What’s the Difference & Which One to Choose?

An IVA is an Intelligent Virtual Agent, often used in larger businesses to provide a premium and automated customer experience. An IVR is short for Interactive Voice Response, which is a technology used in customer support scenarios to route calls efficiently.

While these might seem like very similar solutions, there are a few nuances between the two.

Both can play a large role in implementing customer service automation and efficiency but, depending on your business needs, one (or both) might be overkill. 

Here, we will explain the specific use cases that work best for both an IVR and IVA, as well as explore other options that are a little easier to implement for smaller businesses with limited budgets.

What Is Interactive Voice Response?

An IVR system is an automated phone functionality that allows callers to interact with your phone system by recognizing their keypad presses or their voice. 

A typical IVR sounds like:

“Press 1 for sales or 2 for support.”

But customers can also say, “Help with my support ticket” or “Upgrade my handset.”

The IVR then works out which department or individual your customer needs to speak to based on pre-configured skills and algorithms. The voice recognition capability is what makes an IVR stand out from a standard auto attendant, which is simply presenting options to callers.

They manage inbound calls by requesting customer information and routing callers to the best destination at any given time. As part of most contact center solutions, you get the option to configure an IVR.

Depending on how deep you go, you can transform how your business handles inbound calls — leading to greater efficiency.

Key features of IVR

The core functionality of an IVR is to understand what your customer needs at that moment.

Using dual-tone multi-frequency (DTMF) — the touch-tone sound your keypad makes — or by understanding voice commands, an IVR sends calls to pre-configured teams or people.

Each number press corresponds to a different department. 

For example: 

  1. Sales
  2. Support
  3. Billing
  4. Speak to reception

This is called a static menu. You can have as many or as few options as you desire. 

Alternatively, you can let customers bypass the numbers entirely. 

You have two options for this:

  • Remove the number menu and prompt your customer to say their reason for calling in their own words.
  • Allow customers to say the reason they’re calling when they hear the right department.

Inside the menu, you can also pre-record voice responses to answer common queries. This makes the IVR system do the heavy lifting, reducing the burden on live agents.

If you can automate simple tasks like confirming opening times, call center agents can spend more time adding value to human interactions.

Businesses often choose to present these options first so there’s less chance of callers missing the information they could get without waiting for an agent.

The advantages of IVR

When you use IVR technology, it proves cost-effective in contact centers with high call volumes because customers get through to the right resource, whether that’s a menu or agent, faster. 

No more, “Yes, we’re open on Sundays,” and more, “Let me fix that rather technical issue for you.” Think about the number of calls that have the same answer and free up that agent.

That means:

  • Less time waiting on hold
  • Offering callbacks instead of queuing
  • Potential for 24/7 availability

When there’s a query that can’t be handled with a pre-programmed response, it’s then time to deflect to your on-call team. By streamlining the call routing process, agents spend less time making transfers and more time delighting customers. 

If you’re a business that only handles support and technical queries in the day, an IVR system is a better off-hours resource than the typical “Leave us a voicemail” or “We’re not available right now.” Neither of these options is particularly helpful to your callers.

You can expect call center metrics like average handle time and call abandonment rate to come down significantly too. When callers don’t need to speak to a human, there are no more long wait times.

There are, however, some limitations we must flag too.

The limitations of IVR

The pushback on IVRs surrounds three main areas:

  • Limited to predefined options: What happens if your caller’s need isn’t a menu option?
  • Can be frustrating for users if not designed well: Nailing the priority and frequency of questions is crucial to picking the right menu options.
  • Lacks understanding of user intent: For example, billing queries could fall between teams depending on the specific question.

This is where the benefits of IVA become clear as a great alternative to IVR.

What Is an Intelligent Virtual Agent?

An IVA is AI-powered (artificial intelligence) software that can have genuine conversations with your customers. You might hear IVA solutions referred to as either Intelligent Virtual Agent or Intelligent Virtual Assistant. In a contact center setting, these are interchangeable.

Acting as a digital assistant, IVA uses speech recognition technology and voice biometrics to understand human speech and answer in a human-like manner.

An IVA, or Interactive Virtual Agent, learns why people are calling and determines the next best destination.

Businesses use IVA systems to handle simple and recurring requests like opening hours, qualifying sales leads, and basic troubleshooting.

Sounds like a chatbot? It is like a chatbot but smarter

In fact, IVAs use natural language processing (NLP) to understand what customers really mean and to provide an answer that isn’t just pre-populated and selected from a list.

