Conversational IVR: What is It, and why should you use it?

Conversational IVR (Interactive Voice Response) is a tool for improving customer experience and operational efficiency, especially given that customers now expect quick, efficient, and often immediate responses.

It uses AI and natural language processing (NLP) to transform customer interactions into more intuitive and user-friendly experiences. Let's examine conversational IVR's benefits, how it differs from traditional IVR, implementation strategies, and real-world examples.

What is a Conversational IVR?

Conversational IVR interacts with callers naturally. It uses AI-powered natural language understanding (NLU) to interpret and respond to inquiries.

Unlike traditional IVR systems, which use touch-tone prompts and rigid menus, conversational IVR lets users speak naturally. They can talk in full sentences rather than navigating menus and option trees.

Conversational IVR uses several key AI technologies:

• Natural Language Processing (NLP): This analyzes spoken language and understands its meaning.

• Intent Recognition: This interprets what the caller is trying to achieve.

• Automatic Speech Recognition (ASR): This converts spoken language into text for the AI system to process.

There's much more going on than these three parts, but these are the main technologies used when a conversational IVR understands a caller.

It can choose the best course of action, either answering the caller directly, routing them to the right department, or putting them through to a live agent.

This simplifies and personalizes the interaction, reducing customer frustration and resulting in faster solutions and higher customer satisfaction.

Key Differences Between Conversational IVR and Traditional IVR

So, how does conversational IVR differ from traditional IVR?

There are several key distinctions:

Interaction Style

• Conversational IVR: This uses natural language so users or customers can express themselves as they would when talking to a human. For example, “I'd like to check my account balance”.

• Traditional IVR: This only understands specific keywords and touch-tone inputs, which is much less flexible and user-friendly.

Response and Adaptability

• Conversational IVR: Conversational IVR can improve from each interaction. Thanks to AI learning, accuracy and relevancy should improve over time.

• Traditional IVR: Traditional IVRs work from pre-defined scripts and have limited keyword recognition. Updating traditional IVRs must be done manually.

Efficiency and Routing

• Conversational IVR: A conversational IVR can offer immediate answers or transfer customers to agents, passing the full interaction history along if needed.

• Traditional IVR: Traditional IVRs cannot understand complex queries. Usually, multiple transfers are required for a customer to find the right person.

Availability and Support Score

• Conversational IVR: 24/7 availability with various inquiries, from straightforward requests to complex, personalized questions.

• Traditional IVR: Limited in scope and struggles with complex topics. Usually, agent involvement is required for more complex inquiries.

Conversational IVR enhances user experience and allows for much higher call volume as there's less reliance on rigid pre-recorded menus.

Here are the differences at a glance.

Benefits of Using Conversational IVR

Implementing conversational IVR comes with many benefits, even for businesses that were previously using traditional IVR.

Reduced Call Times

The natural language processing offered by conversational IVR means that customer inquiries are dealt with more quickly as customers don't have to wait for a human customer service agent or navigate options and menus.

Customers can state their needs, and conversational IVR can handle their requests. For instance, a customer could say, "I need to check my account balance" or "I want to schedule an appointment", and the conversational IVR would be able to understand and respond to these requests.

Cost Efficiency

Since conversational IVR can automate repetitive tasks, businesses can save a lot of money as their human agents focus solely on high-priority interactions. This typically improves employee satisfaction and motivation.

Frees Agents from Routine Tasks

Conversational IVR can handle many queries and only redirect to human agents when necessary, greatly improving efficiency and service quality.

Data Collection and Insights

While conversational IVR systems operate, they can collect and analyze customer data and provide insights into customer needs and preferences.

Businesses can use this data to refine processes, anticipate customer needs, and make informed decisions about customer service.

Differences Between Conversational IVR and AI Callbots

While conversational IVR and AI callbots use artificial intelligence to improve customer service, some key differences exist in how they interact with customers.

Understanding these differences can help you choose which is suitable for you and your customers.

Purpose and Functionality

Conversational IVR's main goal is to route and facilitate call flow. To achieve this goal, it uses natural language processing that allows customers to describe their needs and issues just as they would to a human.

From there, it connects customers with the correct department or provides a quick, efficient answer to the most common questions and queries.

Conversely, AI callbots offer a more comprehensive service solution. They act just as a virtual agent would, handling complete interactions and mimicking human agents as they assist customers with complex questions and transactions.

Complexity of Responses

Conversational IVR handles simple, direct inquiries or routing functions, while AI callbots are programmed to handle more nuanced inquiries.

An AI callbot can handle the entirety of a customer inquiry from start to finish by providing detailed assistance like describing product features or handling transactional tasks like a refund.

AI callbots use more sophisticated AI models than conversational IVR and include Natural Language Processing (NLP) alongside machine learning algorithms, which allows them to maintain dialogue and continuity throughout interactions.

