What is IVR (Interactive Voice Response) & how to set it up

Clients call your business when they’re looking for answers. The faster you can provide them, the better the customer experience can be. However, endless call transfers can hinder the amount of people you can help in a timely manner. If your live agents face high call volumes every day, using an interactive voice response (IVR) system can help you save time and connect clients to the right team members from the start.

Keep reading to learn about IVR and the perks it can provide, as well as how you can successfully set up IVR technology for your business.

How businesses use IVR

Businesses use IVR menus for a wide variety of situations. You’ve probably experienced a few IVR systems when calling companies in the past. To help you brainstorm opportunities to improve your call management with IVR, here are examples of IVR use cases that can help your business field more calls:

• Answer common questions: Set up menu options that play pre-recorded answers for your FAQs — for example, “press one for our business hours.”
• Connect clients to the right team: Phone menus help clients reach different teams (like sales, support, or public relations) without saving or looking up multiple phone numbers.
• Streamline support for existing clients: Forward calls from paying customers to a dedicated line, so they get priority support.
• Filter out spam calls: Send salespeople straight to voicemail (and only call back if you want to) while letting customer calls come through.
• Offer language options: Offer separate menu options for different languages, like English and Spanish.
• Promote current deals: Create a menu option that plays a frequently updated recording that lists out current sales or specials.

Some IVR solutions can even pull personalized data, like account balances and product prices, based on the information callers enter. This usually requires you to connect your IVR platform to some sort of database, like a CRM.

How does IVR work?

IVR technology is actually simpler than you might think. Since IVR is now integrated with many user-friendly VoIP phone services, you don’t need to have any technical knowledge to understand the basics of the technology.

When clients call a phone number that’s equipped with an IVR system, they’ll instantly hear an automated voice or a human voice recording listing out menu options that they can choose from. This menu is fully customizable, so you can update your menu options to align with your team’s needs.

Then, to process the menu options callers choose, IVR systems often use two technologies:

• Dual-tone multi-frequency signaling (DTMF): When a caller types a number on their keypad, DTMF triggers its corresponding action, which you set from the backend of your phone system. For example, pressing the number “2” could forward calls straight to a manager.
• Voice recognition: When a caller states their desired option (for example, saying “two” instead of tapping the digit on their keypad), speech recognition tech will translate their verbal response into a corresponding command.

Either way, clients will get routed to the appropriate phone number, voice recording, or alternate location.

5 benefits of IVR

IVR technology is a win-win for your team members and your clients. For your business, IVR acts as an inbound call filter that helps your team members save time and increase their productivity. For your clients, IVR prevents poor customer experiences — no more unprepared live agents or excessive call routing.  

Let’s walk you through five key benefits of setting up an IVR system.

1. Reduce costs

Manually handling high call volumes can lead to plenty of wasted time and money. If you don’t automate your call routing, you’ll really only have two choices: hire receptionists to field your calls or reduce efficiency by putting your live agents in charge of call transfers. With an IVR system as your digital receptionist, you won’t have to worry about either issue. IVR will automate much of the call management process for you.

Plus, since IVR functionality is integrated with many modern VoIP phone systems, there’s no need to purchase separate call center software or hire an IT team to set up an IVR menu. 

With OpenPhone, for example, basic and highly intuitive IVR features are included with the Standard plan. Even if you’re a small business or startup, you can take advantage of IVR technology. Our Premium plan gives you even more options to save time on your inbound call workflows including round robin call distribution, contact syncing with HubSpot, and up to 100 users on a shared number.  

2. Increase customer satisfaction

Businesses that use IVR to improve the customer experience can significantly boost caller satisfaction. McKinsey reports that one enterprise company saw a 10-25% increase in satisfaction thanks to their customer-centric IVR.

It’s easy to see why IVR can transform the caller experience. For one, callers are no longer subject to long hold times or call transfers, which often occur when live agents aren’t prepared to answer certain questions. IVR ensures callers are directly routed to an expert for their needs, so the first human they chat with can provide a resolution fast.

IVR can also allow you to use different scripts or greetings customized based on who’s calling — leads or customers, clients with different membership plans, or people who speak different languages. This can help you better connect with callers, so they feel like valued clients.

3. Maximize your team’s time

If your trained agents are spending more time fielding basic questions than offering support for more complex needs, you aren’t maximizing their time. 

Imagine a talented sales rep answering questions about pricing tiers from casual shoppers instead of doing consultations for leads who actually want to buy from you. Your sales rep won’t meet their full potential, and your response times for warm leads will go up.

IVR technology allows you to implement a self-service support option for callers with simple, repetitive questions. All you need to do is prepare the audio response once to answer every caller with those questions — no real-time support needed. This way, your live agents are readily available for callers who actually need to speak with humans to resolve complex issues.

4. Reduce human error

No matter how well-trained and professional your team members are, there’s always room for human error when you take the manual route. When manually transferring calls, mistyping a single number or tapping on the wrong contact can send callers to a completely irrelevant department. If one of your live agents makes this mistake, your caller will have to deal with a call transfer for a second time.

IVR eliminates this issue by sending callers to set destinations, based on the menu option they select. Your clients know the issue they’re facing best, so they can use your IVR menu to guide themselves to the right destination.

