Before the internet became as popular as it is now, people used to have to call a service called Moviefone to get a list of movie showtimes in movie theaters near them. To automate this process, Moviefone created an automated telephone service that allowed users to get relevant information by providing their zip codes. This was an immensely popular product serving over 3 million callers every week and was later sold to AOL for $388 million in 1999.

Interactive Voice Response (IVR) has been used since the 1970s to automate calls for various industries and services. Although IVR systems are much more advanced now, they were still considered complex back then and were used to increase productivity and efficiency. 

Here, we are diving deep into the world of IVR and breaking down everything you need to know about IVR and all the ways it can be used to improve efficiency.

What is IVR?

IVR (short for Interactive Voice Response) is an automated phone system technology that allows incoming callers to interact with an existing system using voice recognition. In essence, IVR acts as a system that helps users to access information without talking to customer service agents, or any other human, using speech recognition or pre-recorded messages. Since this is all automated, IVR can be run 24/7 all through the year  and can also automate other business practices like feedback requests and data collection. 

The efficiency of IVR has led to its integration in various business practices and industries. In the banking and finance industry, IVR is being used to automate interactions with existing and potential customers. This includes allowing customers to call in to complete simple tasks like opening an account, checking their account balances, and other DIY services. IVR systems are also used in call centers to identify customers assuring that calls and services will be tailored to them specifically. Using IVR, customers are able to queue, answer prompts, choose an automated service or connect to a live agent.  This arrangement considerably streamlines the process of calling into a call center.

In healthcare, IVR systems are used for automated admissions, prescription refills, appointment scheduling, accessing records, and other self-service actions. This allows healthcare practitioners to access accurate information about their patients and manage their time more efficiently. Patients are also able to pass through the admission process quicker and see their doctors or other practitioners faster. Many other industries also use IVR in one form or the other. Television programs and organizations looking to survey a group of people use IVR systems to speed up the process or ask sensitive questions. IVR systems are also used in education to help parents stay updated on their children’s performances and progress.

How it works

IVR works using speech recognition, Text-to-speech, and DTMF decoding technologies. A typical IVR system is usually made up of a TCP/IP network for connectivity, data databases to train and supply the IVR system, and a web or application server where the IVF system can stay. To maintain a more natural system, most systems today are taking advantage of AI research especially with Natural Language Processing and integrating it into IVR systems. This allows IVR systems to understand, analyze and respond to users’ voices. Adding a voice biometric system also allows users to use their voice as their password in some cases reducing fraud cases.

Evolution of IVR

The history of IVR is closely related to the history of speech recognition and text-to speech systems. All of this technology can be traced to the invention of the Voder machine by Homer Dudley in Bell Laboratory in the 1930s. This was the first ever display of a machine that could produce synthetic human speech and led to the research and experiments that are responsible for speech recognition technology today. In the 1960s, more and more call centers were popping up and a lot of money was going into keeping them running. Technologists at Bell Labs were charged with finding a more efficient and cheaper alternative to the system that was being used then. Around that time, the touch-tone system was invented and was used as a very rudimentary IVR system.

By the 1970s, IVR systems were introduced in the commercial market to be used as an order inventory control system and by banks for very basic operations. Although IVR systems were now readily available, they were too complex and expensive to be used by call centers. In the 1980s, Leon Ferber released his perfected Perception technology which could be used to store speech and play messages back. By this time, it was possible to integrate computers and phones making them work together and by the 1990s, IVR systems were used by most call centers and other companies.  Today, we have all-inclusive custom systems like Deepgram’s that offer advanced IVR systems using AI and speech recognition technologies that they have perfected.

Benefits of IVR systems

Over the years, the benefits of IVR systems keep increasing as the technology advances. Today, these are some of the ways IVRs can benefit a company.

  • Increased efficiency: IVR systems are oftentimes used because they are a lot more efficient than the system that was being used before. They can quickly identify a customer's need and attend to it, freeing up employees to do more complex tasks. They are also able to run 24/7 all year meaning that customers can always be attended to at any time.

  • Reduced risk of human error: IVRs remove the risk of an agent making a mistake while answering calls or transferring them.

  • Reduced cost: IVR systems are considerably less expensive than any of their competitors and have been this way for decades. Not only do they reduce the headcount needed at a company, they also require much less tools than what would be used for a manual alternative.

  • Improves customer satisfaction: In most industries, customers want to be attended to as quickly and efficiently as possible so that they can move on with their daily lives. IVR systems help companies to achieve this leaving their customers happy and satisfied.

  • Enhanced data collection system: In a lot of cases, IVR systems are used to collect and analyze data from customers and clients. Some of these data include sensitive information or questions which are best handled by a reliable third party like IVRs.

  • Improved Brand Image: Using IVR machines means that every word on every call can reflect brand values, allowing for an improved or consistent brand image.

IVR systems have been around for decades in different forms, evolving and becoming more relevant as technologies are introduced or improved on. This consistency lends some credibility to IVR since it has been proven that it is definitely not a fad. The constant evolution of IVR systems also gives us some insight into what the future holds for these systems. This includes the impending integration of IVR with the emerging technologies of our time. Deepgram’s text-to-speech API, Deepgram Aura, is one of those technologies. Using text-to-speech capabilities that mirror actual human speech, Aura is the product of nearly ten years of work and research that pushes the boundaries of what is possible in speech recognition and spoken language understanding.

With the help of these technologies, IVR systems will be a lot more realistic and more human than they are now. This can also mean better personalization and customization for users and customers in the future. 


IVR systems are a constantly developing technology that can be used in so many ways across different industries. They offer different advantages ranging from being extremely cost-effective to offering a unique and better way to ensure that customers’ needs are met. Because they’ve been around for so long supported by different technologies, IVR systems are able to be integrated with the latest and best technologies around including Deepgram’s Aura. This allows you to be able to access the best, fastest and most human IVR system.

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