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Customer service is the lifeblood of most small and medium-sized businesses, helping to form lasting bonds with their customers. It enables them to stand out from larger competitors like big-box retailers or online giants and build a sustainable business.
Even in 2023, a key element in maintaining that relationship is the phone. 60% of consumers prefer using the phone to reach local businesses (source: BrightLocal). While other channels have gained in popularity, a 2023 Research Report sponsored by SoundHound of over 1,000 restaurant goers found that 62% of customers indicated a desire to “be able to conveniently place pick-up orders by calling the restaurant.”
Handling the phone continues to be a challenge, however. Over the years small businesses, like larger ones, have adopted one or more of a handful of phone answering solutions, such as cloud-based call centers, IVR systems, virtual assistants, and more. Each has its benefits and drawbacks.
But with the arrival of new technologies in 2023, it’s time to consider how they match up with new innovations like AI-powered voice assistants. Based on modern, well-tested voice AI technology, AI-powered voice assistants converse with callers in a natural way, avoiding the frustration of canned automated responses and providing fast answers to caller questions.
This blog will look at what’s made IVRs popular, examine their pros and cons, then introduce AI phone answering as an alternative, and look at how the two compare:
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Interactive voice response (IVR), also known as a phone tree, is an automated phone system tool that answers incoming customer calls and offers options for next steps via a menu. It uses these responses to route customers to the right agent or department, provide recorded responses to frequently asked questions, and more.
IVR systems have become ubiquitous in the business landscape for several reasons:
IVR has become so popular that the global market for IVR, estimated at US $4.9 Billion in the year 2022, is projected to reach US $9.2 Billion by 2030, growing at a CAGR of 8.3% over the analysis period 2022-2030, according to Global Industry Analysts, Inc.
However, IVR systems are not without their limitations. Here’s a look at a few of the downsides of IVR.
The biggest disadvantage of IVR is that it relies on menu selections that can be confusing or difficult to interpret. The customer is presented with multiple options by an automated voice, which they must patiently listen through. This slows down the experience by adding a cumbersome step between them calling and reaching a customer service agent, often leading to frustration.
IVR Solutions Provide a Poor Customer Experience
“Out of 2,009 UK adults aged 16 to 55 surveyed, only 15 percent believed that IVR made for a good customer experience (CX).”
Vonage 2019 IVR Study
While IVR is helpful in one respect, the fact that it doesn’t depend on a human being is a drawback. IVRs can’t understand customers, can’t talk like an agent, and can’t always solve problems. It’s very limited in its ability to understand complex queries or requests. So although IVR seems cost effective and a time saver, it can easily damage a business’s customer base if poorly implemented.
In some instances, IVR can elicit an even stronger reaction from customers. If an IVR system is particularly frustrating, it can even lead to the customer abandoning the business altogether. A 2019 Vonage survey found that “more than half of consumers (51%) have stopped using a business because they’ve reached an IVR.”
Recent technological advances in voice AI are enabling businesses to use an AI voice assistant to answer their phone. SoundHound’s Smart Answering, for example, leverages artificial intelligence and natural language processing to handle customer queries and provide assistance. These systems are designed to simulate human-like conversations and offer personalized customer experiences.
Voice assistants can answer phones and provide several benefits to a small business:
While AI voice assistants may lack the direct connection with a person that some callers desire, AI voice assistants don’t put customers on hold. And they answer on the first ring. IVR systems often fall short in delivering a personalized and empathetic experience, whereas AI phone answering can simulate human-like conversations and provide tailored responses.
IVR systems are cost-effective for high call volumes, but AI phone answering can bring long-term cost savings by reducing the need for human operators and streamlining operations.
While IVR systems may struggle with complex inquiries, AI phone answering has the potential to comprehend and address intricate customer needs more effectively.
Both IVR and AI phone answering solutions are scalable, allowing businesses to adapt as they grow and handle increasing call volumes.
Type of Questions Smart Answering Handles Instantly With No Staff Involvement
David Barry is the senior technical content writer at SoundHound.
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