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How Smart IVR Unlocks a Better Caller Journey

Smart IVR refers to Interactive Voice Response (IVR) systems that can recognize and respond to human speech. Unlike traditional IVR — which relies on rigid menus and keypad inputs — smart IVR can interpret spoken language, ask clarifying questions, and adapt its responses based on customer needs.

This creates a smoother, faster experience that leaves callers more satisfied and businesses more efficient.

Now — you’ll see terms like “smart IVR,” “intelligent IVR,” “conversational IVR,” and “natural language IVR” that are often used interchangeably. The distinctions usually stem from marketing and branding rather than significant technical differences.

In this post I’ll help cut through the marketing noise to explain what smart IVR is, how it works, and what it can do.

Technically, what is a smart IVR?

For practical purposes, a smart IVR has the following capabilities that go beyond traditional systems:

  • Conversational capabilities: Using Natural Language Processing (NLP) to understand and respond to natural speech.
  • Dynamic routing: Adjusting call flows based on real-time customer inputs and historical data.
  • AI-driven insights: Using data from past conversations and machine learning to improve interactions and refine responses over time.

Supplemental smart IVR features

In addition to core capabilities, some vendors offer supplemental features that enhance the functionality of smart IVR systems. These features can provide additional value and address specific business needs:

  • Customer feedback surveys: Automatically prompt callers to provide feedback after their interaction, offering insights for continuous improvement.
  • Visual IVR: Extend IVR functionality to a smartphone interface, allowing users to navigate visually instead of verbally.
  • Outbound notifications: Proactively reach out to customers with reminders, updates, or alerts via automated calls or messages.
  • Multilingual support: Offer advanced language capabilities for seamless interactions with diverse customer bases.
  • Integration with third-party tools: Connect IVR systems to CRM, helpdesk, or analytics platforms for a unified workflow.

Generally, the best call center software supports all of these capabilities — just bear in mind that some vendors offer built-in solutions whereas others rely on third-party tools to support visual IVR, multilingual support, and other features.

How smart IVR works

When a caller dials in, the system greets them and invites them to describe their needs in their own words. Unlike traditional IVRs, which rely on fixed menus, smart IVRs use Automated Speech Recognition (ASR) and NLP to interpret the caller’s intent, ask clarifying questions if needed, and route them efficiently.

Behind the scenes, smart IVR systems use AI to analyze spoken input and match it to the most relevant solutions. They connect with customer data through CRM integration to personalize interactions, such as recognizing returning customers or recalling past issues.

Smart IVR systems also dynamically adjust call flows based on context, ensuring that each caller gets the appropriate response, whether it’s self-service, detailed information, or a transfer to a specific agent.

The result is a streamlined caller journey that balances speed and satisfaction. Callers spend less time explaining their needs or waiting for the right connection, while businesses benefit from reduced call handling costs and more effective agent utilization.

By combining advanced contact center technology with a focus on the user experience, smart IVRs ensure that every step of the journey feels purposeful and productive.

SEE: Discover seven surprising things call center ASR does really well

Benefits of smart IVR systems

In terms of the performance metrics associated with call centers, Smart IVRs offer a number of attractive KPI-related benefits.

Shorter customer wait times

With Smart IVR, you can offer a greater range of self-service features, which can significantly reduce call center queuing times for customers. The intelligent routing features also cut down on wait times by connecting callers to the right department or agent without bouncing them from one agent to the next. And, since callers are able to get moving in the right direction a lot sooner, this can lead to a lower call abandonment rate and a higher first-call resolution rate.

Increased productivity and decreased stress for agents

Since smart IVR systems provide more ways for callers to perform basic inquiries on their own at any time of the day, it lessens the burden on live agents. This not only lets the call center’s employees focus on more complex (and less repetitive) tasks, but it also tends to lower burnout rates and call center turnover — ultimately saving your business money in the long run.

Improved data collection and analysis

A Smart IVR system also makes it simple to collect and evaluate large amounts of customer data. This supplements traditional IVR analytics with additional data points to optimize call flows and customer journeys. This data can also be used to gain deeper insights into customer bases and their pain points, effectively providing implied feedback that can help companies improve their products and get rid of common issues.

SEE: Learn how IVR analytics can fix call flow issues

Fewer human errors

In a traditional contact center without Smart IVR, manual call routing errors and long wait times commonly lead to negative customer experiences and call abandonments. Smart IVR, however, greatly reduces the risk of human errors, leading to a better customer experience overall.

