What is Conversational IVR?

What is Conversational IVR? 

IVR stands for Interactive Voice Response, an automated phone system that interacts with callers. It uses voice prompts and touch-tone inputs often with keypad navigation. The goal of IVR technology is to route calls to the appropriate recipient. Furthermore, IVRs also gather information from the caller, or provide information to the caller.

The technology works by playing a series of pre-recorded voice prompts that guide the caller through the call. For example, a system might ask the caller to enter their account number or to select an option from a menu. The caller inputs their response by pressing the touch-tone buttons on their phone. Then, the system uses that information to determine the next step in the call.

The traditional Interactive Voice Response (IVR) experience not only damages customer satisfaction but also burdens contact center agents with repetitive, low-value interactions, driving up operational costs.

Conversational IVR represents a paradigm shift, leveraging the power of Artificial Intelligence (AI) – specifically Natural Language Understanding (NLU) and Automatic Speech Recognition (ASR) – to transform automated voice interactions. Instead of forcing callers into predefined paths, it allows them to speak naturally, understand their intent, and provide intelligent, efficient self-service or route them accurately the first time.

This guide explores the world of Conversational IVR, what it is, how the technology works, the critical benefits it offers enterprises, common use cases, and how Teneo.ai provides a unique advantage in achieving superior voice automation and business outcomes.

What is the difference between is Conversational IVR and IVR?

Conversational IVR (Interactive Voice Response) is a system that interacts with customers through natural language conversations over the phone. It provides a more welcoming experience. In contrast to traditional IVR, which is pre-recorded voice prompts and menu options. (“Press 1 for Sales,” “Say Billing”)

Conversational IVR engages callers in a more human-like dialogue. Think of it as upgrading from a restrictive flowchart to an intelligent conversation. Instead of forcing callers down predefined paths, it interprets their intent – what they actually want to achieve – regardless of the exact words they use. This allows for dynamic, context-aware interactions that can handle a much wider range of queries and tasks efficiently.

Traditional IVR vs. Conversational IVR

This fundamental difference in understanding and interaction capabilities is what enables Conversational IVR to deliver vastly superior customer experiences and operational efficiencies compared to traditional IVR.

Conversational IVR is a key component of call center automation, using AI agents to resolve customer queries. Agentless voice systems are revolutionizing phone-based customer service by offering 24/7 voice support, cost savings, and improved caller experiences.

For enterprises handling 10 million phone calls, saving with Conversational IVR is $27 per month:

Learn more about the implementation of modern IVR systems in our recently published e-book.

What are the Benefits of Conversational IVR?

According to the analyst firm ContactBabel some of the benefits of conversational IVR systems are:

• Reduced call volume
• Improved customer satisfaction
• Cost savings

The transition from IVR to Conversational IVR isn’t just about adopting new technology; it’s about unlocking significant, measurable business value. For large enterprises managing high call volumes and complex customer interactions, the benefits are particularly compelling:

Enhance Customer Experience (CX) 

This is arguably the most significant benefit. Conversational IVR eliminates the primary sources of caller frustration. By understanding natural language, it allows customers to state their needs directly, bypassing confusing menus. This leads to faster resolutions, reduced effort, and a sense of being understood, dramatically improving overall satisfaction and Net Promoter Score (NPS). Personalized interactions, driven by integration with CRM data, further enhance the experience.

Increase Automation & Containment Rates 

Conversational IVR can handle a much broader and more complex range of queries than traditional systems. By accurately understanding intent and integrating with backend systems, it can fully resolve many issues within the automated system (high containment rate) without needing agent intervention. This significantly improves First Call Resolution (FCR) rates for automated interactions.

Reduce Operational Costs 

Every call handled successfully by the Conversational IVR is a call that doesn’t require a human agent. This directly translates to reduced agent handling time and lower labor costs. Furthermore, by resolving issues faster and more accurately, it minimizes repeat calls and optimizes resource allocation within the contact center.

Improve Agent Productivity & Satisfaction 

By automating routine and repetitive queries, Conversational IVR frees up human agents to focus on more complex, high-value, or empathetic interactions where their skills are most needed. This not only boosts overall contact center productivity but also improves agent job satisfaction by reducing monotonous tasks and allowing them to engage in more meaningful work.

Achieve Unmatched Scalability 

Cloud-based Conversational IVR platforms can seamlessly scale to handle massive fluctuations in call volume, whether it’s predictable seasonal peaks or unexpected surges. Enterprises can maintain consistent service levels without the need for significant overstaffing or infrastructure investments.

Ensure 24/7 Availability & Consistency 

Unlike human agents, an automated Conversational IVR system is available around the clock, providing consistent service and information regardless of the time of day or agent availability. This ensures customers can get help whenever they need it, following standardized processes every time.

The impact on businesses and customers can be significant. Businesses can improve their customer service processes and reduce costs. At the same time, customers can get the information they need more quickly and efficiently. Additionally, conversational IVR can help businesses gather valuable customer insights and make data-driven decisions to better meet customer needs.

See how Conversational IVR works with an AI agent in action for flight bookings:

Conversational IVR Use Cases

The versatility of Conversational IVR allows enterprises to automate a wide array of interactions, improving efficiency and customer satisfaction across various touchpoints: 

Intelligent Self-Service 

This is the most common application. Conversational IVR empowers customers to perform numerous tasks independently, 24/7:

• Account Management: Checking balances, reviewing recent transactions, making payments.
• Order Management: Tracking shipments, checking order status, initiating returns.
• Information Retrieval: Finding store hours, checking service status, getting product information.
• Bookings & Appointments: Scheduling, rescheduling, or canceling appointments.
• Technical Support: Basic troubleshooting steps, password resets.

