Traditional vs. Conversational IVR: What’s the Difference?

One is more familiar. The other might be more cost effective.

Written by Ted Hunting
Published on Jan. 11, 2023
Traditional vs. Conversational IVR: What’s the Difference?
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One much-discussed benefit of a call center is the empowering nature of interactive voice response, or IVR, and for good reasons. IVR is a cornerstone of an efficient, productive and effortless customer experience.

What Is Conversational IVR?

Conversational interactive voice response (IVR) is powered by AI, natural language processing and natural language understanding. It allows customers to describe what they need by saying words, compared with traditional IVR, in which customers press buttons to navigate options on a preset menu.

Both traditional IVR and conversational IVR have their advantages, and knowing how each best serves its purpose is the key to implementing them correctly. 

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What Is Traditional IVR?

Let’s start with the original, traditional IVR. This is the menu so many of us are already familiar with. When you call, you’re presented with a voice that tells you to press 1 for one option, 2 for another, etc. Each number correlates to a presumed need. Your call is then routed to the resource or person best able to help you. 

 

Benefits of Traditional IVR

Traditional IVR is ideal for bank customers who, for instance, might want to use the phone to find out balances. Older generations of people who prefer the phone are very much active customers. Baby Boomers, whose ages range from 58 to 76, are the second-largest population group in America, according to U.S. Census data. From an accessibility standpoint, traditional IVR via the telephone can be easier than logging on to a computer. 

The key to using traditional IVR well is to consider it from your customer’s point of view. It’s also giving customers a choice: your call center can let callers know upfront they can press a button or say a phrase. IVR doesn’t have to be an either/or situation. 

 

Challenges of Traditional IVR

The challenges traditional IVR faces include limited options, the time it takes to cycle through the menu and the customer’s patience level. If your customer is already frustrated, the first step in effective customer service is to lower that frustration level. Traditional IVR doesn’t always do that.

 

What Is Conversational IVR?

Powered by advanced technologies, conversational IVR allows customers to say words that describe what they need. They use voice commands rather than number selections. Artificial intelligence, natural language processing (NLP), natural language understanding (NLU) and speech-to-text make the magic happen. It’s a way to empower your customer through technology without losing the valuable warmth of the human voice.

 

Benefits of Conversational IVR

Conversational IVR may be a better choice for your business for several reasons. The first is increased speed and efficiency. It’s simply faster for someone to speak their needs than it is to sit through the menu of options and press the button that may or may not correlate with their problem. 

Here’s an example. You’re sitting at home watching TV when the power goes out. You want immediate information on the outage, so you call your energy provider. Here’s a comparison of what could happen with traditional IVR and conversational IVR.

Traditional IVR 

“Welcome to Energy Oasis. For account changes, press 1. For service requests, press 2.”

By the time the IVR has provided the sixth option, you’ve already forgotten the first few options. 

Conversational IVR

“Thank you for calling Energy Oasis. How can we help you?” 

You: “I would like information on the power outage.”

IVR: “We are experiencing some outages due to high winds from the Santa Anas. Would you like more information on your specific ZIP code?”

You: “Yes, I would like to know when the power will be restored.”

IVR: “What is your ZIP code?”

You: “93117”

IVR: “The power in 93117 should be restored at around 5 p.m. today.”

Conversational IVR helps to create an effortless customer experience, which is essential for brand loyalty. Ninety-six percent of customers who had to exert a high level of effort are likely to leave compared to only 9 percent of those who went through an effortless experience, according to Gartner, a leading industry analyst group.

Because acquiring new customers is always more costly than retaining current ones, conversational IVR is more cost effective. Increased customer retention means your business spends fewer dollars trying to find and convince people to become new customers. 

The Gartner study indicates that 81 percent of customers going through an experience with high levels of effort are likely to share their bad experiences with friends. Thanks to social media, word travels exponentially faster. This makes the already uphill battle of customer acquisition even harder.

 

Challenges of Conversational IVR

Conversational IVR isn’t without challenges. Planning must address what happens when customers say phrases that it doesn’t recognize. The same is true when dialects aren’t recognized. Like all contact center activities, with proper planning, monitoring and data analysis, most misunderstandings can be handled. 

 

IVR Trends

Because conversational IVRs are scalable, they’ll grow with your business. If you need to offer support in more languages, you can do so quickly. AI in customer support is increasing rapidly, and that’s good news for you. Cloud-based call center solutions are ideal for businesses of all sizes due to their ability to scale with you. Let’s look at some recent trends in IVR.

 

More People Are Using IVR

The global IVR market is projected to reach $6.7 billion by 2026, up from $4.2 billion in 2020. The more people are accustomed to using it, the more they’ll expect it to be available. Increased usage will also help refine it because the industry will review the data collected and feedback received.

 

People Are More Comfortable With IVR 

Technology advances will always outpace adoption rates for various reasons. Given the increased presence of IVR, however, people are rapidly catching up. Voice-activated services like Siri and Alexa are credited for improving people’s comfort levels with voice activation. 

 

Outbound Conversational IVR Is Catching On

While we’ve really only explored inbound communications in this article, outbound shouldn’t be ignored. Businesses that tap into AI-powered conversational IVR to proactively contact their customers will find themselves lowering their customer acquisition costs. As these technologies become part of everyday lives, people will get used to receiving these calls, enhancing their effectiveness.

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Use IVR To Transform Your Customer Experience

The most effective actions you can take for your call center will be those that create an effortless experience for your customers. They need to be able to solve their problem quickly and efficiently. Implementing IVR plays a large role in achieving this goal. We’ve already discussed their benefits on their own. Those are just the start of their true advantage.

When your call center is omnichannel, you’re able to communicate with your customers across voice, video, text, chat, email and any other communication method necessary. Working in tandem with your IVR, your customers can call about an issue and receive a messenger message with a link to their solution. More options can be emailed to them, and if they want to ask more detailed questions, they can call to talk to an agent, who seamlessly picks up the conversation.

Cloud-based call centers offer robust opportunities, such as integrating customer relationship management tools. This information further aids agents in taking care of customers holistically. Everything a call center does should support the creation of a frictionless customer experience. There will be some trial and error — reporting dashboards will tell you how to streamline and refine your operations. IVR will evolve as technology evolves, and each business will decide what strategies best meet its customers’ needs.

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