November 15, 2023

IVR vs. Conversational AI: 5 Reasons Why AI Creates Better Experiences

There’s a good chance you’ve had to call customer service at least once.

This means you’ve encountered an everyday technology that helps companies route massive call volumes at scale.

These automated phone systems have been immensely helpful, but there’s a problem. They aren’t known for creating positive experiences with customers.

In this article, you’ll learn why interactive voice response (IVR) is outdated and how its functionality falls short and fails to meet customer expectations as a modern, convenient phone system. We’ll also explore how conversational AI phone answering is the solution to each of IVR’s shortcomings.

What is interactive voice response?

Interactive Voice Response (IVR) is a technology that allows a computer to interact with humans It's commonly used in customer service to direct calls to the appropriate department, using automated voice prompts to guide callers through menu options.

Interactive voice response (IVR) is a decades-old technology that allows computers to interact with humans through voice commands and keypad inputs. It's commonly used in customer service to direct calls to the appropriate department, using automated voice prompts to guide callers through menu options.

The history of IVR technology

The history of IVR dates back to the 1970s when businesses began exploring ways to automate customer service interactions. Early IVR systems were simple and primarily used for telephone banking and flight information.

Later on, these systems became more sophisticated, incorporating voice recognition and more complex menu options. By the 1990s, IVR had become a staple in customer service, allowing companies to handle high call volumes efficiently and reduce the need for live operators.

How IVR works

Plenty of small and medium-sized businesses utilize IVR to route callers where they need to go or get them information quickly. It’s a system you’re familiar with, and as mentioned above, most folks will have the urge to groan when they hear its robotic spiel.

It goes something like this:

“Thank you for calling Brandon’s Burgers! Your call is very important to us. Please listen closely to the following menu, or if you know your party’s extension, please enter it now.”

‍An IVR system will then launch into a list of options, such as listing hours of operation, leaving a voice message, or speaking with a staff member. Each business can customize the options menu, but that’s essentially where customization ends.

An IVR script is like a puzzle, designed to anticipate why a customer is calling. However, if a caller’s query is unique and doesn't match the menu options, or the system has trouble interpreting the caller’s responses, they'll be guided to connect with a live agent or staff member at the end.

IVR aims to narrow down what customers need to funnel them to get on the phone with a staff member, be placed on hold, or provide an option to leave a voicemail.

IVR systems can technically help people resolve issues. However, the experience is time-consuming, frustrating, and often leaves customers with negative sentiment.

‍Translation: Traditional IVR systems only provide a bare minimum experience to resolve their queries.

Although IVR performs well in some instances, some businesses could be getting more with a modern solution custom-built for them.

What is conversational AI phone answering?

Conversational AI phone answering simulates human-like conversations with callers using advanced artificial intelligence. This technology stands out in its capabilities to understand and respond to customer inquiries in real-time with accurate responses.

Conversational AI is the antidote to IVR’s stiff, robotic functionality. Using natural language processing (NLP), AI phone answering allows callers to speak exactly as they would to a human being.

For example, here’s what a conversation might sound like using conversational AI phone answering:

‍Customer: "Hi, can you tell me what time you close tonight?"

Conversational AI: "Hello! We'll be open until 10 PM tonight. Can I assist you with anything else?"

Customer: "Yes, I'm driving over. Where can I park my car?"

Conversational AI: "We have a free parking lot right next to our restaurant. The entrance is on Elm Street. Would you like me to send you directions in a text message?"

The above example illustrates conversational AI’s capabilities. Unlike the outdated, traditional IVR system of “press 1, press 2,” AI offers a more responsive, flexible, and customer-focused experience.

When customers call, they can speak with an AI voice just as they would a real person. Restaurants utilizing this technology present customers with useful, relevant information in a matter of moments. This eliminates the need for menu listings, clunky navigation, and sometimes outdated information.

5 Reasons AI phone answering is better than traditional IVR

Now that we clearly understand what IVR and conversational AI phone answering offer, let’s delve deeper into why IVR can feel like a relic from a bygone era and how it’s most likely hurting your business rather than helping it.

1. AI answering can grasp and understand human speech

Though traditional IVR has voice recognition capabilities, it has severe limitations. If what you’re saying isn’t on their list of recognizable words, the system won’t understand you.

Using “yes” and “no” responses are useful, but can only go so far. Beyond these simple responses, IVR systems are unable to understand even simple phrasing like, “Can you help me update my delivery order?”

You’re isolated to statements like “delivery” or “hours,” but this can be even more frustrating if you are speaking clearly and audibly. We’ve all been there stuck in a loop with an automated IVR yelling the same words repeatedly, hoping it will finally get what we’re saying.

Consider how swiftly IVR can turn a simple call into a heated moment.

Communicating with an AI voice concierge feels natural. In fact, the interaction is so realistic that a bystander wouldn't guess you were engaging in an AI-driven phone conversation.

When questions or ideas surface, customers can express them instantly, and AI effortlessly keeps pace, deciphering not only the spoken words but also grasping the underlying intentions and surrounding context.

2. Traditional IVR menus are long and time-consuming

A 2019 study on IVR and customer satisfaction revealed that 54% of people who encounter an IVR phone system reported feelings of frustration.