Secure Authentication & Identification

Leveraging voice biometrics or asking security questions in a conversational manner provides a more secure and user-friendly authentication process compared to remembering PINs or complex passwords.

Smart Call Routing & Deflection

By accurately understanding the caller’s intent upfront, Conversational IVR can route calls to the most appropriate agent or department the first time, reducing transfers and handle time. It can also intelligently deflect calls to digital channels (like chat or a mobile app) if that’s a more efficient path for resolution.

Proactive Outbound Notifications

Conversational IVR isn’t just for inbound calls. It can be used for automated outbound campaigns, such as appointment reminders, service outage notifications, payment reminders, or delivery updates, often allowing customers to interact and confirm or reschedule directly within the call.

Automated Data Collection

Gathering information through surveys or structured data collection becomes more engaging and natural using Conversational IVR compared to lengthy DTMF-based questionnaires.

Implementing Conversational IVR: Key Considerations

Successfully deploying an enterprise Conversational IVR solution requires careful planning:

• Define Clear Goals & Use Cases: Start by identifying the specific business problems you aim to solve and the key interactions you want to automate.
• Data Strategy & Integration: Understand what customer data is needed for personalization and resolution, and plan for secure integration with backend systems (CRM, ERP, knowledge bases).
• Choose the Right Platform/Partner: Select a platform that offers enterprise-grade scalability, accuracy, robustness, security, and development tools. Consider the vendor’s expertise and support capabilities. Teneo’s proven track record in large-scale deployments makes it a strong choice for complex enterprise needs.
• Design for Conversation: Focus on creating natural, intuitive dialogue flows. Avoid simply replicating old DTMF menus with voice commands.
• Change Management & Agent Training: Prepare your organization and agents for the shift. Train agents on handling escalations from the IVR and leveraging the new capabilities.
• Ongoing Optimization & Governance: Continuously monitor performance, analyze interaction data, refine NLU models, and update dialogues based on user feedback and changing business needs. Establish clear governance processes.

The Teneo Advantage: Enterprise-Grade Conversational IVR

While many platforms offer basic conversational capabilities, Teneo.ai provides a truly enterprise-grade Conversational IVR solution built to handle the scale, complexity, and performance demands of the world’s largest organizations. Here’s what sets Teneo apart:

Unmatched Accuracy & Robustness

Achieving high accuracy in understanding diverse user speech, especially amidst background noise or with varying accents, is critical. Teneo incorporates sophisticated NLU and built-in tools that allow continuous improvement of recognition and understanding accuracy more efficiently and effectively. Unlike solutions solely reliant on standard Machine Learning (ML) models which can degrade with Speech-to-Text (STT) errors, Teneo’s hybrid approach and specialized tools ensure significantly more robust performance, maintaining high accuracy even as more use cases, intents, and data are added. 

Proven Scalability & Performance

Enterprise contact centers handle immense call volumes. Teneo is architected for hyper-scalability. We have proven experience scaling customer deployments from 3 million calls/month to 5 million calls/month over a single weekend, and further scaling to handle 10 million calls/month just four months later. Our platform routinely handles peaks of 25 agent interactions per second and processes over 1 billion interactions annually for our clients, supporting over 80 languages globally.

Rapid Deployment & Time-to-Value

Speed to market is crucial. Teneo’s development environment and pre-built components enable faster implementation cycles. We have successfully taken enterprise Conversational IVR solutions live within 5 months of contract signing, achieving 100% call volume coverage (over 1 million calls/month) within four months and implementing over 400 use cases in the first year for a single deployment.

Demonstrable ROI

Ultimately, the investment must deliver returns. Teneo’s focus on high automation rates, improved accuracy, and operational efficiency translates into significant ROI. For one major customer, the Teneo Conversational IVR solution has a projected ROI of $39 million. 

Global Leadership 

Our track record speaks for itself. Teneo powers over 15% of all automated voice conversations worldwide, demonstrating our expertise and the trust global enterprises place in our platform. 

The Power of the Teneo Platform 

Beyond IVR, Teneo offers a comprehensive AI orchestration platform. This allows for seamless integration of Conversational IVR with other channels (chat, web, mobile), leveraging hybrid AI models (combining generative AI with classical ML), ensuring robust governance, and managing the entire AI agent lifecycle. 

Conversational IVR is revolutionizing how enterprises interact with their customers over the phone. By moving beyond rigid menus to embrace AI-powered natural language understanding, businesses can dramatically enhance customer experience, achieve significant automation rates, reduce operational costs, and empower their agents. The benefits are clear, tangible, and essential for staying competitive in today’s CX landscape. 

Teneo.ai provides the most robust, scalable, and accurate platform for building and deploying enterprise-grade Conversational IVR solutions. With proven success in handling billions of interactions for the world’s leading brands, Teneo offers the technology, expertise, and partnership needed to transform your voice channel and achieve unparalleled business results.

Ready to unlock the power of Conversational IVR for your enterprise? Talk to an IVR Expert

Explore Further:

• Conversational IVR Benefits Deep Dive
• The Technology Behind Conversational IVR (ASR, NLU, Dialog Management) 
• Top Conversational IVR Use Cases for Enterprises
• Implementing Conversational IVR: A Step-by-Step Guide
• Conversational IVR vs. Traditional IVR vs. Voicebots