12 min read

IVR vs. IVA: Is There a Difference and Does It Matter?

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IVR and IVA are both technologies that allow customers to interact with a company without having to speak to a live agent. They have two purposes. First, they make customer service sustainable as a company grows. Second, they make it easy for customers to solve their own problems.

Unfortunately, they haven't always been successful in that second point. IVR in particular has garnered a reputation for frustrating customers. That failure is caused by some key differences between the two technologies.

Difference between IVR and IVA

IVR stands for interactive voice response. It is a technology that uses pre-recorded audio prompts to guide customers through a series of tasks. For example, an IVR system might ask a customer to press 1 for customer service, press 2 for sales, or press 3 to hear account information.

IVA stands for intelligent virtual agent. Some call it "intelligent virtual assistant." It is a more advanced technology that uses artificial intelligence (AI) to understand and respond to customer queries. IVAs can be used to provide self-service support for a wide range of customer needs, from account information to troubleshooting.

Feature

IVR

IVA

Technology

Pre-recorded audio prompts

AI

Capabilities

Limited tasks

Wide range of tasks

Personalization

Generic

Personalized

Reputation

Poor quality

New and advanced

 

In general, IVR allows businesses that need to provide basic self-service support. It can be a low-cost option, but IVRs with many recorded responses may be quite expensive. IVA is a better option for businesses that need to provide a more personalized and intelligent experience, or that have a high volume of customer calls.

Use Cases of IVR/IVA Contact Center

Here are some examples of how IVR and IVA are used in contact centers for different industries:

  • Banking: Allow customers to check their account balances, transfer money, and pay bills.
  • Retail: Answer customer questions about products and services, and to process returns.
  • Healthcare: Schedule appointments, refill prescriptions, and provide patient information.
  • Travel: Book flights, make hotel reservations, and rent cars.

As AI technology continues to develop, IVA is becoming a more popular choice for businesses of all sizes. IVAs offer a number of advantages over IVR systems, including:

  • They can understand and respond to a wider range of customer queries.
  • They can be customized to provide a more personalized experience to each customer.
  • They can learn and improve over time.

As a result, more businesses are expected to use IVAs to manage their customer service needs in the future.

differences Between IVR vs. IVA: Do They matter?

The differences between IVR and IVA matter because they affect the customer experience and the ROI of the technology.

  • Customer experience: IVR systems typically provide a more limited and generic experience than IVA systems. This can lead to customer frustration, especially if the customer has a complex question or issue. IVA systems, on the other hand, can provide a more personalized and conversational experience, which can lead to higher customer satisfaction.
  • ROI: IVR and IVA systems cost about the same. However, IVA systems can also lead to improved customer satisfaction, reduced call volume, and increased sales. One in three consumers will leave a brand after one bad experience. On the other hand, improving customer experience may increase sales revenue by 2 to 7 percent.

If the business needs to provide basic self-service support at a low cost, IVR may do the job. However, if the business needs to provide a more personalized and intelligent experience, or that has a high volume of customer calls, IVA may be a better choice. Because personalization matters to customers more than ever, IVA is quickly replacing IVR as the industry standard.

Here are some additional reasons why the differences between IVR and IVA matter:

  • Employee productivity: IVA systems can free up employees to focus on more complex tasks, such as customer support and sales. This can lead to increased employee productivity and satisfaction.
  • Business agility: IVA systems can be quickly and easily updated to reflect changes in products, services, or policies. This makes it easier for businesses to adapt to changing market conditions.
  • Data insights: IVA systems can collect data on customer interactions, which can be used to improve the customer experience and the overall business performance.

As AI technology continues to develop, IVA is expected to become more affordable and accessible to businesses of all sizes. This will make it a more viable option for businesses that are looking to improve their customer service and business performance.

How does IVR work?

IVR systems typically use a menu system to guide customers through their desired task.

Here is a step-by-step overview of how IVR works:

  1. The customer calls the company's phone number.
  2. The IVR system greets the customer and asks them to press a number to select a menu option.
  3. The customer presses a number to select their desired option.
  4. The IVR system responds to the customer's selection. This may involve playing a pre-recorded message, transferring the customer to a live agent, or accessing a database to provide information.
  5. The customer continues to interact with the IVR system until they have completed their desired task.

IVR systems can be used to provide a variety of self-service features, such as:

  • Checking account balances
  • Making payments
  • Scheduling appointments
  • Answering frequently asked questions
  • Providing technical support

IVR systems can also be used to collect customer information, such as names, addresses, and phone numbers. This information can be used to improve the customer experience and to target marketing campaigns.