We call this natural language understanding (NLU) when IVAs move on from the recognition phase to the understanding phase. While chatbots can answer questions that have limited possible outcomes, IVAs have genuine conversations.

Chatbot vs IVA

IVA enables conversational AI — the term used for one-to-one conversations between a human and a robot. The key element is that it’s conversational, unlike some chatbot experiences where you’re spamming the talk to an agent button.

Key features of IVA

Basic NLP capabilities are at the root of everything an IVA can do for your business.

NLP works by breaking conversations up into three steps:

  • Recognizing a conversation
  • Understanding the meaning as well as the words
  • Providing a helpful response based on intent, sentiment analysis, and available information

Basic responses are the bread and butter of NLP and IVAs. But it’s dynamic responses based on context where they have the upper hand compared to chatbots and IVRs.

Instead of being limited to closed questions with yes or no answers, IVAs can search resources and respond with much-needed context.

An example of an IVA that routes incoming calls based on the caller's intent.
An example of an IVA that routes incoming calls based on the caller’s intent.

But it could also be a more complex question, like an update on order progress. Using real-time customer data, like an order number or email address, your IVA can look up progress and provide an update without a live agent.

Another useful feature is integrating IVAs across multiple channels (chat, voice, email, etc.). 

If you run an omnichannel contact center, using IVAs for transactions that don’t need human intervention frees up agent resources and gives customers near-immediate information.

The advantages of IVA

When you present your customers with an IVA, you offer a more personalized customer experience than basic call routing.

When you remove the dependency for a human, there’s also:

  • No need to hold for an agent, as virtual agents don’t take breaks or vacations 
  • No limit to the number of interactions an IVA can handle
  • Better experience for consumers who need help with simple requests

Compared to a traditional IVR, an IVA can handle far more complex questions. If you’re thinking about using either as the frontline of your customer service, think about how much an IVA can do on top of that of an IVR.

There’s also the (often forgotten) benefit of retaining customer requests for continuous learning. During web chats, message history can be retained and used for training purposes.

Your IVA is an evergreen source of training and customer materials and is constantly updating itself through machine learning technology.

The limitations of IVA

While IVAs sound great, they do need more sophisticated setup and maintenance. 

It’s worth it if you have the time and knowledge (or find a contact center provider that has this expertise).

It pays to get it right. If you’re entrusting your first line of support to a virtual agent, you need 100% trust that it’s doing as good (or better) a job as a human agent.

Failure to maintain an IVA can lead to misunderstanding of customer inquiries and, ultimately, customer dissatisfaction. If you don’t schedule regular reviews or track for red flags (keywords, expletives, sentiment, etc.), you run the risk of providing bad information to customers.

Comparing IVA and IVR

On the face of it, an IVA is a superior technology. But, in some cases, it may be overkill. It might be the case that you need one more than the other. Or neither. 

Every business has a different type of customer. This next section runs through the key factors to consider when comparing IVR and IVA technology.

Interactive Voice Response (IVR) Interactive Virtual Agent (IVA)
Menu-driven Conversational
Limited options Wide-range of responses
Dependent on agent availability Virtual agents available 24/7
Can’t request same agent as previous call Virtual agents retain interaction history
Replicates existing call flows Requirements gathering and customer research
Set and forget Launch and monitor
Optimize for popular options Examine accuracy and helpfulness
Instant changes when needed Major updates need planning

User experience

When customers arrive at either your IVR or IVA, they expect a slick experience. Their primary need is for their query to be resolved as quickly as possible. Here are the clear user experience differences between an IVR and an IVA.

Flexibility

Customers want to know exactly what will happen when they press a button or make a request. In some cases, it’s better to be flexible. In others, it’s more efficient to get them to the right place.

Generally, for most small businesses, an IVR will be easier to update and maintain since it’s more straightforward and not as flexible in interpreting callers.

Implementation and maintenance

IVR is easier and cheaper to set up. But there’s a clear reason. 

The configuration of the inbound call flow is black and white. Option 1 goes here and option 2 goes there. There’s no context, emotion, or urgency to plan for.

IVA requires more investment but offers better long-term value to the businesses because it’s learning as it goes. As such, it takes more time to get right up front. But it’s worth it if your goals are self-service and personalization.

How Do Businesses Use IVR and IVA?

Large enterprises

IVR is often used in customer support centers, banking, and utility businesses for efficient call routing. Aside from that, large enterprises rely on IVR systems for simple, self-service inquiries.

