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 look to modernize their systems, business phone services are an excellent place to start. 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 who work 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 your VoIP system's features from any location. They can see presence data for supervisors and coworkers, 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 consolidation of services reduce administrative tasks and application switching. Since many VoIP systems include video conferencing, task management tools, and software integrations, your teams 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 benefit small businesses, there are drawbacks. The most significant issue is that VoIP runs over the internet, meaning your company loses service during an outage — 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 can continue 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, and 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: Founded in 1999, RingEX is a communication and collaboration platform. It offers AI-powered tools, unlimited calling, video conferencing, and a multilevel auto attendant.
• Vonage: Launched in 2001, Vonage is a unified communications platform with unlimited calls and team messaging. It also has several low-code and no-code omnichannel communication options.
• Ooma Office: Since 2003, Ooma has offered user-friendly VoIP services. Plans include a virtual receptionist, ring groups, and voicemail.
• Nextiva: In 2008, Nextiva landed its first customer. In addition to unlimited faxing and calling, the NextivaONE app supports team collaboration and chat messaging.
• 8x8: Established in 1987, 8x8 X-Series provides scalable subscriptions with international calling, hot desking, and voicemail transcription.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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