IVR systems use a combination of hardware and software to work. The hardware typically includes a computer, a telephony card, and a speakerphone. The software includes the IVR system's operating system, the menu system, and the voice recognition engine.

The IVR system's operating system controls the flow of information between the hardware and the software. The menu system provides the customer with a list of options to choose from. The voice recognition engine converts the customer's spoken words into text.

When the customer presses a number on their phone, the IVR system sends a signal to the computer. The computer then interprets the signal and determines which menu option the customer has selected. The computer then sends a signal to the speakerphone, which plays the corresponding audio message.

If the customer needs to speak to a live agent, the IVR system can transfer them to the appropriate department. The IVR system can also collect customer information, such as names, addresses, and phone numbers. This information can be used to improve the customer experience and to target marketing campaigns.

Modern systems today can also understand basic verbal inputs, such as "yes," or "representative." Because customers choose what to say to the IVR, these are called "natural language IVR."

History of IVR

The history of IVR can be traced back to the 1930s, when Bell Labs created the Voder, a machine that could analyze the English language and produce human-like audio. This technology was the first to use computers to synthesize speech, and it paved the way for the development of IVR systems.

In the 1960s, the Bell System built a dual-tone multifrequency (DTMF) technology, enabling the development of phones with keypads. This made it possible for customers to interact with IVR systems by pressing buttons on their phone.

The first commercial IVR systems were introduced in the 1970s. These systems were simple and limited in their capabilities, but they were a major improvement over the previous method of customer service, which relied on live agents.

In the 1980s, IVR systems became more sophisticated. They began to use voice recognition technology to understand customer requests, and they could access databases to provide information. These natural language IVR systems were more efficient and user-friendly.

In the 1990s, IVR systems became even more popular. They were used by businesses of all sizes to provide customer service, collect information, and automate tasks.

In the 2000s, IVR systems continued to evolve. They began to understand customer requests more accurately and provide more personalized service.

Today, IVR systems are an essential part of customer service for many businesses, but they never won the hearts of customers. With the advent of AI, their popularity has begun to fade.

Benefits of IVR

Historically, IVR delivered many benefits to businesses, including:

  • Quick service: In cases when an IVR can resolve an issue on its own, it provides an efficient and convenient way to interact with a company. Customers can get the information they need without having to wait on hold or speak to a live agent.
  • Reduced call volume: IVR systems help reduce call volume by automating common requests. This frees up live agents to handle more complex customer issues.
  • Increased employee productivity: Live agents become more productive when they are free to focus on more complex inquiries. This can lead to improved employee morale and satisfaction.
  • Lower costs: By automating tasks such as scheduling appointments, taking payments, and providing customer support, employees spend less time on the phone, reducing contact center expenses.
  • Data collection: IVR systems can collect data on customer interactions, such as the time of day the call was made, the customer's location, and the customer's reason for calling. This data can be used to improve the customer experience and the overall business performance.
  • Scalability: IVR systems are scalable, which means they can be easily adapted to meet the needs of a growing business. This is important for businesses that experience seasonal fluctuations in customer demand.
  • Flexibility: IVR systems can be customized to meet the specific needs of a business. This allows businesses to create a customer experience that is both efficient and effective.

Overall, businesses of all sizes have gained value from IVR. It is a versatile and powerful technology that can be used to automate customer service, reduce costs, and increase efficiency. Until recently, IVR was the only option to make customer service sustainable for many companies.

Limitations of IVR

While IVR delivered many benefits, it also sports some limitations. Here are some of the most common limitations of IVR:

  • Limited ability to handle complex requests: IVR systems are typically limited to handling simple requests. If a customer has a complex request, they may need to speak to a live agent.
  • Can be frustrating for customers: If a customer is having trouble navigating the IVR system or if the system does not understand their request, they may become frustrated. This can lead to negative customer experiences.
  • Not always accurate: IVR systems are not always accurate, especially when it comes to understanding customer requests that are not in the system's database. This can lead to errors and frustration for customers.
  • Not personalized: IVR systems are not personalized, which can make the customer experience feel impersonal. This can lead to customers feeling like they are not being heard or understood.
  • Can be expensive: IVR systems can be expensive to implement and maintain, especially for businesses with a large call volume.

