This article originally appeared in the Sept. 2011 issue of  Customer Interaction Solutions

Several times over the past few years, I’ve detailed in this column the good and the bad about customer service experiences – and ways the bad can be transformed into the good. One of the most common technologies for enhancing service quality, especially in a time when many customers prefer self-service alternatives to having to wait in queues for agents to solve routine problems, is IVR functionality.

IVR systems can be designed to solve any number of issues, from the most basic, like providing directions, to more complex, like troubleshooting cable set top box malfunctions. Without question, it’s great to have that option but, there are times – more often than not – that an automated voice tree is going to create more frustration than satisfaction.

For one thing, when it comes to product quality, most companies proactively resolve common problems in the production cycle, hopefully eliminating calls regarding those problems altogether. In addition, when customers do find the need to call a service center, often, they are unsure which IVR option to choose, forcing them to play a guessing game, often leading to even greater frustration.

The last thing any business wants to create is more dissatisfaction. Most customers can accept the problems may arise from time to time, and will be satisfied with quick and simple resolution (thus the success of the IVR market for basic queries). 

The key, however, lies in making it easy for customers to reach live agents when they desire – and to do it quickly. We all know the relationship between poor customer service experiences and churn. In an online world, where it’s just as easy to shop at one retailer as it is another, businesses must be ready to interact with their customers quickly and efficiently – and that’s usually via phone, or perhaps chat (I had an extremely positive chat experience with an iTunes agent when faced with a loss of content).

A recent Consumer Reports study shows that more than 7 out of 10 online shoppers express frustration when unable to reach live agents. Of those, two-thirds say they have become so disenchanted with the lack of response they hung up. This is the ultimate frustration, and certainly creates candidates for defection.

So, what’s the best approach? If you look at the Internet’s largest retailer, Amazon.com (News - Alert), the answer is, don’t use IVR. However, according to STELLAService, it is the only one of the top 10 Internet retailers that doesn’t.

A STELLAService survey found that the 21 retailers in the top 100 that use only live agents boast AWT (News - Alert) (average wait time) less than half of the other 79 businesses, at under one minute. According to the study, Sierra Trading Post ranks best, with an AWT of an incredible six seconds. Furthermore, of the top 10 online retailers, ranked by AWT, only one leverages an IVR system.

This creates something of a conundrum for businesses seeking to understand how to most effectively provide quality care. Clearly there are a number of factors involved, including the nature of the business, which has a direct correlation to the nature of customer problems and how they can be resolved. It’s safe to say, however, that every business will find a large percentage of its customers much happier when they can easily reach a live agent. 

An all-agent model requires confidence in a skilled workforce – incompetence agents are worse than no agents. It also requires a greater investment in labor, but the growing trend towards home agents helps reduce overhead significantly.

IVR has been proven an effective technology – when it is applied properly. A well designed IVR system can reduce staffing requirements and costs, and supports those customers who prefer self-service options.

Realistically, then, the common answer is a mix of the two. Despite the successes of agent-only service operations, budget restrictions will force most businesses to automate more.

In that case, the answer seems evident: design an IVR system that makes it very easy at the outset for customers to opt out of the voice tree and secure a session with an agent. Then, it’s not difficult to analyze interaction data to assess whether a more complex IVR tree would be beneficial or, on the other hand, if it being used at a rate that renders it extraneous.

Let’s face it – cost savings serve little purpose if it results in lower customer satisfaction.