Customer Autonomy

Conversational IVR and AI callbots differ in how much customer autonomy they offer.

A conversational IVR will act as an intermediary, routing customers to the right resources, departments, or human agents as needed.

AI callbots operate with much more autonomy, resolving various issues without human agent intervention. While they do this, human agents can perform more specialized tasks.

Generally, companies prioritizing self-service may prefer AI callbots over conversational IVR.

How to Implement a Conversational IVR System

As with any AI-powered solution, the real value comes from correct and effective implementation. Here are some of the key steps to implementing a conversational IVR system:

Define Goals and Objectives

Before deploying any conversational IVR system, you must establish clear and reasonable objectives. Think about which issues it would address and why.

Are you looking to reduce call handling times, improve customer satisfaction, or both?

From there, you can ensure that the conversational IVR solution aligns with your business's goals and objectives.

Identify Use Cases

Remember to work out what your conversational IVR will handle.

Conversational IVRs usually handle high-frequency straightforward requests. Tasks like checking account balances, scheduling appointments, or tracking deliveries are all good places to start.

Your use cases will help you to establish how you'll measure the effectiveness of your conversational IVR.

Design the Conversational Flow

Ensure your conversational IVR has an intuitive conversational flow for optimal user satisfaction.

Map out expected interactions, user inputs, and responses based on your insights on typical customer behavior.

The more streamlined the flow, the smoother the interactions and the better the customer experience.

Integrate NLP and Speech Recognition

Since NLP and speech recognition are essential for handling natural speech, they're worth carefully considering when choosing your conversational IVR.

You want to look for solutions that interpret intent accurately and adjust their responses to meet user needs effectively.

Implement Best Practices for UX Design

Given that one of conversational IVR's biggest advantages is sounding natural and human-like, make sure that yours uses language that's easy to understand and provides clear prompts to guide users through interactions.

You can personalize responses by integrating customer data wherever possible, making the conversation relevant to the caller.

Test and Optimize Regularly

While this stage technically comes after implementation, you still need to prepare during the implementation phase for ongoing testing and optimization.

Run pilot programs, collect user feedback, and assess key performance indicators (KPIs) like call duration, customer satisfaction, and error rates.

Feedback loops will allow you to refine your conversational IVR constantly.

Collect Data and Continuously Improve

In addition to testing, make sure that you regularly collect data on your conversational IVR's performance.

Collect data on customer behavior, resolution times, and feedback to identify areas for improvement.

Update your conversational IVR regularly to meet your customers' changing needs and keep up with industry standards.

How to Transition from a Traditional IVR to a Conversational IVR System

If you already have a traditional IVR system and are thinking about transitioning to a conversational IVR to improve service quality without sacrificing existing investments, here's how to do it.

Assess Infrastructure Needs

The first step is to examine your current IVR infrastructure and determine where you can upgrade or change its conversational capabilities.

Conversational IVR systems can be integrated into CRM and telephony systems, using the data and processes you already have.

Gradually Phase Implementation

Phased implementation will allow a smoother transition from traditional IVR to conversational IVR.

Use conversational IVR for specific, everyday interactions before expanding to more complex inquiries.

Look to minimize disruption to staff and customers.

Train Customer Service Agents

Your customer service teams will need to be trained on the new system. By understanding the conversational IVR's capabilities, agents can assist customers better and navigate situations where the conversational calls for human intervention.

Measure and Optimize

Like implementing a conversational IVR directly, you should always collect data from customers and agents to measure the new system's effectiveness.

Case Studies: Companies Using Conversational IVR Successfully

Many companies have chosen conversational IVR and seen significant improvements to their customer service.

Here are just a few examples of those that have.

BoAt Electronics used conversational IVR to manage increasing call volumes and customer satisfaction.

Their AI-powered IVR could handle routine inquiries and route complex calls efficiently, resulting in a 35% decrease in average call handling time and increased customer satisfaction scores.

Swisscom Telecommunications

Swisscom is one of Europe's largest telecom companies. Swisscom's conversational IVR enhances customer experience by managing and seamlessly redirecting customer inquiries.

Customers expressed high satisfaction with Swisscom's conversational IVR's natural language capabilities. Since its introduction, Swisscom has reported a 20% reduction in call abandonment and improved first-call resolution rates.

MAIF Insurance

MAIF is a major insurance provider. MAIF's conversational IVR streamlines interactions and improves efficiency.

The effective call routing has allowed customers to access policy information and submit claims without needing agent assistance.

Call transfer rates have been reduced by 25%, and customer feedback has been positive. Many customers approve of the enhanced interaction quality.

As you can see, conversational IVR provides a modern, efficient solution for handling customer inquiries. It can improve both customer satisfaction and operational efficiency, and as it continues to evolve, its positive impact on customer service will improve.