Despite these limitations, IVR has still provided value for businesses of all sizes. While it's impossible to completely avoid these limitations, there are ways to reduce their impact. Here are some tips for overcoming the limitations of IVR:

  • Make sure the IVR system is easy to use: The IVR system should be easy to navigate and should have clear instructions.
  • Train customers on how to use the IVR system: Provide customers with instructions on how to use the IVR system before they call.
  • Monitor the IVR system: Monitor the IVR to identify any problems and make improvements.
  • Use a hybrid approach: Combine IVR with live agents. This allows customers to get the help they need, even if the IVR system is not able to understand their request.

By following these tips, you can overcome the limitations of IVR and improve the customer experience.

History of IVA: More than an AI IVR

Intelligent virtual agents (IVAs) are the next generation of customer service automation. More than an AI IVR, the history of IVAs can be traced back to the early 1960s, when researchers began to develop computer programs that could simulate human conversation. One of the earliest IVAs was ELIZA, which was developed by Joseph Weizenbaum at MIT in 1966. ELIZA was a rule-based system that could simulate a Rogerian psychotherapist.

In the 1970s, IVAs began to use artificial intelligence (AI) to improve their ability to understand and respond to human language. One of the most influential IVAs of this era was Parry, which was developed by Kenneth Colby at Stanford University in 1972. Parry was a chatbot that simulated a paranoid schizophrenic.

In the 1980s, IVAs began to be used in commercial applications. One of the first IVAs to be used in a commercial setting was the Virtual Customer Assistant (VCA) developed by IBM in 1984. The VCA was used to provide customer service for IBM products and services.

In the 1990s, IVAs became more sophisticated and began to be used in a wider range of applications. One of the most popular IVAs of this era was the Ask Jeeves Virtual Assistant, which was launched in 1997. Ask Jeeves was a question-answering system that could answer a wide range of questions.

In the 2000s, IVAs continued to evolve and began to use natural language processing (NLP) to improve their ability to understand and respond to human language. One of the most popular IVAs of this era was the Siri Virtual Assistant, which was launched by Apple in 2011. Siri is a voice-activated assistant that can perform a variety of tasks, such as making calls, sending text messages, and setting alarms.

Today, IVAs are used in a wide range of applications, including customer service, education, healthcare, and entertainment. IVAs are becoming increasingly popular as AI technology continues to develop. They offer a number of advantages over traditional customer service tools, such as 24/7 availability, the ability to handle a wider range of tasks, and the ability to learn and improve over time. As IVAs become more sophisticated, they are expected to play an increasingly important role in our lives.

How does IVA work?

Intelligent virtual agents (IVAs) are computer programs that can simulate human conversation. They use artificial intelligence (AI) to understand and respond to natural language queries. IVAs are used in a variety of applications, including customer service, education, healthcare, and entertainment.

Here is a step-by-step overview of how an IVA works:

  1. The user interacts with the IVA using their voice or text.
  2. The IVA's AI engine analyzes the user's query and identifies the intent.
  3. The IVA retrieves the relevant information from its database.
  4. The IVA generates a response in natural language.
  5. The IVA delivers the response to the user.

IVAs can be used to perform a variety of tasks, such as:

  • Answering questions
  • Providing customer service
  • Booking appointments
  • Making reservations
  • Troubleshooting problems
  • Providing recommendations
  • Generating creative content

As people became comfortable with virtual assistants in their homes and pockets, businesses became comfortable with virtual agents handling customer service inquiries. Today, IVAs outperform traditional tools like IVR, and they even boast a few advantages over human-based customer service.

IVAs have the potential to revolutionize the way we interact with technology and the way we get things done. Here are some additional details about how IVAs work:

  • IVAs use a variety of AI techniques to understand and respond to natural language queries, including natural language processing (NLP), machine learning (ML), and deep learning (DL).
  • NLP is used to identify the meaning of the user's query. ML is used to learn from the user's interactions with the IVA and to improve the IVA's ability to understand and respond to queries. DL is used to create IVAs that are able to understand and respond to complex queries in a natural and human-like way.
  • IVAs typically store their data in a database. This data can include information about the user's past interactions with the IVA, as well as information about the products or services that the IVA is providing support for.
  • IVAs can be accessed through a variety of channels, including voice, text, and chat. They can also be integrated with other systems, such as customer relationship management (CRM) systems and enterprise resource planning (ERP) systems.

Benefits of an IVA Call Center

You've already read about the differences between IVA and IVR. Now it's time to discuss the advantages of replacing an IVR with IVA in a call center or contact center.