Lower customer support costs

With Smart IVR’s self-service options and intelligent call routing, there’s less of a need for a large team of live agents. This cuts down on staffing costs for businesses and organizations to save big bucks over time.

KPIs to measure smart IVR performance

When taking a look at how well your Smart IVR is working, keep these critical call center metrics in mind:

  • First Call Resolution (FCR): A high rate indicates that the IVR effectively resolves issues without needing multiple interactions. Look for trends where resolution rates drop, which could signal ineffective routing or unclear prompts.
  • Average call abandonment rate: A low abandonment rate suggests the IVR keeps callers engaged. A sudden spike might point to overly complex menus or extended wait times.
  • Customer Satisfaction (CSAT): Often measured through post-call surveys. Watch for declining scores, which could highlight areas where the IVR’s conversational capabilities or routing are falling short.
  • Average Handle Time (AHT): A steady decrease in handle time may reflect that the IVR is efficiently routing calls to the right agents. However, if it’s too low, it could mean callers are bypassing the system entirely due to frustration.
  • Cost per call: Track whether the IVR reduces costs over time. Rising costs might indicate inefficiencies in how calls are handled or routed.
  • Agent utilization rate: A well-functioning IVR should free up agents for more complex tasks. If utilization rates are stagnant, it may mean the IVR isn’t offloading basic queries as intended.

By tracking these metrics shortly after implementing your Smart IVR, you can more confidently assess whether your system is working and reduce the risk of making poor decisions based on inaccurate data.

Tips for implementing smart IVR

Implementing a smart IVR system requires thoughtful planning to ensure it meets both business objectives and customer needs. A well-executed rollout can streamline operations and enhance the caller experience, but achieving this balance takes more than just deploying the technology.

Here are a few IVR best practices and rules of thumb to help you maximize the system’s potential and set the stage for long-term success.

Give customers the option to bypass your IVR

No matter what, always provide an option to speak with a live agent. Doing so can help reduce customer frustration if they feel your IVR system isn’t helping them get the answers they need right away. Even if people don’t use the option, offering it early is a way to build trust and establish credibility during the opening moments of the caller journey.

Provide multiple caller response options

One way to streamline IVR call flow and make it more user-friendly is to offer both touch-tone and voice command options for your callers. This gives them the freedom to interact in whichever way they feel more comfortable. Likewise, doing so also provides a way for callers with unique accents and dialects to ensure that they can communicate with your IVR system properly.

Make your call routing smart and seamless

Implementing intelligent routing in your IVR system lets you transfer calls based on the caller’s phone number, making it possible for callers to speak with the same agent that handled their issue before. It can also transfer callers to agents who speak a specific language and move important calls to the front of the call queue. All of this leads to a more seamless and user-friendly customer experience overall.

SEE: Learn about the different types of IVR routing and when to use them. 

Make your menu simple and user-friendly

Always map out your menu beforehand to ensure that it’s user-friendly, intuitive, and simple. This makes it easier for customers to understand your IVR system and reduces friction along the customer journey.

Use a realistic-sounding voice

Although Smart IVR systems generally have realistic-sounding voice options, test out a few and decide which one is the best one for your customers. Using the most realistic voice possible will help put callers at ease, make conversation more natural, and improve the customer experience.

SEE: Learn more about how to make a high-quality IVR recording.

Add a callback option

By including a customer callback option in your Smart IVR system, your customers won’t have to wait in a call queue for an unknown amount of time. This gives them the freedom to go about their day without losing their place in line, and it also gives you an opportunity to optimize your call management system for your live agents.

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Yes, Analog Phones Work Just Fine Over a VoIP Gateway

Thinking about switching to Voice over Internet Protocol (VoIP) so you can make calls over the internet instead of landlines? With a VoIP gateway you won’t have to replace your existing phones, fax machines, or other equipment.

This saves money on new hardware and avoids the hassle of retraining employees who are comfortable with the current phone setup. Any modern business phone service is going to have a range of gateways available to help companies make the transition to the cloud.

A VoIP gateway acts as a bridge, allowing older analog devices — or even an entire office of them — to connect seamlessly to cloud-based communication systems. By converting traditional analog signals into digital packets, a VoIP gateway enables your legacy devices to work with the internet-based systems powering today’s communications.

