Technology & Roadmap

The Ultimate Guide to Interactive Voice Response (IVR) [What is IVR, Types, and Business benefits]

  • September 12, 2019
  • 6 mins read

If you have dialed a business number and heard a voice that said “Welcome to the company. Please press 1 for support and 2 for sales”  then already know what an IVR is. IVR or Interactive Voice Response has revolutionized voice interactions. Even though it’s a very simple technology, it has found multiple applications in industries like healthcare, mobility, customer support, etc. 

In this article, we’ll take a deep dive look into IVR, it’s types, advantages and more. The idea here is to clearly understand the technology and its applications in different industries. 

What is an Interactive Voice Response (IVR)?

First things first, let’s understand what an IVR is.

In simple terms, an IVR is an automated voice system helps in making customer segmentation and routing easier. It enables customers to make a choice through their phone’s keypad. It’s popularly used in support centers and has also found it’s usage in other scenarios like customer feedback.

Let’s take a scenario of a hotel booking platform and the implementation of IVR for their helpline number. First up, the hotel will probably want to know the language that the customer is most comfortable with. After capturing the language preference, the company checks if the caller is an existing customer or not. 

In case the customers have a query that can be handled by the system, it can be handled by the IVR system itself. For example, if you would like to cancel their bookings, the registered users can use IVR to directly cancel their bookings. 

In case the user would like to speak to a customer support agent, they can be connected to the right agent based on their preference. For more information, look at the image below. 

How does Interactive Voice Response (IVR) work?

Let’s talk about the technology behind IVR. For this, let’s understand DTMF first. 

Call Centre DTMF (Dual Tone Multifrequency), also known as touch-tone, is the tone that is produced when you enter numbers on your phone’s keypad. Every key on your phone has a specific frequency attached to it. For example, when you press 1, two tones are generated,  1209 Hz and 697 Hz. In case you want to learn frequencies for other digits too, you can find them here

So whenever you make an IVR choice on your phone, specific frequencies are passed through the phone line to the IVR system. The frequencies are then translated to determine the key pressed. Depending on the key pressed, different tasks are triggered, be it the next IVR message or call routing. Newer phone systems are usually equipped with automated DTMF encoders. 



Types of IVR

IVR can be briefly divided into two parts – Single Level IVR and Multi-Level IVR.

Single Level IVR 

As the name suggests, single-level IVR helps you add one layer of IVR to your call flow. A simple example would be an automated IVR call for feedback.

One of the popular ways companies use single-level IVR is for automated feedback. The feedback call is triggered which asks the user to enter their rating using the IVR menu. The entry is then fetched and entered into a CRM. Calls are proven to get more engagement when compared to SMS and emails.


Multi-Level IVR

This type of IVR lets you trigger another IVR after an IVR. This enables you to create complicated call flows depending upon your business requirements. If you’ve called a support number before, then you’ve probably experienced multi-level IVR. 

Let’s see how RedBus, a popular online bus ticketing platform in India uses multi-level IVR for their support. 


There are different layers to the IVR –

  • Language selection
  • Number Verification for existing users through OTP
  • Booking related queries, Bus availability, Carpool, Customer assistance, etc

How to set up an IVR?

You can set up an IVR in multiple ways. If you’re a cloud telephony platform, setting up IVR can be a breeze, you can do it without any technical help. But incase of a PBX system, you’ll have to utilize a tool like Asterisk. 

Let’s look at how you can set up an IVR on Exotel. We provide our users with a drag and drop interface to create an IVR call flow. Here’s how our IVR applet looks like –

  • The first step in the setup is to add a Greeting. Exotel allows you to type the greeting out and uploading a custom audio file.
    Example – “Welcome to Exotel. Your call is very important to us”
  • The second step is to add menu options. You can map digits to different actions. So, let’s say I want to map a digit, that customers can use to connect to our sales agents. To do this, I’ll enter “1” and map it to another applet “connect” (applet used in Exotel to route calls to different agent group).
  • You can also set the number of times you want IVR menu to repeated (ideally it should 2-3 times). You can also set an applet which is triggered incase the user doesn’t enter a choice.

In the case of a dynamic IVR, you can also map digits to trigger another IVR. This means a digit will trigger another IVR applet. We’ll discuss about dynamic IVR and it’s advantages, later in the post.

Different ways of using an IVR system

IVR has found it’s usage in a lot of systems. It’s not limited to only support or sales, companies are utilizing IVR to cancel tickets, book appointments and more.

Let’s look at the various ways different industries are using IVR. Since there are a lot of ways, companies can use IVR for, I’ve tried to cover only the popular ones in different industries.

Note : IVR can be used for both inbound calls and outbound calls.

In hospitals 


IVR enables hospitals to utilize a single number for customer support and enquiries. So in case, you need to check if your blood report is ready, you can easily connect to the Lab Department by dialing the same support number (that you might use for booking appointments). For Hospitals, it increases visibility and decreases operational costs.

In the automotive industry  


Companies can leverage automated feedback calls to improve customer experience. This can be triggered after an event (for example, the purchase of a new car). Customers can rate their experience using the DTMF input on their phones. This data can easily be synced using a simple CRM integration.



For some sectors like BFSI, where the financial literacy rate is only 26% (in India), institutions can advertise a centralized toll-free number where customers can call to get their basic FAQs answered through IVR.

In call centers

IVR is incredibly useful for call centers. It helps in decreasing costs to providing a personalised customer experience. Here are some ways IVR is beneficial for call center :

Personalisation – IVR helps you to greet customers with a personalised message. 

Data collection – Boost customer experience by collecting specific information from the customer to route them to the right agent. 

Handle high call volumes – IVR enables call centers to handle high call volumes by solving certain customer problems which doesn’t require speaking to a real agent.


Best practices for setting up an IVR call flow that doesn’t compromise on the customer experience

We help hundreds of people every month in creating user friendly IVR flows. Here are a few things you should keep in mind when setting up a call flow :

  •  Always start your IVR flow with a welcome greeting. This provides the caller with a personalised experience.
  •  Sometimes it’s hard to track the IVR inputs, especially if there are more than five choices. Hence it’s recommended to repeat the inputs on the call at least 2-3 times.
  • In case of multi level IVR, make sure to map a key that leads user back to the previous menu.
  • When designing the IVR, add an error message that can be triggered if the user clicks a key which isn’t mapped to any flow. This way they can retry with the correct choice.
  • Wait music is essential to keep the customer on hold. You can either play a music or share some company statistics when the call is queued. But make sure to play a message saying “your call is on hold and you’ll be connected to an agent” every two minutes.

Here are some best practices for effective IVR scripts


The usage of IVR has revolutionised voice communication. It has turned out to be an essential component for companies, especially for automation and personalisation when it comes to communication. 

If you’re looking for an IVR solution for your business, then there’s no better platform than a cloud telephony provider like Exotel. Not only does it save you the hassle of maintaining physical hardware but it’s cost efficient and will save you a lot of time too. To know more you can check here.

Moving your business communication to the Cloud

Businesses often move to cloud communication system to save on operational costs. However, that is not the only benefit of moving to the cloud. We wrote down the other direct and indirect advantages of moving your business communication to the cloud in this white paper.


Manisha Mishra

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