Common functions include:

  • Check account balance: IVR shares the current balance of a customer’s accounts.
  • Check order status: Customers provide details of an order for its current status.
  • Product lookup: Callers request information about products.
  • Bill payment: IVR pulls account information and accepts credit card data.
  • Set or change PINs: Customers request to set up or change an account or card PIN.
  • Answer surveys: IVR prompts customers to give feedback at the end of a call.

IVAs, on the other hand, provide large enterprises with more personalized experiences and help with more complex queries. It’s here where they’re being used as a genuine virtual agent rather than a voice response with stock responses.

Often used in customer support, sales, and IT help desks, IVA in large enterprises plays a huge role in business productivity and improving the bottom line.

Medium-sized businesses

In medium-sized businesses, IVR is preferred to manage moderate call volumes. 

If the bulk of your customer requests come from inbound calls, and you have the data and awareness that a good portion is repeat queries, your IVR can look after those, freeing up agents.

IVA is beneficial for medium-sized businesses aiming to provide a premium customer experience. 

When your goal isn’t just to send people to the right place efficiently, but it’s to resolve their concerns (or get them to the right place), IVA offers an extra set of hands for frontline support. 

You can troubleshoot basics like:

  • Have you rebooted your machine?
  • Is your internet working?
  • Is the power light on?

Then, take the question to the next level without needing human intervention. By leveraging integrations into CRMs, knowledge bases, and ticketing systems, virtual agents can continue resolving the problem.

However, it might prove difficult for small businesses that pride themselves on quality, human customer service.

Small businesses

Unless you’re a small team handling a significant call volume, IVR might be a little bit too much.

Most small businesses operate an “informal call center” using cloud phone system features like auto attendant and call flows. Setup is easy and often a direct copy of an existing on-premises phone system.

While there may be a case for using an IVA to handle queries when you’re short of support staff, it can be expensive to implement and maintain.

By the time you’re happy and 100% trusting of your virtual agent, the time to ROI has been handled just as efficiently and expertly by your staff.

Then begins the cycle and expertise of ongoing monitoring and adaptation.

Setting Up a Call Flow or Auto Attendant for SMBs

The alternative to choosing an IVR or IVA for small and medium businesses is to use call flows or an auto attendant.

Call flows

Call flows are configurable menus that send callers to the department or individual with the associated skills. Inside a call flow, you can use a main number or local numbers to branch off from.

You can then add opening times and holidays before creating where calls route to. Like in the case of an IVR, you can choose 1 for sales or 2 for support, etc.

If nobody picks up or staff is engaged with something else, you can choose to overflow that number to a different department or user.

Unlike an IVR, you don’t need to configure the more intelligent options. Call flows are one-way interactions. Callers dial your number and get routed based on their number choices.

An example of a Call Flow in Nextiva.
An example of a Call Flow in Nextiva.

Auto attendant

An auto attendant is like a virtual receptionist for your business. 

Like call flows and IVRs, you configure pre-recorded options for customers to choose from. This means that when you’re busy working, customers’ calls still get answered straight away. 

By the time a staff member picks up, they know the caller has a specific query for their department. In small businesses, this can help give the appearance of a larger or more robust company and increase both customer satisfaction and first-call resolution.

It’s a much more cost-effective way to provide customers with qualifying options to get them to the right person every time. It’s also much easier to set up and make changes to, compared to a complex IVR or IVA scenario.

When to consider a call flow or auto attendant

If you desire to improve customer experience without significant investment, consider call flows or auto attendants instead of breaking the bank for something you might not need.

Scenario Solution
Small business with limited budget Call flows and auto attendant
Call routing without advanced features Call flows and auto attendant
Serve customers who won’t use speech Call flows and auto attendant
Serve customers who don’t use web chat Call flows and auto attendant

Tip: Some cloud phone systems like Nextiva include call flows and auto attendants as part of your service.

Choosing the Solution Right for Your Business

The choice between IVR, IVA, call flows, and auto attendant depends on your business size, budget, and customer service goals.

  • If you’re a small business, consider call flows.
  • If you have a limited budget, consider an auto attendant.
  • If you have a large number of calls, consider an IVR.
  • If personalization and automation are key, consider an IVA.

The most important aspect to consider is your customer’s experience. 

What’s the best option for them? What will make their life easier when they need to reach you?

Likewise, your agent’s experience must be top of mind, too.

One of your goals must be to empower agents to be productive and provide value where they need to fill in the gaps of whichever system you choose.

Need help deciding which is the right choice for you? Speak to a Nextiva expert to help get ahead of your inbound calls.

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