5. Offer support 24/7

When you implement an IVR system, you can offer support even when your business hours are over. While you may not have live agents available to resolve complex issues, the ability to direct clients to pre-recorded messages allows you to answer common questions (like what your business hours are) in the meantime. You can also set up a command that directs after-hours callers to an emergency number.

Instead of getting sent straight to voicemail, which leaves callers with little explanation, your callers will at least have some options. Or, you can set up an away voicemail greeting specifically for callers who dial your number outside of business hours. In this sense, setting up an IVR menu can help clients feel more supported.

How to set up an IVR system

You can set up an IVR menu in a matter of minutes. VoIP systems have simplified the IVR setup process, so you don’t have to call an IT team just to automate call routing for a single phone number.

The steps that you need to take to set up IVR can vary between business phone systems, but we’ll guide you through OpenPhone’s step-by-step process, so you can see exactly how easy setup can be.

1. Navigate to the “Phone Numbers” section of your admin dashboard.
2. Select the phone number you’d like to add an IVR phone menu to.

3. Scroll down to the “Phone Menu” section and tap “Disabled” to add your menu.
4. Tap “Set a greeting message” to upload an audio file, record a message, or type out a message for an automated voice to read. This message will be the first thing callers hear after dialing your phone number.
5. Under “Menu Options,” you can set the destinations for each keypad or voice command. For each menu option, you can choose to:

• Forward calls to another OpenPhone number,
• Forward calls to a US or Canadian number outside of your organization
• Let calls go through to the number callers originally dialed

If you have a Premium plan on OpenPhone, you can also send callers to voicemail or a specific person (even if they share a phone number), or play an audio recording based on the caller’s command.

6. Under “If no option is selected,” OpenPhone users can decide what happens if clients don’t type or say any command at all. Standard users can select from the three basic destinations in Step 5. Premium users can select one of the six destinations listed in Step 5 or have their IVR system repeat all the menu options to the caller.
7. Tap “Save” when you’re finished customizing your IVR menu.

Best practices for setting up IVR

IVR doesn’t have a great reputation with every consumer. Though IVR is improving every year, most people have had bad experiences with this technology. One major reason: Too many businesses use auto-attendants purely to save time, rather than to help clients.

To avoid some of the most common mistakes associated with IVR and keep your customers happy, you need to take on a client-centric mindset when creating your menu. Consider implementing these best practices when setting up your IVR system.

1. Limit the amount of menu options you provide

For consumers, the most frustrating part of using IVR systems is having to listen to all the irrelevant options on a phone menu. There’s no such thing as a skip button on phone calls, so long IVR menus can be hard to bear. ⏭️

To improve the customer experience, limit your menu to five options max. Think about the calls you normally get on a day-to-day basis and the questions clients commonly ask. This can help you decide what menu options are absolute musts and which ones you can do without. Try not to waste your menu options on highly specific commands (like “dial 3 to learn how to clean your water filter”) unless you’re constantly fielding calls about one subject.

It’s also a good idea to have an option for miscellaneous needs. Not having the ability to fully describe an issue is another frustration that clients have with IVR, so it’s helpful to offer a way for callers to reach you if no other options are a great fit for their needs.

2. Use customer data to improve your IVR system

Even if you perfected your first IVR menu, client needs can change over time. Keeping an eye on your call data, adding call notes to your contacts list, and chatting directly with your live agents can help you learn about why clients are calling and who they’re trying to reach.

If you notice any major needs you’re not directly addressing, consider adjusting your menu options to create a better customer experience.

3. Record your own welcome message when possible

When clients call your phone number for support, the last thing they want to hear is a robot speaking to them. Starting off your IVR audio with a robotic message can sound a lot like being sent to voicemail — which can lead callers to hang up before they get the answers they need. 

Using a human voice for a greeting can make your IVR menu feel much warmer and friendlier. If you’re able to add a personal touch by recording a custom greeting, consider doing so.

4. Test your IVR system after setting it up

After you finish customizing your IVR menu on your VoIP phone system, don’t immediately set it and forget it. IVR does reduce human error in the long run. However, that’s only the case if you enter the right routing options or select the right audio files during the setup process. Double check your IVR system settings and call your phone number several times to test out each command.

Testing your IVR system also gives you a chance to catch any errors or poor phrasing in your recording or text-to-speech entry. If your team uses an on-premise PBX system, moving to a cloud-based VoIP provider makes updating your phone settings simple. As a result, you can make changes fast and ensure you put your best foot forward for anyone who calls.

Implement IVR to improve your call flow

Providing top-notch support to your callers is key to keeping customer satisfaction high. With an interactive voice response system, you empower clients to guide themselves to the right agents or get instant answers to their questions.

Keeping in mind our IVR system best practices, like having a short menu greeting and testing your system, you can improve the experience for your callers. All the while, you can reduce your own business expenses and maximize your team members’ time. 🙌

Thanks to VoIP phone systems like OpenPhone, setting up an IVR system is no longer difficult. There’s no technical knowledge required, and basic IVR features are available with every single plan at no extra cost — along with other helpful business phone features like call recording, business app integrations, and voicemail transcriptions.

Sign up for your free trial of OpenPhone to set up your first IVR menu today.

Emily Liu

Emily is a freelance business and marketing writer based in the desert, though her writing is anything but dry. Her passion is writing compelling, human-friendly content that helps growing businesses perform better.