to provide an “escape” key press that will take the caller to a live receptionist or CSR (usually “0”).       

IVR types

Dynamic IVR

A dynamic IVR processes key presses or voice prompt input from the caller.  Based on caller authentication via a PIN, unique phone number, SS number or other unique identifier, the dynamic IVR can connect with a CRM or other customer database.  In addition to basic account information, a dynamic interactive voice response can possess the ability to access the rudiments of the caller’s call history (basically dates, times, length of call).  Based on information retrieved from the CRM or customer database, the IVR software can adapt by routing the call to a specific destination, or can present a different menu.  For example, a dynamic interactive voice response system can identify delinquent accounts, and route the call to an IVR payment interface or collections Department.  Using call history data, a dynamic IVR might take the caller to a more specific menu of choices.  By comparison, a static IVR might take the caller to a generic menu, making the caller sit through the entire menu to determine their key press, while a dynamic IVR might be able to identify the time, date, and destination of the caller’s last call, and automatically route the call to the appropriate IVR, ring group, or extension.

Inbound IVR

Inbound IVR is a system set up for the handling of incoming calls, much as described above in the “Dynamic IVR” section.

Outbound IVR

Outbound IVR makes calls to customers, but should not be confused with robocalling.  Where robocalling is intended to deliver a blanket statement to a large audience, outbound IVR is aimed at creating personalized customer interactions. 

Conversational IVR

Conversational IVR uses Natural Language Understanding (NLU) to follow voice commands from callers of greater complexity. Instead of understanding simple responses like “yes” and “no” from a caller, conversational IVR technology can understand and utilize more natural caller language.


IVR technology is generally aimed at providing a positive customer experience with an IVR solution. Below are some common benefits provided by IVR systems.

First call resolution (FCR)

Because of the ability to route calls to the specific department, individual, or automated system, an IVR significantly increases first call resolution, literally resolving customer issues on their first call which can lead to improved customer satisfaction. 

24*7 customer service

Combined with time conditions and time groups, after hours calls can be routed to automated payment or account management systems, voicemail, emergency numbers, or to available sales and support customer service representatives (“CSRs”).

High call volume handling

By diverting routine account or support inquiries to automated self-service account management systems or prerecorded responses, CSRs are free to work with those customers requiring assistance, while the automated system simultaneously handles more routine calls.  It would not be an exaggeration to say that an IVR can double the volume of calls received and processed.

Use Cases/Examples


A self-service IVR typically requires little or no agent intervention.  Through key presses and voice prompts, callers can perform routine operations like account status inquiries, updates, and changes, payment submissions, participate in polls and surveys, etc, without interacting with a CSR. 


An Agent-assisted IVR would typically be found in a direct sales or live support environment.  Based on key presses or voice prompts, calls are routed directly to a sales or support CSR.  Agent- assisted IVRs can also be multilevel, to route calls to specific sales or support subcategories, such as a particular product line or department.

Hosted IVR

A hosted, or cloud based IVR can provide all the features of an on premise IVR for those users who might not have an on premise PBX.  Hosted IVR can also be useful for those users who do have a PBX as well because of the ease of deployment and configuration of more sophisticated IVR features like CRM integration and speech recognition.  Some hosted IVR providers even offer adaptive AI technologies that the ordinary on premise user might not have access to.

Multi-Level IVR

Key presses and voice prompts can take callers to extensions, call queues, ring groups, etc. They can also lead to another IVR, which, in turn, depending on the caller’s key presses or voice prompts, might take the caller to yet another IVR, whether it is a specific support queue or an automated IVR payment system.  This can be useful for determining which product or service a caller is calling about, or for handling after hours calls.

IVR callbacks

IVR callback is a feature that can be configured in a queue, for example.  Taking the caller’s number from the Caller ID, or by key press input, the number can be placed into a callback queue.  Ordinarily, callers will not lose their place in the queue when this feature is selected.  This can be automated, so that the number is automatically dialed and terminated to the next available CSR or CSRs can then return these calls as specified via the PBX or CRM system, or via autodialer.


IVR authentication

There are various scenarios in which caller identity needs to be verified.  The IVR can access a single database or multiple databases and compare caller input from DTMF keypresses or verbal input against data contained in the database to authenticate the caller’s identity from a PIN code or password.  Based on the input, the IVR will handle the call accordingly by granting access to the desired feature, whether it is voicemail access, account information, or to process a payment or other transaction.

Frequently Asked Questions About IVR

What are IVR payments?

Callers can make payments via an IVR.  A payment can be agent assisted or self serve.  In an agent assisted payment system, the call is directed to a live CSR for collection.  In a self serve system, once the caller is authenticated via key press or verbal input, their record can be accessed from a database or CRM for updating.  The caller can retrieve balance information, and select an option to make a payment.  In most cases, the caller can tell the system via keypress or verbal input how much they want to pay, or they can select an option to pay the entire balance.  The IVR takes the credit card information, usually via key press, and based on information contained in the credit card number entered, connects to the customer’s credit card processor.  If the payment is authorized, it is applied to the account, and the account database is updated accordingly.  Payment confirmation can be delivered to the customer via email, SMS, or via a payment confirmation number.

What is an IVR call?

IVR call is an outbound feature that integrates with a database for autodialing.  It works exactly like an inbound IVR.  Using an auto dialer, the IVR calls outbound.  When answered, it works just like a conventional IVR.  IVR calls can be useful when integrated with a customer database or CRM for account and schedule reminders.  This is not to be confused with IVR callback.

What is IVR deflection?

IVR deflection is a way of reducing call volume by determining via key press or verbal input those calls that don’t necessarily require a human customer service or support representative.  This can be accomplished in a number of different ways.

First by offering the caller the option to perform common inquiries and tasks through an automated IVR interface.  Common transactions like balance or status inquiries, payments, time tracking for field workers, and confirmation of transactions can be completed without human intervention, reducing call volume for a call center, and wait times for those customers who do need a CSR.

Another means of call deflection is the addition of custom messaging to your IVR.  Custom messaging can include anything from location information and driving directions, to alert information like emergency/weather related closures and scheduling delays.  Often a custom message can answer the caller’s concern without routing the call to a CSR.