December 12, 2016

Making Dollars and Sense of IVRs

An Interactive Voice Recognition (IVR) system is the automated component of any customer service call that ensures customers reach an employee who can help them with their problem. Since IVRs remain a key component of a company’s customer engagement, evaluating them and improving their responsiveness is smart business. According to a survey conducted in 2014 by the Customer Feedback Insights (CFI) Group, a global leader in providing customer feedback insights through analytics, 77% of respondents used their telephone to contact customer service—an increase of 10% from 2013—and 57% indicated that telephone is their preferred method to address service-related issues. According to the same study, the probability a customer will recommend a company falls from 84% to 72% when a caller cannot resolve a customer service issue on their first attempt.[1]

For the past 10 years, Kenway Consulting has helped design, test, and report on an IVR that processes roughly four million callers per week. Please see this blog, Agent, Agent, Agent!, and Case Study, Kenway Ensures a Client is Empowered for Long Term Success for more information on our IVR thoughts and experience. During that time, Kenway has developed a unique methodology and set of metrics to evaluate the IVR’s health and success by turning the data into information. Using the metrics included in this article combined with data analytics, your company can turn all of your IVR data into useful and actionable information.

Evaluating an IVR System

Kenway recommends evaluating an IVR as a function of its efficiency, effectiveness, and customer satisfaction, yielding a result that Kenway terms “inferred profitability.” This is a departure from current IVR-related research, which generally evaluates an IVR in isolation based on various ratios. As an IVR’s efficiency, effectiveness, and customer satisfaction increase, the company’s inferred profitability will improve. This indicates customers are utilizing the IVR more frequently to resolve their questions and are requesting to speak with a customer service agent less often, which reduces costs associated with the call center. Companies that track their inferred profitability score will glean deeper insights into the health of IVR processes and identify opportunities for improvement.


Efficiency is the average time a customer spends in the IVR to successfully resolve their question. As an IVR is able to more quickly address and resolve customers’ problems, customers are more likely to use the IVR. Kenway evaluates the efficiency of the IVR two different ways. First, we calculate the duration of the call in seconds. Since some questions a caller hears can be longer than others, Kenway identifies all questions in the IVR and breaks down the total number of prompts or questions a caller hears during the call.


Effectiveness measures whether the IVR is sufficient to resolve a customer’s inquiry or whether a service agent is needed. This metric, therefore, captures the comprehensiveness of the IVR system and its ability to resolve a range of calls. To calculate this metric, the total number of calls resolved by an agent is divided by the total number of calls resolved in the IVR.

Kenway was able to help the client measure the IVR’s effectiveness using call routing data and agent interaction data to create actionable information to reduce transfers by 50,000+ for a year. The other side of the transfer rate is callers who are able to complete their task in the IVR and not talk to an agent. Organizations can see significant savings through this call shed. Kenway analyzed self-service and FAQ data and recommended changes that resulted in a call shed of 20,000 for the year.

Customer Satisfaction

We capture customer satisfaction through First Call Resolution (FCR), a metric which captures the number of customer inquiries that are successfully completed entirely in the IVR on the customer’s first attempt.[2] FCR does not include calls that enter the IVR but are later transferred to a service agent, nor does it include calls that are resolved after more than one attempt. The CFI group says FCR can be used as a barometer of customer satisfaction. Their studies show that customer satisfaction declines from 83 to 67 when an issue is not resolved on first contact.

While measuring efficiency and effectiveness, Kenway was able to improve customer satisfaction by not only reducing the number of questions callers hear, but also by making sure the caller hears only the most critical questions for routing. Using the customer account data available in the IVR allowed us to create informed recommendations on specific questions callers must hear to route to the correct call center.

Opportunities to Refine Efficiency, Effectiveness, and Customer Satisfaction Ratios

Both an IVR’s efficiency and effectiveness are affected by the responsiveness of each stage of the IVR. Data collection at these stages will produce insights into the strengths and weaknesses of the IVR and offer opportunities to improve an IVR’s inferred profitability. Specifically, companies should evaluate each prompt in their IVR and track its responsiveness to include, at each stage, the customer’s average working time and how many callers abandon, opt-out, or transfer to an agent. Companies also should monitor the IVR’s ability to route calls in the minimum number of steps; because the sooner a caller can be placed to the correct prompt; the sooner the customer will resolve his or her inquiry. Expediting the customer’s engagement with the IVR also will improve the IVR’s FCR, which will improve customer satisfaction.

IVR’s are not often the most beloved customer service tool, but they can be immensely helpful in navigating customers to someone who can help them. Furthermore, for some businesses, a high performing IVR can be a competitive advantage. If you have an IVR with more data than information, are struggling to evaluate said IVR, or simply have an opinion on our recommended metrics, we would like to hear from you at


Additional formula for the above metrics:

  • Inferred Profitability of IVR = Efficiency of IVR x Effectiveness of IVR x Customer Satisfaction
  • Efficiency of IVR = Log (Total time in seconds spent in IVR for calls completed / Total Calls Resolved in IVR)
  • Effectiveness of IVR = Total Calls resolved by Agent / Total Calls Resolved in IVR
  • Total calls resolved in IVR = 1 – (Abandonment Rate + Opt-Out Rate + Transfer Rate)
  • FCR = Number of Calls Completed Successfully in IVR in One Attempt / All Calls That Enter IVR

IVR-level Metrics

Prompt-level Metrics

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