Handling routine phone requests for information can consume a substantial amount of staff time. And money. Handling a customer call with a live operator reportedly costs five dollars per call. An interactive voice response (IVR) system offers an automated, and much less costly, way to provide the same information much more cost-effectively.

Simply put, an IVR system lets callers interact with your company via the telephone. A business will typically implement a system to handle customer inquiries. An interactive voice response system can also be very effective for companies with on-the-road employees who need to call into the office to receive their next assignment or to report their activities.

IVR systems, which reportedly lower customer handling costs to about 25 cents per call, can be implemented in a variety of ways. With a basic system, you simply record a message that is played when a person hits the appropriate number on the telephone keypad.

More advanced IVR systems allow callers to retrieve customized information. A system with text-to-speech recognition, for example, can read aloud information that is stored in a database. Using this functionality, you can set up a system that retrieves account-specific information, like order status. Systems can be further enhanced to actually process orders or store information from the callers.

The latest systems are not limited to the keypad for entry. Using a feature called speech recognition, callers can interact with the phone system by speaking their choices aloud instead of having to enter information via the keypad. This interface improvement makes IVR much more user friendly.

When choosing an IVR system, you will of course need to identify the basic functionality that you want. When defining those needs, base it on your current data environment to project a realistic implementation. You will also need to choose the platform that you want to use to develop your system. Both proprietary and open systems exist. In addition, you will need to decide whether you want to buy a system or outsource it to a service that can provide all the IVR capability you need without the investment.

How much does it cost to install an IVR system? On the low end, expect to pay at least $3,000 to $8,000 for a small, basic system, including the programming to create your application. The cost will increase substantially as you add the ability to handle more simultaneous callers or utilize advanced features like speech-to-text recognition. In addition, complex requirements that require more programming will also boost the cost of an IVR system. On the high end, systems can run into the tens of thousands and even hundreds of thousands of dollars.

While you may be averse to implementing an IVR system because it can seem impersonal, having one allows you to provide 24-hour access. In today's world, as long as customers can still "press 0" for help, this tradeoff is one that customers welcome.