Customers have grown accustomed to the perks, flexibility, and convenience of cloud computing-hosted platforms. In customer service terms, these include personalized interactions, 24/7 access, self-service options, and AI-enhanced features. 

A hosted interactive voice response (IVR) is an automated telephone system that operates from a remote server, which users can access using a web browser or mobile app. It incorporates technologies such as voice recognition, dual-tone multi-frequency (to signal user intent when a number is pressed), and automated call distribution to fulfill its call center duties. 

While traditional, on-premises systems may share some similarities with their hosted counterparts—like call forwarding, chatbots, and auto attendants—significant differences still exist. Most obviously, the main difference is that on-premises IVRs are installed on devices to run natively.

That said, most locally deployed applications have become anachronistic and belong to a bygone era that people aren’t clamoring to revisit.

Hosted IVR typically follows a subscription-based business model known as SaaS (Software as a Service). This means that it offers customers a pay-as-you-go convenience so that they only get charged for what they need rather than being saddled with unnecessary extra features.

Similarly, hosted IVRs can also trim the fat of the customer services experience so that call centers can provide speedy resolutions without a lot of wasted time or effort. 

Hosted IVR: From the Caller’s Perspective

From the caller or customer’s perspective, hosted IVRs are more reliable. This is primarily because hosted IVRs typically operate as managed services by third-party providers with core competence and technical expertise. Consequently, this frees up call center business owners to focus on operating their core business activities.

Meanwhile, when customers call the business number provided by the organization, a message greets and prompts them to choose an option from a menu. Customers use their keypads (or voices) to enter their preferred option, which triggers a prerecorded message from the selected menu. 

Conventionally, these menu options are condensed into phrases as simple as “Press 1 for marketing” or “Press 2 for technical support.” 

Ideally, the call flow will be organized so it does not overwhelm callers. Therefore, the menu should be spread out and arranged with multilayered hierarchies so a submenu appears after a customer makes an initial selection. 

This makes it easy for customers or callers to find the most appropriate solution, department, or agent they seek. As a practical solution, a hosted IVR acts as a well-oiled delegation machine, empowering callers with relevant options while also offering the opportunity to speak with a live agent if needed. 

For further customization, it’s possible to configure special rules for the IVR of your hosted system to direct calls to certain agents based on things like agent expertise, customer priority, call volume, and waiting time.

When agents are off the clock, IVR systems continue to give customers 24/7 access to your business. This way, customers can still seek guidance, check account balances, or pay a bill outside of business hours. Overall, an IVR system saves you, your agents, and your customers a lot of time and otherwise unnecessary hassle.

Unlike traditional IVR platforms, cloud-based contact centers provide customers with flexibility and omnichannel accessibility. This means they can offer customers social media messaging, instant chat, and computer telephony integration (CTI) technology integrated with customer relationship management (CRM) systems. 

Overall, a hosted IVR enables you to provide customers with focused attention without having to micromanage the underlying technology.

Is Hosted IVR Right for You? Probably – Here’s Why

Using a hosted IVR has several benefits compared to traditional on-premises IVR. However, if you are still on the fence, here are some compelling reasons why your customers will thank you for having a hosted IVR platform. 

Improved customer service

Compared to on-premises IVRs, hosted IVRs have a much wider reach, allowing you to serve customers on a much broader scale. Moreover, hosted IVRs pack more features that appeal to customers, seeing as they combine the availability of live agents, self-service options, and omnichannel connections to ensure no customer call goes unattended. 

Customers often feel more appreciated and cared for when they know they can reach you on their own terms. This, along with optimized call routing to improve first-contact resolution rates, can boost the overall customer experience.


Personalization adds a layer of smoothness and reduces user effort during the customer service process. Meanwhile, it also behooves business leaders to favor personalization because customers tend to be more engaged with a product and spend more money when interactions are tailored to their interests.  

Hosted IVRs can offer customers multiple languages. This functionality can be leveraged to make callers feel more seen, which can be especially fruitful for businesses that have a global reach.

With the flexibility afforded by hosted platforms, it’s possible to offer many different kinds of personalization. For instance, you can create special menu options for high-ticket and high-value customers to show extra appreciation and attention to detail. 

Cost savings 

Hosted IVRs can reduce costs because they operate on better economies of scale. Hosted cloud services eliminate the need to invest in hardware and server equipment, which enables you to save critical money early on as an entrepreneur. 

In addition, cloud telephony permits the use of relatively inexpensive VoIP technology, which, unlike traditional phone systems, doesn’t require upfront investment in physical equipment. More importantly, this convenience extends to your customers, since they only need to download a mobile phone app to reach you. 

Subsequently, the low-cost profile associated with hosted IVR allows businesses the wherewithal to reinvest the savings into providing customers with improved benefits.

Access to analytics

Cloud computing and the managed services that accompany it offer hosted IVRs a bounty of rich call center analytics. For instance, cloud service providers typically include live dashboard interfaces to view real-time metrics like first call resolution and response times. 

As a result, this feature puts you in an excellent position to determine whether your call center IVR is serving your customers adequately. 

Enhanced self-service options

Customers want services that intelligently anticipate their needs. As a predominantly SaaS model, hosted IVRs typically provide smart or skill-based routing. This can proactively shift a considerable percentage of customer calls to appropriate self-serve channels—ultimately reducing the burden on live agents while providing a satisfying experience for your customers. 