In this guide, we’ll explore how VoIP gateways work, the different types available, and practical tips for ensuring optimal performance and security. Whether you’re transitioning one device or an entire office, we’ll cover everything you need to know to make the process smooth and effective.

Does every analog phone work with VoIP gateways?

I wanted to speak to this quickly before we get into the weeds about VoIP gateways, because there is a little more nuance than I could fit into the headline.

Now, I’ve never personally encountered an analog phone that didn’t work with a VoIP gateway — but I know that they exist.

Typically, these non-compatible phones are specialty models that require specific voltage levels or use fancy signaling that’s not supported by the VoIP gateway. You may also run into proprietary digital phones designed for specific PBX systems that don’t work without special hardware or adapters.

To avoid problems, confirm that your VoIP gateway supports the specific devices you plan to use. I would double check if you have any older or specialized equipment, like DECT devices, for example.

In general, though, most analog phones equipment should work just fine with a VoIP gateway. After all, the technology is really not that complicated.

A VoIP gateway converts signal to packets

As long as you know the basics of computer networking, this should all be pretty straightforward.

Think of a VoIP gateway as a bridge between different types of networks that allows organizations to integrate legacy telephony equipment with modern VoIP phone services.

Analog equipment was designed to send signals over the PSTN (Public Switched Telephone Network). The signal sent by these phones and fax machines doesn’t transmit over an IP network like the internet — it just won’t work at all — unless you have a VoIP gateway.

A VoIP gateway converts analog voice signals from traditional phone systems into digital data packets that can travel over an IP network. A VoIP gateway takes the voice from a phone, digitizes it, and sends it as packets over the internet or private network to the destination.

On the receiving end, it converts the digital data back into an analog signal for the recipient’s phone, enabling seamless communication. This two-way conversion process allows different types of communication systems — old and new — to work together efficiently.

VoIP gateway example

Consider a hotel that wants to lower costs with a VoIP phone system, but doesn’t want to have to buy new phones for every room. The VoIP gateway allows the hotel’s existing phones to connect to the hotel’s cloud phone system by converting the analog signals into digital data that can be sent over the internet.

This setup also opens the door to add useful VoIP features such as easier call routing, better voicemail options, and enhanced customer service, all without the need for a major overhaul of the hotel’s phone infrastructure.

Types of VoIP Gateways

There are a few different types of VoIP gateways that range from analog telephone adapters (ATAs) that support a single device and solutions designed to work for busy offices with hundreds of devices.

Single-port VoIP gateways are compact devices that connect one analog device, such as a fax machine or phone, to a VoIP network. These are ideal for small businesses or home offices with minimal communication needs, supporting a moderate number of concurrent calls, typically 10-30 depending on the device. They offer a cost-effective way to integrate analog equipment into a modern VoIP system without overhauling existing infrastructure.

For larger or busier environments, enterprise-grade VoIP gateways are designed to handle high call volumes and complex networks, such as in call centers or large offices. These devices are scalable and support both inbound and outbound communication, with advanced features like centralized control, CRM integration, and omnichannel support for voice, fax, and even video.

FXS (Foreign Exchange Station) gateways are used to connect multiple analog devices, such as phones and fax machines, to a VoIP network. They support multiple VoIP and fax codecs to ensure clear communication. and are a good option for businesses with multiple analog devices that need to transition to VoIP without replacing all hardware.

Fax-ATA (Analog Telephone Adapter) gateways are a specialized type of gateway designed for businesses that still rely on fax machines. These devices convert analog fax signals into digital data that can be transmitted over a VoIP network. Ideal for industries like healthcare or legal services, where faxing remains a key method of communication.

Session Border Controllers (SBCs) are used in conjunction with VoIP gateways to enhance security and ensure quality. SBCs monitor and manage traffic between networks, protecting against threats like fraud and VoIP Denial of Service (DoS) attacks, while also ensuring seamless communication between different VoIP systems. They are especially crucial in large-scale deployments or when connecting to external networks like the PSTN, ensuring smooth and secure VoIP operations.

Tips for using a VoIP gateway

1. Match VoIP codecs to business needs

VoIP codec selection directly affects both audio quality and bandwidth usage. Select one that fits your network’s capacity and the quality of calls you expect. G.729 offers low bandwidth usage while maintaining decent sound quality, ideal for networks with limited capacity. On the other hand, G.711 delivers high-quality sound but uses more bandwidth.

