What Are the Benefits of a VoIP Phone System?

Over 30% of U.S. companies use Voice over Internet Protocol (VoIP) phone systems. Many switch from conventional services to realize the benefits of VoIP, including lower costs, operational efficiency, and accessibility.

Cloud-based platforms centralize contacts and calendars, enable collaboration, and support multichannel communication. Small teams can reach clients through one-click SMS texting or video calling. Advanced features like customer relationship management (CRM) integrations improve customer experiences, while artificial intelligence (AI) increases productivity.

As companies seek to modernize their systems, business phone services are an excellent starting point. Explore the advantages of VoIP, how it differs from conventional office setups, and strategies for future investments.

What is VoIP?

According to the U.S. Federal Communications Commission (FCC), "Voice over Internet Protocol (VoIP) is a technology that allows you to make voice calls using a broadband Internet connection instead of a regular (or analog) phone line."

Many VoIP service providers offer home and business systems. Both solutions allow users to make and receive calls from any internet-connected device, including cell phones, computers, or VoIP phones. You can buy adapters for analog desk phones and fax machines through your internet phone service.

VoIP works on various devices through a softphone application, which is software that provides all the telephone functions like a dial pad and contact list. Along with a softphone app, professionals may wear VoIP headsets that plug into their devices. These are especially helpful for high-volume users, such as those handling customer support or working in call center services.

[Read more: Choosing the Best Business Phone System for Your Business]

Advantages of VoIP

Cloud-based phone systems keep your company connected to the outside world, enable internal collaboration, and provide many other benefits. Their flexibility and advanced features are among the top reasons small businesses switch to VoIP. However, they also increase customer satisfaction while optimizing business processes.

The benefits of VoIP for businesses include:

• Enhanced customer experiences: CRM, e-commerce, and point-of-sale integrations display client details on your screen before every call, allowing you to personalize greetings and record the details of every interaction.
• Access to softphone apps: Remote teams, particularly call centers or customer service staff, benefit from using VoIP system features from any location. They can see presence data for supervisors and co-workers, transfer calls, and get assistance via call monitor, whisper, and barge features.
• Improved online collaboration: Many VoIP systems have file-sharing, one-to-one and group messaging, and other real-time collaboration features. These tools can break down barriers between departments and allow teams to get answers quickly without waiting for a call back or email.
• Scalability: With VoIP, you can add or remove lines from your online admin portal. Additionally, most services have tiered pricing models, add-on features, and contact center services.
• Increased productivity: AI, automation, and service consolidation reduce administrative tasks and application switching. Since many VoIP systems include video conferencing, task management tools, and software integrations, your teams can focus on core activities in a single software program.

Indeed, your staff can manage many business tasks remotely or on-site from the VoIP platform. When a client wants to pay over the phone, your employee can enter the details thanks to credit card processing integrations. Retailers can process returns or view orders without switching channels by connecting their e-commerce platform to their VoIP system.

Leveraging VoIP phone benefits: Future-proofing your business

Many VoIP phone providers have invested in analytics, automation, and AI tools. These capabilities help leaders solve problems and get more value for their money. Moreover, sophisticated VoIP solutions automate workflows and analyze data across platforms, allowing organizations to coordinate activities involving help desk or CRM tools.

Here are a few ways small businesses use VoIP to their advantage:

• Review call reports and trends to determine staffing levels.
• Examine call routing segments to identify and resolve bottlenecks.
• Use conversation insights to develop FAQs and self-service pages.
• Automate text replies to VIPs or first-time callers.
• Use business phone AI to summarize sales calls to build better training programs.
• Create an information line or direct callers to online channels for self-service.
• Keep tabs on customer and product satisfaction with AI keyword monitoring.

[Read more: 4 Emerging Tech Trends Small Businesses Should Be Paying Attention To]

Disadvantages of VoIP

Although cloud-based phone systems offer benefits to small businesses, they also have drawbacks. The most significant issue is that VoIP runs over the internet, meaning your company loses service during an outage — either internet or electricity. Downtime affects customers and staff, resulting in lost productivity and revenue.

However, failover solutions, including backup power or internet services or alternate call routing flows, mitigate these issues. When connectivity is disrupted, the phone system switches to an alternate method, ensuring business continues as usual.

Other disadvantages of VoIP affect workplaces with traditional alarm and paging systems. In these cases, you must identify phone systems that connect to analog hardware and confirm functionality before committing to a long-term contract.