Here are some of the benefits of an IVA contact center:

  • Better understanding of user intent: IVAs use natural language processing (NLP) to understand the meaning of user queries. This allows IVAs to provide more accurate and helpful responses than IVRs, which are limited to understanding pre-defined keywords and phrases.
  • Greater personalization: IVAs can be personalized to the individual user, taking into account their past interactions with the IVA, their preferences, and their current needs. This can lead to a more satisfying and productive customer experience.
  • IVAs can be used to handle a wider range of customer queries. This is because IVAs are able to understand natural language queries, while IVRs are limited to understanding pre-defined keywords and phrases.
  • Ability to learn and improve over time: IVAs can learn from their interactions with users and improve their ability to understand and respond to queries over time. This means that IVAs can become more accurate and helpful as they are used more often.
  • Cost-effectiveness: IVAs can be a cost-effective way to provide customer service. They do not require the same level of human resources as IVRs, and they can be used to automate tasks that would otherwise be performed by live agents.

Overall, IVAs offer a number of advantages over IVRs. They are more accurate, more personalized, and able to learn and improve over time. IVAs are also more scalable and cost-effective than IVRs. All of these benefits allow your entire customer service operation, including the contact center, deliver more value. If trends continue, IVAs will continue their path in replacing IVR's leading role in customer service.

Here are some additional benefits and opportunities with an IVA contact center:

  • An IVA contact center provide 24/7 customer service. This is important for businesses that have customers in different time zones or that need to provide support for customers who work during non-standard hours.
  • IVAs can be used to collect customer feedback. This information can be used to improve the customer experience and the products or services that the business offers.
  • IVAs can be used to upsell and cross-sell products and services. This can help businesses to increase revenue.

With recent AI developments, IVAs should continue to offer even more benefits over IVRs. They are a powerful tool that can be used to improve the customer experience, reduce costs, and increase efficiency.

Limitations of IVA

While IVAs have many benefits, they also have some limitations. Here are some of the most common limitations of IVAs:

  • Accuracy: IVAs are not always accurate, especially when it comes to understanding complex queries or queries that are outside of their knowledge base. This can lead to frustration for customers and can also result in errors.
  • Personalization: IVAs can be personalized to the individual user, but they are not always able to provide the same level of personalization as a live agent. This can lead to a less satisfying customer experience.
  • Cost: IVAs can be expensive to develop and maintain. This is especially true for IVAs that are used in complex applications.
  • Acceptance: Not all customers are comfortable interacting with IVAs. Some customers may prefer to speak to a live agent, especially if they have a complex issue that they need to resolve.

Despite the limitations, IVAs are still worth the investment for most businesses. Not all IVAs are created equal. Many companies have jumped on the AI bandwagon and quickly stitched together a customer service tool to sell. While they use AI, the end result is more of an AI IVR than a true IVA.

Mosaicx has methodically and consistently developed our solutions over the past 30 years, and we're one of the few providers to offer a dedicated success coach to ensure the IVA continues to provide maximum value over time. Choosing a trustworthy IVA provider is key in minimizing limitations of the technology and maximizing long-term value.

Future of IVR/IVA: Which to Choose?

If you read this far, you'll know IVA is a better value than IVR. IVR served the customer service industry well for decades, but it is falling out of favor. As AI develops and customers become comfortable with virtual assistants in every day life, IVA is positioned to be the go-to customer service tool for the future.

Here are some of the trends that we can expect to see in the future of IVR and IVA:

  • Increased personalization: IVAs will become more personalized to the individual user, taking into account their past interactions with the IVA, their preferences, and their current needs. This will lead to a more satisfying and productive customer experience.
  • Improved accuracy: IVAs will become more accurate in understanding and responding to user queries. This will reduce frustration for customers and will also lead to fewer errors.
  • Increased scalability: IVAs will become more scalable to handle a large number of customer interactions. This is important for businesses with a high volume of customer traffic.
  • Greater affordability: IVAs will become more affordable to develop and maintain. This will make them more accessible to businesses of all sizes.
  • Improved security: IVAs will become more secure to protect customer data. This is important as IVAs process sensitive customer data.
  • Enhanced user experience: IVAs will become more user-friendly and engaging. This will make them more appealing to customers and will encourage them to use IVAs more often.

Everything is trending upward for IVAs. Replacing IVR is just one of several important virtual agent trends experts are tracking in coming years.

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