There’s not too much to think about here, but I wrote a whole post about choosing the right VoIP codec because it is important.

You can usually configure VoIP codecs in the settings of your VoIP gateway, PBX system, or individual IP phones. Depending on the system, you can set different codecs for different devices, users, or call types based on factors like bandwidth and call quality requirements.

2. Use a VoIP-friendly router

Not all routers are built to handle VoIP traffic effectively. Make sure your router supports Quality of Service (QoS) to prioritize voice traffic over data and other applications. VoIP routers handle voice data more efficiently and provide better stability for high-quality calls.

If your current router doesn’t support these features, consider upgrading to one designed specifically for VoIP use. It will be simpler to set up, perform better, and in the event something goes wrong, a good router will probably make finding and fixing common VoIP issues a lot easier.

3. Ensure reliable internet connectivity

A fast, stable internet connection is essential for VoIP. Run a free VoIP speed test if you are unsure about whether or not your connection can support all the new lines your gateway will enable.

Once it’s up, you will need to implement QOS settings to prioritize voice traffic and avoid disruptions from other high-bandwidth activities like video streaming or large downloads, especially during peak hours. Consider running VoIP on a VLAN as another way to separate voice traffic from the rest of the network. These are two important ways to optimize your VoIP network that ensure that real-time communications like VoIP get the steady connection they need.

4. Secure your gateway against threats

Both traditional and cloud phone systems are targeted by cybercriminals every day. There are always new forms of VoIP fraud, and these attacks that cost businesses millions of dollars every year. You should make yourself as unattractive a target for hackers as possible by following basic network security best practices, such as:

  • Change default passwords and usernames: Always change default login credentials on your VoIP gateway and devices to unique, strong passwords to avoid common security risks.
  • Update and patch regularly: Ensure that your VoIP gateway and connected devices are running the latest firmware and software updates to protect against security vulnerabilities.
  • Limit access to the VoIP gateway: Restrict access to the VoIP gateway’s administrative interface by allowing only trusted IP addresses or through a secure VPN to prevent unauthorized remote access.
  • Monitor for fraudulent calls: Set up alert systems to detect unusual call patterns, such as international calls or long-duration calls, which may indicate potential VoIP fraud.

5. Be proactive about network monitoring

Use network monitoring tools to track key metrics like latency, bandwidth usage, and packet loss. Persistent high latency or packet loss could signal hardware malfunctions, improper codec settings, or interference from other network traffic.

Watch for warning signs like frequent dropped calls, audio delays (latency), or choppy sound caused by jitter. If you notice unexplained call disruptions or poor quality despite a strong internet connection, it may be time to inspect your VoIP gateway’s configuration, firmware, or even its physical condition.

6. Avoid using Wi-Fi for VoIP

While wireless technology has done magnificent things for telephony, its instability and unpredictability pose challenges for VoIP calls. Wi-Fi technology increases the chances of network communication and VoIP quality issues like latency, network jitter, and packet loss.

These factors can significantly impact the clarity and reliability of voice calls, making Wi-Fi less ideal for VoIP gateways.

Encourage employees to use wired Ethernet connections whenever possible. Ethernet provides a stable and consistent connection, reducing the risk of call disruptions. Wired setups are especially beneficial in offices where high call quality is a priority, as they eliminate the variability associated with wireless networks.

When wired connections aren’t feasible, focus on optimizing wireless setups. Equip employees with high-quality Bluetooth VoIP headsets and ensure they have access to a strong, stable Wi-Fi signal.

Tools like Wi-Fi extenders or mesh networks can help minimize interference and improve call reliability, making wireless solutions a viable alternative in certain situations.

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Can You Replicate a Key Phone System In the Cloud?

Key phones are traditional desk phones with a central unit and handset. Able to support up to 50 users, they’re often used by small to medium-sized offices. They have a dial pad and special buttons that let users route calls to other extensions or access features like hold or transfer.

A key phone system has been ideal for companies with employees who need to be reachable at their desk and behind the counter. These systems are easy to manage compared to a traditional PBX — and excel at the core competencies of a basic phone system.

But as equipment ages and more flexible, scalable, and cost-effective solutions hit the market, many businesses are upgrading their landline to VoIP (Voice over Internet Protocol).

Why it’s hard to let go of your existing system

For many businesses, this trusty technology has been the silent backbone of communication since before the internet became a regular part of our daily lives. Key phones made offices more efficient and productive with features like call transfer, hold, conference calling, direct inward dialing, and paging.

