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RIP IVR: 1980-2020

This article was published on July 6, 2021

IVRs (Interactive Voice Response menus) had a good run. But 40 years after they became commercially available, automated voice menus are about as relevant to life today as the Walkman, Delorian, and Commodore 64.

Illustration of an angry customer.

IVRs aren't just old fashioned. They're customer satisfaction kryptonite. More than half of U.S. consumers have abandoned a business transaction when faced with an IVR. It gets worse, though. Of those people, 89 percent went on to spend their money with a competitor.

So, what should your business do? Employ a contact center’s worth of human receptionists? No. While the IVR may be dead, new technologies can help you meet today’s consumer expectations. Retiring your IVR is just the start.

Self-Service Is the Best Service

During the lifetime of the IVR, consumer expectations have changed significantly. Think about it in terms of how most people interact with their checking account.

  • 1970s: monthly bank statement sent by mail, visit the branch in the meantime

  • early 1980s: check account balance at ATMs

  • mid 1980s to mid 1990s: phone banking with a human agent

  • late 1990s: check basic account information through IVR

  • 2000s: online banking

  • 2010s: mobile banking

The banking customers of the 1970s operated on the bank’s terms. In such a world, an IVR made sense as a front-of-house gatekeeper.

Since the 1990s, though, the power has shifted from service provider to service user. Vendors are no longer gatekeepers. Instead, the best service providers are enablers. And consumers like it. In fact, 60 percent of American consumers prefer self-service.

So, if we were to complete our list to include this decade, it might end like this:

  • 2020s: conversational self-service

But IVRs Are Self-Service, Right? Right?

Even the best IVR is a crutch. It’s a transitional technology bridging two eras. The first era is high touch, high margin. The second is lower margin and low touch for as long as the technology lives up to the customer’s expectations. The IVR helped reduce the cost of managing customer interaction, while only selectively improving customer experience.

IVR was the answer to the question, “How can we reduce the cost of serving customers?”

Self-service answers the question, “How can we improve customer happiness by letting them do what is right for them at the time that is right for them?” Granted, it’s a more nuanced question, but we’re living in a more nuanced world.

Guide, Not Gatekeeper

What, then, is the difference between online self-service and conversational self-service?

The relationships that companies build with customers are changing from transactional to ongoing. One-off purchases become subscriptions. The 360-degree customer view changes anonymous purchases into a fuller picture of a customer’s needs and situation. The one-off customer service call of the past becomes a conversation that takes place across multiple channels.

In the era of conversational self-service, we need to offer customers a guide rather than the gatekeeper of old. And that starts with the chat bot.

Chatbots, Assistants, and the Conversational Interface

For a moment, chat bots seemed like the reincarnation of the IVR. Instead of memorizing phone menus, early chat bot users had to find the precise combination of words to trigger the response they needed.

More recently, artificial intelligence techniques have given us chat bots that understand natural language, can learn from experience, and deliver an improvement to customer service rather than simply offsetting costs.

Perhaps most importantly, today’s AI-backed chatbots are no longer imprisoned in a pop-up window on the vendor’s website. Instead, they’re available in the places that the customer already spends their time. Whether it’s a healthcare provider offering basic advice via email or a fashion retailer suggesting next purchases through WhatsApp, these chat bots augment the self-service experience by providing shortcuts to functionality. Asking “Where’s my stuff?” in a WhatsApp conversation is a lot easier than logging into a mobile app, digging through menus to find the right order, and then viewing package tracking information.

And while text is fast and discrete, voice assistants are an increasingly important way of building trust with customers. As Alexa, Siri, and other digital assistants make their way into homes and workplaces, voice interfaces become not just normalized but expected.

The Conversation Is Here to Stay

How people interact with businesses has changed. The balance of power and knowledge have shifted. Increased competition in many markets makes it easier for customers to vote with their wallets when they’re faced with poor customer experience.

The IVR had its uses, but they were almost all in the favor of the company that deployed them. The conversational interface, where vendors and customers continue an ongoing conversation across multiple channels, instead benefits both sides. Customers are served faster, at their convenience, and to a higher level of satisfaction. Businesses connect more deeply and for longer with customers who previously would have been nothing more than a single anonymous entry in a book-keeper’s log.

So, farewell IVR and hello to conversational self-service.


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