Differences between VoIP and other business phone systems

The public switched telephone network, or plain old telephone service, uses copper lines. Most telecommunications carriers no longer maintain or upgrade analog lines. The FCC said, "America's communications networks have been rapidly changing from copper-based networks originally built for voice services to alternative platforms built for a variety of purposes, including broadband, video, and data, as well as voice."

Businesses used to rely on multiline services or on-premises public branch exchange (PBX) systems. A PBX system requires infrastructure inside the building to manage multiple lines and advanced features, like call routing and voicemail. However, both options are expensive to maintain and still lack many tools found in modern VoIP systems.

Today, most companies select VoIP phone services, as they have the capabilities of PBX systems without the added costs and maintenance demands. Moreover, many VoIP vendors offer unified communications platforms. These business phone systems unify multiple communication methods, including video conferencing, voice calling, file sharing, and chat messaging.

[Read more: How (And Why You Should) Audit Your Business's Current Technology]

VoIP phone systems for small businesses

There are plenty of service providers for companies ready to choose a business phone system. Vendors charge a monthly fee per user; many offer a discount for annual prepayment. Most plans include a business phone number, internet faxing, text messaging, and unlimited domestic calling.

Check out services from the following vendors:

• Zoom: Known for video conferencing, Zoom also provides metered and unlimited calling plans. Business Plus Workplace plans include the AI Companion for team chat, email, and meetings.
• RingCentral: RingCentral for Small Business offers affordable plans that include unlimited domestic calling, business SMS and MMS, video meetings, and more. It also offers AI features for customer support.
• Vonage: Vonage is a unified communications platform with unlimited calls and team messaging. It also has several low-code and no-code omnichannel communication options designed to meet the needs of small businesses.
• Ooma Office: Since 2003, Ooma has offered user-friendly VoIP services. Plans include a virtual receptionist, ring groups, and voicemail.
• Nextiva: Nextiva has dozens of features and integrations. In addition to unlimited faxing and calling, the NextivaONE app supports team collaboration and chat messaging.
• 8x8: 8x8 Work provides unified communications with an enterprise-grade PBX featuring advanced call features, SMS, fax, mobility, and machine learning.

How to choose the best VoIP system for your business size and industry

Although VoIP providers advertise dozens or hundreds of features, your company may not need or use all of them. Assess your business needs before you start vetting providers so you know what features will be most relevant to your daily work.

At a minimum, there are some essential VoIP features to look for as you weigh your options.

• Call forwarding: Route incoming calls to your mobile device, a backup line, or a co-worker when you're unavailable. Look for customizable call forwarding rules like time-of-day routing, forward when busy, and simultaneous ring settings.
• Auto attendants: Automatically greet callers and route them to the right person or department. Choose systems with drag-and-drop call flow builders and flexible call routing options, including multilevel menus, interactive voice response systems, and business hour schedules.
• Call management tools: Manage high call volumes with ring groups, hold music, call flip (switching devices mid-call), and call queues. Look for one-click call transfers and customizable hold music or messages.
• Mobile apps and softphones: Turn laptops, tablets, or smartphones into business phones. Ensure that mobile apps match the desktop experience and have robust security features like two-factor authentication (2FA) or remote wipe.

Learn more about how to choose the best VoIP system for your business in our guide, the “Best Phone Systems for Small Businesses.”

Security and compliance considerations for VoIP systems

Because VoIP systems work using the internet, there are some security risks involved.

“There are vulnerabilities and risks associated explicitly with attacking VoIP systems and cyber threats that can attack VoIP systems similarly to IT devices. Voice-over IP security is just as important as IT network security,” wrote Technology Advice.

Many of the best practices that apply to your other information technology also apply to your VoIP system. For example, you should use multifactor authentication and a virtual private network (VPN) to keep your system secure. Use complex passwords and regularly update them; experts recommend routinely scheduling security audits to make sure everything is locked down.

Any business subject to HIPAA compliance must be particularly careful when installing a VoIP system.

“Use the HIPAA compliance checklist and compare it to the VoIP technology software privacy and security policies,” recommended the U.S. National Library of Medicine. “Or, purchase HIPAA compliance software specific to VoIP that will walk you through each piece of the HIPAA legislation to make certain the software is private and secure.”

Payment Card Industry (PCI) Data Security Standard (DSS) and Sarbanes-Oxley Act (SOX) guidelines also apply to VoIP systems. Look for guidance on those regulations before signing on to a VoIP vendor.

This story was edited by Emily Heaslip.

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