Key phone systems are generally easy to use, and more than anything, they’re familiar. Since most adults have used a key phone system at some point in their careers, there’s not a huge learning curve when you need to onboard new employees. With a quick explanation of how to access voicemail and what extension belongs to who, you can get most new hires up to speed by the end of their first day.

This makes it hard for a lot of businesses to let go of their old school key phone systems — even if they know that modern business phone services offer a ton more functionality.

In short, key phone systems once had all the advanced functions you’d expect from a business phone, and they were easy to use, with predictable costs and straightforward maintenance. These strengths made them a mainstay in business communications.

But now, after over 50 years of usage, this technology is slowly sunsetting. And businesses today should look at modernizing their phone systems sooner than later.

Using a VoIP gateway with a key phone system

A VoIP gateway or Analog Telephone Adapter (ATA) allows traditional phones to make calls over the internet. The ATA acts as a bridge between your old phone system and the internet.

Plug your regular phones into the ATA, connect the ATA to your internet router, and you are ready to start answering calls as before. ATAs support fax machines and multifunction printers, as well.

This is a budget-friendly way to modernize without replacing your phone system, minimizing disruption to employees. Typically, you can access basic VoIP features like voicemail-to-email and call forwarding while staying with familiar hardware.

This approach is ideal for businesses that want to gradually transition to cloud, phase out old equipment, or simply want to ride out their old phone system contract for a few more years.

Are all key phone systems compatible with an ATA?

Most key phones will work with an ATA, but not all.

If your phone says “analog” or connects with a standard phone line, it’s probably compatible.

If it’s labeled “IP” or “digital,” you may require  special adapters or need to take another approach entirely. Always check your system’s compatibility before investing in an ATA.

Challenges with moving to the cloud

Migrating to a cloud phone system comes with a lot more versatility for businesses and their employees — but it’s not without challenges. Here are some of the important issues you will have to address over the course of transitioning from a key phone system to the cloud:

  • Compatibility: Can your existing handsets work with a cloud system, or do you need to invest in new equipment? You may need to buy new handsets or softphones to use modern VoIP services.
  • Replicating functionality: Can you replicate features like DID and intercom in the cloud? Chances are you can, but be sure to choose a provider that supports the features your business relies on.
  • Soft key programming: Cloud systems often rely on “soft keys,” which are on-screen buttons that can change dynamically. You may need IT support to configure changes manually.
  • Training: This is a big one, as you may have employees who are resistant to change. Do you have the time and resources to teach your employees how to use these new cloud-based systems? You’ll need to train employees how to use new features like call parking in order to put callers on hold.

Any upgrade naturally presents challenges, but the key is to ask yourself whether the benefits outweigh the costs and whether now’s the right time to upgrade.

Benefits of replacing a key phone system before it fails

If your key phone system is still working, you may be hesitant to replace it. But there are risks to keeping an old system that doesn’t have an infinite lifespan — what if your phone system fails or your hardware becomes unsupported before you have a backup in place?

Today, most businesses use a hosted PBX, where the vendor manages all of the infrastructure and software — employees simply log into their account and make calls. It works perfectly whether they are in the office or working from an airport bar — the vendor secures the network, allows remote employees anytime access, and you never have to worry about the main office network being up 24/7 ever again.

VoIP phone systems are relatively inexpensive — most businesses save money switching by eliminating most hardware maintenance costs associated with traditional phone setups. It’s not an incredible savings, but it’s nice.

The real draw is the functionality you gain from connecting your phones to other business software. This enables advanced call administration, simple call recording, Interactive Voice Response (IVR), in-depth analytics, and potentially much more. Premium systems support CRM integration, which allows reps to pull up customer files, view previous conversations, order history, and more on a single dashboard.

Migrating to the cloud is a great way to future-proof your business phone system, as the software is continuously updated, patched, and improved. If you’re thinking about switching to a remote or hybrid setup, cloud-based phone systems can make the switch easy. Even if some employees are working from home and others are onsite, they’ll all have the same communication capabilities.

Yes, there are challenges with updating your systems to new technology — this is inevitable — the downsides of staying with you an old key phone system will probably get worse over time.

But by choosing to upgrade your key phone system to a cloud-based system, you get to navigate those challenges at your own pace rather than being forced into them later on.