The reasons why people became frustrated include:

None of the options fit their reason for calling
They felt forced to listen to irrelevant options
The system kept them from reaching a live person
The menu options are too long

If a customer has a question that doesn’t fall into a category, they’ll often have to sit through the entire menu multiple times to find a good fit.

Remembering all those options while listening to the next selection is tough. Was it option #3 or #5 that will get you what you need? Too late – you’ll have to listen to the whole menu again.

Some customers have learned ways to avoid IVR menus altogether by immediately pressing “0” for a live agent, saying “agent” instead of menu selections, or mumbling and cursing to bump them out of the queue.

Conversational AI can deliver answers within seconds because customers simply state their questions instead of sitting through lengthy menu descriptions.

Because most calls are handled without the help of an employee, the times that calls do go through to staff members, callers aren’t put on hold because there are significantly fewer calls getting through to agents.

3. Conversational AI is more dynamic and customizable

IVR as a system begins with an essential disadvantage. The whole structure relies on a “set it and forget it” framework.

Once IVR is up and running, there won’t be any updates to the system unless someone manually creates new options. The same limitations exist even when someone makes changes, and the process can be difficult or time-consuming.

A task that’s difficult to complete and often falls by the wayside. As customer needs and product developments change, IVR menu options need ongoing management.

IVR is static, and unless team members can consistently update the menu, it will cause havoc and frustration with customers.

On the other hand, conversational AI phone answering gives businesses more options to understand where they can optimize guest interactions and make changes quickly.

For example, if a customer calls your restaurant asking about vegetarian options, AI voice might initially share a broad response like, “We offer several vegetarian options, including salads and pasta.”

As a restaurant picks up on trending topics and questions guests pose, they can easily make suitable modifications to ensure the AI software can give more accurate responses.

Over the course of thousands of calls, the AI phone answering system will develop a more refined knowledge base, each time giving customers a more personalized experience.

4. AI phone answering creates more revenue opportunities

Conversational AI phone answering not only gives customers a better overall experience. It also helps yield cost savings and capture more revenue.

The biggest reason? No more missed opportunities.

Because AI voice is available 24/7, it doesn’t matter if it’s during peak service or after hours. This technology enables businesses to have a reliable method of engaging customers by phone. IVR is also available all day, but it’s restricted to only providing information and not much else.

For restaurants, many missed calls happen outside of regular hours of operation. And even in cases where staff are working on site, there’s a good chance their time is better spent preparing for service. From managing reservations to placing orders, IVR falls short.

Customers get information quickly and easily, so they aren’t likely to seek out a competitor when they hit a dead end with IVR.

Let’s look strictly at calls where a customer or guest is trying to get the information they need. An IVR could provide the answers they’re looking for, but the conversational AI is better equipped to do so with greater accuracy. In turn, this gives your staff more time to focus on customers in the building or completing tasks that require their full attention.

For example, restaurant hosts often have to split their attention between the ringing phone and guests walking through the door. By using an AI-driven phone system, hosts can focus solely on guests in the building, only grabbing the occasion call that comes through the system.

‍With AI phone answering, this full-service Miami restaurant pulled in 7,700 reservations in just 3 months. See how they did it with Slang.ai.

5. Conversational AI creates more personalized experiences

IVR’s “set it and forget it” approach to handling customer calls leaves zero room for personalization.

Traditional IVR's cold and impersonal nature feels more like a blockade than a helpful tool. What’s worse is that it fails to convey that a company genuinely cares about or appreciates its customers.

However, AI phone answering can bring a personalized touch to every conversation. When it comes to creating truly memorable experiences, guests crave personal connection.

For example, restaurants that use Slang.ai phone answering can recognize specifics about guests calling in. Let’s say a customer calls to make a reservation for Saturday at 7:00 pm. In combination with popular reservation management platforms like OpenTable, Resy, or Seven Rooms, Slang.ai can identify the names of the callers.

Calling guests by name makes customers feel recognized and valued. This is a noticeable contrast to the rigid, static experience of listening to an IVR menu. When a customer calls, AI’s ability to understand natural language helps create a more personalized experience because it can adjust to whatever the customer is saying.

When a caller asks about vegetarian options, AI can create a completely personalized experience by naming each item on the menu that falls into the vegetarian category.

With IVR, the caller would have to listen to the entire list and figure out on their own what is vegetarian and what isn’t.

Conversational AI outperforms IVR

IVR started in the 1960s, but what we know today looks similar to what it was in the 1970s.

To put it bluntly – traditional IVR is outdated.

Today, the adaptive, personalized, and efficient capabilities of conversational AI phone answering are taking center stage.

This goes beyond an upgrade in customer communication. It’s a complete transformation.

Conversational AI is changing how businesses engage with their customers, moving away from the rigid, impersonal, and often frustrating experience of static IVR menus. This includes a shift towards engaging, personalized conversations that meet customers' expectations for convenient and effective communication.

‍Ready to ditch bygone phone technology that peaked more than a decade ago? Sign up for a free demo to see how Slang's AI phone answering can help your business grow.

Authors

Alex Sambvani

IVR vs. Conversational AI: 5 Reasons Why AI Creates Better Experiences

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