The True Cost of IVRs

By Replicant
July 9, 2024

Interactive Voice Response (IVR) systems have been a staple in customer service for decades. They were initially introduced to streamline operations, reduce costs, and improve the efficiency of handling customer inquiries.

However, as technology has advanced, the limitations and costs associated with IVRs have become increasingly apparent. As such, the cost of IVRs has ballooned far beyond their sticker price.

In an increasingly AI-first world, IVRs often fall short of customer expectations, leading to inefficiencies and increased operational expenses for businesses. As more contact centers opt for conversational AI solutions to replace old-school touchpad and keyword menus, let’s explore the hidden costs of IVRs behind the transition.

Ineffective authentication & routing

Caller authentication is a critical part of customer service, ensuring that sensitive information is protected and interactions are secure. However, the statistics reveal the significant and often unnecessary cost this process incurs for US contact centers. According to the 2024 US Contact Center Decision-Makers’ Guide, 63% of all calls require a security and identification process to be completed first, taking an average of 26 seconds per call. This results in an overall cost of $19.8 billion per year for agent-handled security and identification checks.

The substantial cost associated with these security checks indicates a significant misuse of resources. Automating this process where possible – which IVRs often can’t – can free up agents to handle more complex queries, thereby improving overall efficiency. Additionally, automation can reduce human error and ensure a consistent security process, enhancing overall service quality.

A black box of analytics

Detailed analytics can help identify areas where caller authentication processes can be streamlined, leading to improved efficiency and reduced costs. By analyzing call data, contact centers can pinpoint bottlenecks and implement more efficient methods. However, many IVRs don’t offer granular details about why customers call. This lack of insight makes it difficult to improve processes and reduce inefficiencies.

Without comprehensive analytics, businesses are left in the dark about the specific pain points customers face, making it challenging to implement targeted improvements. Investing in AI platforms that provide detailed analytics can lead to better decision-making, more effective training programs for agents, and ultimately, a more seamless customer experience.

Inability to resolve calls

Conversational AI is capable of fully resolving a majority of calls, a feat that IVRs fail to achieve. As a result, agent call volumes remain high because IVRs are unable to provide satisfactory resolutions. This leads to an increased workload for agents and longer wait times for customers.

AI-driven solutions can handle a wide range of customer inquiries, from simple questions to more complex issues, with a higher degree of accuracy and efficiency. By leveraging AI, businesses can significantly reduce the volume of calls that need to be escalated to human agents, allowing them to focus on more nuanced and critical customer interactions. This shift not only improves operational efficiency but also enhances customer satisfaction by providing quicker and more accurate responses.

Minimal benefits for agents

IVRs do not enable agents to seamlessly pick up an existing call, which often forces customers to repeat themselves, leading to longer average handle times. This inefficiency not only frustrates customers but also adds unnecessary strain on agents, reducing their productivity and job satisfaction.

When agents are bogged down by repetitive tasks and inefficient processes, their ability to provide high-quality service diminishes. Streamlining the transition from intake to agent and integrating more advanced technology can alleviate these issues. By providing agents with better tools and more meaningful work, businesses can enhance agent satisfaction and retention, ultimately benefiting overall customer service.

Poor customer experiences

The time taken to navigate an IVR – usually a resolution or substantial progress on a caller’s issue – adds friction to the customer experience. Customers may feel frustrated by the delay, leading to dissatisfaction and potential loss of business. With an average speed to answer still well above the pre-pandemic average at 79 seconds, the inefficiency of IVRs has never been more apparent.

Moreover, IVRs lack the capability to speak and listen naturally, which can further exacerbate customer frustration. The inability to engage in a natural, conversational manner can make interactions feel robotic and impersonal, detracting from the overall customer experience. Investing in more advanced, conversational AI technologies can help create a more human-like interaction, enhancing the customer journey and building stronger customer relationships.

What’s next?

The true cost of IVRs goes beyond their financial implications. They contribute to inefficiencies, frustrate customers, and burden agents with redundant tasks. Embracing AI, which offers better authentication, detailed analytics, and full resolution of queries, can significantly enhance both customer and agent experiences. It’s time for businesses to reassess their reliance on IVRs and invest in more advanced, efficient solutions that align with modern customer expectations and technological capabilities. Download our free guide to learn how to choose the right solution without getting burned by false promises that put your business at risk.