Sep 11, 2023

What’s New in Answering Services for Small Businesses?

It’s been awhile since real innovation came to the answering service market. Interactive Voice Response (IVR), Call Centers, and Virtual Receptionists are still dominant after more than 40 years, even for small businesses. 

While new capabilities have been added, such as cloud-based services, live chat, and VoIP (voice over IP) services, these systems still rely largely on either a live person or an automated voice recording. And they ask a lot of a caller to punch through menu trees, repeat information already provided, or speak with a distant person in a call center who knows little about their business.

Innovative tech 

Exciting innovations today with AI voice assistants, machine learning, chatbots, and speech recognition are changing that dynamic. In fact, more and more customer service interactions will occur without the customer speaking to a live agent. The rapid implementation of AI algorithms into these answering services has accelerated that timeline.

In this blog, we’ll briefly review the state of today’s legacy answering service and compare with these newer developments.

5 minutes on hold

Depending on which legacy technology you encounter, it’s likely you’ll spend 5 minutes on hold. In 2023, that’s asking a lot of customers or prospects. The results of this treatment of callers to the brand can be significant.

image of IVR history
Answering services like IVR have been around a long time. Newer AI-based solutions offer much faster and friendlier solutions.

60% of customers use the phone

Yet the phone continues to be a major channel by which customers reach small businesses, with 60% of consumers choosing to call local businesses after finding them on Google (source: BrightLocal). 

However, many are not finding anyone picking up the phone. According to 411 Locals, 24% of calls are not answered, 38% go to voicemail, and just 38% are actually answered by a live person.

As mentioned earlier, these realities call out for innovation. But first let’s review a sampling of small businesses and what they really need from an answering service.

Most people expect to spend at least 5 minutes on hold when calling a business

Avochato, 2019

How small businesses use answering services

Small and medium-size businesses of all kinds and sizes take advantage of answering services—perhaps more often than most people realize.

  • Hair salons, barbershops, day spas, massage therapists. To schedule patient appointments or take messages or provide information when in-house staff are busy providing the services.
  • Home service construction/contractors, plumbing, electrical, and landscaping. To ensure calls don’t go unanswered when team members are offsite.
  • Dealerships, tire shops, auto repair shops, auto body shops. To lessen the workload on workers and staff trying to complete work and facing staffing shortages.
  • Retail ecommerce. To offload the demand to pick up the phone themselves and to present their businesses as professionally as possible.
  • Law firms and other professional services firms. To field calls from clients and prospects.

stylist cutting hair, while Smart Answering handles phone calls

Existing answering services

Before diving into what’s new, let’s recap some of the existing answering services.

IVR – Interactive Voice Response for Small Businesses

IVR systems offer a robotic or auto-responder service. They work by directing callers through menu trees to either gather information or help route customers to a human agent in a specific department. IVR systems can be confusing and they can only provide pre-recorded responses to a set list of issues and are not simple or fast to customize.  

Small business call centers

Traditional call centers are available for small businesses and often involve a team of people stationed in a specific location, receiving and managing customer calls. Although they offer the advantage of human interaction, call centers can be expensive due to staffing and infrastructure costs. What’s more, it’s often hard to get through to a human.  

Virtual receptionists

Virtual receptionists are real people who answer calls remotely. They offer a more personalized service than IVR systems and can be more cost-effective than maintaining a full-scale call center. While they provide a greater degree of flexibility, the service level can be inconsistent and their capabilities may be limited to certain tasks.

Comparison of Answering Services

Newest Innovations: AI voice assistants, machine learning, chatbots, and speech recognition 

Now, let’s take a look at the exciting development in 2023, ranging from AI voice assistants to speech analytics.  

Chatbots in customer service

Call centers commonly use chatbots to provide quick replies with default answers to common questions. This frees customer service reps to tackle more challenging queries. 

While chatbots can be programmed to bring up a competitive analysis if the name of a competitor is brought up, or to collect feedback from customers on a regular basis, they are still limited. They don’t fully exploit voice AI technologies like natural language understanding or advanced automatic speech recognition.

Omnichannel communications

Today’s average consumer communicates in multiple ways on a daily basis, such as telephone calls, video chat, SMS and any of the various social media platforms. 

Tools like co-browsing and video chat can help to identify a customer’s issue faster and provide effective solutions via personalized conversations and reduce the number of touchpoints significantly.

Live chat can be highly effective to address all the sales and support-related queries.

Self-service options allow customers to access portals that can help customers resolve issues on their own through a knowledgebase, tutorials, or FAQ pages.

AI voice assistants

Small businesses that still rely heavily on phone traffic — auto repair shops, nail salons, HVACs, electrical, landscaping, home security services, and more — often struggle with ongoing staffing issues, which makes it difficult to answer the phone. And creates the risks of missing calls and potential business or, worse, losing out to competitors. 

AI voice assistants can easily send an SMS link so callers can visit webpages for pricing, to make reservations, or to view weekly specials.

An AI Phone Assistant such as SoundHound’s Business Smart Answering or goes beyond the typical robotic voice assistant to provide a custom, friendly AI-powered voice assistant that can handle 100% of a small business’s phone calls.

Features of SoundHound Smart Answering

Most people expect to spend at least 5 minutes on hold when calling a business

Avochato, 2019


The world of answering services is changing rapidly. While many of the legacy answering services continue to provide features that businesses need — routing of calls, human agents, message taking, chatbots, among other features — many labor-intensive small businesses don’t need all these services. Or the complexity, time commitment or cost of setting it up, particularly when human agents are involved.

AI Voice Assistant offerings such as SoundHound Smart Answering helps small businesses with a simple onboarding process that leverages the most advanced voice AI and generative AI technologies. Business owners can then instantly test the voice assistant and experience the natural flow of an AI-powered voice assistant. 

So your employees can stay focused on delivering the level of service and care that keeps your customers coming back time and again.

Ready for a custom demo of your own AI voice assistant?

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David is the senior technical content writer at SoundHound.

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