Projected professionalism 

Using a hosted IVR enables organizations to project a business-like, professional image. When making a first impression on customers, having a polished IVR setup (with recordings done by skilled voice narrators) will positively define your brand or business. 

Third-party integrations

Integrations are what give cloud-based platforms an edge by extending their capabilities and features with third-party apps. Call centers are their own niche market, but a cloud-hosted IVR makes them much more than their constituent parts.

For example, a hosted IVR can be extended to provide unified communications with additional resources, apps, and infrastructure through UCaaS (Unified Communications as a Service). 

Data security and business continuity

Customers want their data to be secure and their privacy to be protected. Unlike most traditional on-premises platforms, cloud-based systems usually have the resources and cybersecurity expertise to make this happen. They are equipped with 24/7 monitoring and intrusion detection tools to ensure every inch of your attack surface is always scrutinized.

At the same time, locally storing and handling data is generally more of a risk hazard than doing so via a cloud service.

Critical Metrics for Measuring Hosted IVR Success

Happy customers are the ultimate motivation to establish an IVR-driven contact center. Here are six call center key performance indicators (KPIs) that are vital for good customer experiences and high agent productivity. 

Average handle time (AHT)

As its name implies, average handle time measures the time it takes for an agent to handle or resolve a customer’s issue. Even though they want their issues resolved, customers don’t want to spend much time on calls. Just remember, although it’s important to have a low average handle time, you don’t want to make customers feel as if they are being rushed or brushed aside. 

First response time (FRT)

This metric captures the average time an agent or representative takes to answer or respond to a customer’s initial call. Callers don’t want their patience tested, especially on their first call about an issue. Moreover, these types of first impressions matter to customer perception. 

First contact resolution (FCR)

You may also know FCR as first call resolution or first touch resolution. While FRT is measured in averages, the first contact resolution measures the percentage of customer or caller inquiries that are resolved without requiring repeat calls, transfers, or follow-ups.

Average speed of answer (ASA) 

ASA measures the time that an IVR or live agent takes to answer a customer’s call from the instant that customer is placed in a queue This is a vital metric to improve customer happiness, so reducing first response time is typically a top priority for businesses.

Active waiting calls

This call center metric captures the number of callers who have to be placed on hold. Your objective should be to reduce this metric by getting people through to an agent in as little time as possible. You can also cut down on this by improving the self-service options you provide so that fewer and fewer callers will require the help of a live agent. 

Call abandonment rate

This captures the inbound calls where the customer hung up or abandoned the call before an agent answered it. This metric paints an overall picture of the performance effectiveness of your call center. 

How to Get Started With Hosted IVR

The great thing about hosted IVRs is that most of the heavy lifting and groundwork is already done for you. However, the success of a hosted IVR usually depends on its underlying software and associated features. As a result, it’s really important to conduct some due diligence on the best cloud-based phone systems so you can choose the right one for you.

At minimum, you should ensure that your call center software is equipped to do the following: 

  • Provide enhanced call routing to connect customers to the best available agent.
  • Offer an option for the customer to schedule an automated callback at a preferred time.
  • Include remote call forwarding capabilities in its call flow management. This eliminates the need for customers to redial while ensuring no inbound call goes unanswered.
  • Route calls by combining automatic filters with skill-based call-forwarding capabilities. 
  • Utilize queue management to lower the number of repeat customer calls and accelerate issue resolution.
  • Be customizable enough to adapt its capabilities to your peculiar needs.
  • Integrate with CRMs and other software to expand its productive capacity beyond itself.

Beyond these vital features, sentiment analysis is a nice-to-have because it analyzes your calls to show how effective your customer service is—while also offering real-time insights so that managers can step in and help out sooner. 

To make sure your cloud-based IVR platform is ahead of the curve, be sure to stay abreast of the latest call center trends.

Hosted IVR Best Practices for the Perfect Caller Experience

Our list of call center best practices isn’t written in stone, but it can help guide your decision-making based on the particular circumstances surrounding your call center.

Offer personalization

Most of today’s customers are tech-savvy and value personalization whether they realize it or not. While it used to be a new phenomenon, automated personalization is so commonplace in modern apps that it’s becoming a price of entry to engage with users. As a result, you should make customers feel cared for and appreciated by using the personal touches available to you in your contact center experience. 

Expand customer service options

In addition to personalization, today’s customers have come to expect a variety of digital resources and access points. Therefore, an IVR system should make a concerted effort to diversify its contact options by embracing an omnichannel approach that includes text, chat, video conferencing, and email. 

Provide smart integrations

Tap into the numerous integrations that are available to boost productivity, including those that handle CRM and iPaaS (Integration Platform as a Service) interfaces.

Use a PCI-compliant provider

Use only compliant providers to place a high premium on customer data privacy and security. Regulatory compliance should encompass the Health Information Trust Alliance (HITRUST) Common Security Framework (CSF). 

Focusing on this cybersecurity framework is effective because it unifies several vital components. It is a compendium of application network security, application security, data privacy, regulatory compliance, and physical security. 

Leverage AI and automation features

Automation reduces manual labor to increase the productivity of call center operations. AI can make sense of the data your call center amasses by analyzing it to reveal hidden insights and make predictive forecasts. 

Compliance and security

Ensure your IVR systems meet the highest compliance and security standards. This minimizes the possibility of security breaches that jeopardize the security and privacy of your customer’s data while safeguarding the reputation of your contact center.