Voice over Internet Protocol (VoIP) is the technology that allows businesses to place phone calls through the internet. VoIP systems are a great solution for modern businesses, especially those that have both remote and office-based workers, as they seamlessly connect multiple devices over the internet, including desktops, tablets, and smartphones.
This guide covers the definition and meaning of VoIP technology, what benefits make it stand out, and what tradeoffs you can expect from it.
In this guide:
What Is VoIP?
A VoIP telephone system, such as a softphone, uses digital compression to send audio over the internet. This enables seamless calls between multiple devices, anywhere in the world. Unlike traditional telephone systems, which require cords and telephone wires, a VoIP system works anywhere you have an internet connection.
Businesses that are looking to cut costs and gain more flexibility will benefit from VoIP systems. Because some systems can integrate with existing applications, users can centralize a number of their everyday processes. For instance, you might choose to integrate your CRM platform with your VoIP system. This way, you can view key contact information, including how far they are along in the funnel, at a glance.
How Does VoIP Work?
VoIP digitizes your voice into data packets, sending it over the internet rather than through a physical telephone wire.
When you pick up a phone or open your app, the number you’re calling is sent to your VoIP provider, which places the call for you. Your voice is digitized and sent to the call recipient through your provider, and their voice is then sent back over the internet to you through your provider.
This means the full process looks something like this:
Your voice → internet → VoIP provider → internet → call recipient
The whole lightning-fast process takes less than a second, no matter where anyone is on the globe.
On-premises vs hosted
It’s important to distinguish between on-premises and hosted VoIP phone systems. Hosted refers to paying the provider to host the service for you, and they’re responsible for handling equipment and tech on their end. On-premises, meanwhile, means that you host equipment locally at your business, and are responsible for its maintenance.
Who Is VoIP Best For?
As a flexible, affordable business phone solution, VoIP systems are great for a variety of businesses. Small businesses, for instance, would benefit from the ability to forward calls to different physical locations. If you want to quickly transfer a customer to a member of your team, without having to physically hand them the phone, VoIP systems make this possible.
Businesses which have staff both on-site and working remotely will enjoy the flexibility offered by VoIP systems, which can connect people from multiple devices, anywhere in the world.
VoIP Benefits
The benefits of VoIP are clear and there’s a reason so many businesses are switching to it. The technology’s cost-effectiveness, flexibility, and integration capability all add up to a higher customer satisfaction for your business – paired with lower operational costs. Here’s why.
Advanced calling features
VoIP systems unlock the “bonus features” of phone calls. Tools like video conferencing or voicemail-to-email allow you to meet with others across different mediums, while call forwarding ensures that you’ll be able to take or make calls from a variety of different numbers.
Voicemail, call waiting notifications, and caller ID all work to ensure every employee stays on top of their work even if they can’t accept a call immediately. Finally, conference calling allows for large meetings, while a call recording feature helps your operation monitor for quality.
Integrations
The digital nature of VoIP makes it easy to dovetail with other business software for boosted operational efficiency, both internally and externally. Done right, a few integrations can create a single centralized dashboard for handling virtually all your business communication and management needs. Software integrations are a key advantage VoIP offers that landline telephone systems can’t replicate.
Flexibility
Another benefit of digital tech? You can send or receive calls from anywhere. Many businesses opt for telephone handsets, but you can use just your laptop, desktop, or mobile device as well. Any of these options will deliver the same call quality, so you’ll keep your operation up and running without sacrificing anything.
This added flexibility makes it easier to scale your operation up, making VoIP perfect for a call center or customer support line. VoIP also supports remote or hybrid workplaces.
Cost savings
Landlines have extra costs that VoIP doesn’t. Installation and hardware are big up-front fees for landlines, and continued maintenance is an ongoing one. With VoIP, you’ll just have the single monthly subscription fee. Our landline vs VoIP experts estimate that a typical 12-person VoIP system costs about $800, compared to $2,500 for a similar landline setup.
VoIP Integrations
As we’ve mentioned, VoIP opens up the world of business software integrations. The number of options can be overwhelming, but three of them rise above the rest: email, analytics, and CRM integrations.
Many customers prefer support help through email exclusively, while others want only phone calls. Combining the two allows you to track most customer requests with a single workflow.
Plus, matching emails with phone calls is just as helpful if you’re in sales instead of support. You’ll be able to track your outreach responses, following up on email leads with a call or vice versa. The extra data you’ll naturally accumulate can then be turned into marketing insights.
Analytics
The best companies review their data and learn from it. You’ll want to review your company’s successes and failures on a weekly basis in order to spot subtle trends that could give you an edge over your competition. Adding a data analytics integration allows your business to review call data for insights that will improve your operations.
CRM Systems
Customer service phone calls are often a major part of the customer relationship management process, and if that’s the case for you, integrating your VoIP system with your CRM software is key.
Integrations with top small business CRM software solutions like Salesforce or Zendesk CRM can funnel all phone calls in the same ticketing system as their other contact channels. Employees can take and make calls both in and out of the office. Here’s how one digital marketing manager we spoke with explained it:
“When I ran Zendesk for the customer support team I managed […], getting VoIP integration was a big thing I was keen to do. Done correctly, this enters all calls into the same ticketing and CRM system as your emails or other contact channels, all attributed to the same customer so you can see their support history and open/closed/satisfied status.”
Streamlining all customer management can be one of the biggest benefits to adopting a VoIP system at your business.
VoIP Disadvantages
VoIP systems aren’t perfect. Before you take the plunge, consider these three downsides to adopting a VoIP business communication system.
Internet dependence
The internet’s central role in VoIP communications will turn into a downside as soon as that internet connection drops. Using a direct connection rather than a wireless one can help reduce lag, but an internet outage remains a possibility.
Granted, the right provider will make this issue less likely. Many brands will guarantee 99.99% uptime, which means fewer than nine seconds of dropped connections per 24-hour period.
Security concerns
Risks of data breaches or cyber attacks are on the rise, and business communication networks are often a target. Here’s a quick look at the key elements behind VoIP security.
- Call encryption will keep your data safe. The most common VoIP protocols are Transport Layer Security (TLS) and Secure Real-time Transport Protocol (SRTP).
- 24/7 support via phone or live chat will help your team address concerns as they come up.
- Compliance accreditations might include HIPAA (for healthcare providers), PCI (for any business that accepts credit cards) or SOC 2 (for any business with consumer data).
For an in-depth look at all of the risks to consider, check out our complete guide to VoIP security.
Transition challenges
Moving to a new communication system is a big adjustment, both for financial investment and for staff-hours. The steps aren’t too complex, but the entire process will be unfamiliar, so the learning curve can be difficult to fold into the rest of your typical tasks. The good news is that it’s a one-time process. Once you’ve muddled your way through setting up a VoIP, you’ll start saving so much time and money that you’ll be able to easily make up for the investment.
How Much Does VoIP Cost?
Our researchers found you can typically expect to pay $10 to $30 per user, per month for a hosted VoIP system. You might also install an on-premises system, which typically costs a one-time fee of around $10,000. Hardware like VoIP handsets or headsets can be rented or owned as well.
In some cases the per user, per month cost can be higher than $30, depending on the features, security and speed of the system. For a full look at the costs associated with any form of VoIP system, check out our dedicated guide to VoIP costs and pricing.
How Do I Choose a VoIP Provider?
When it comes to choosing your a VoIP provider, there are several things to think about. We’ve broken some of them down below.
Features
One of the best things about VoIP phone systems is their extensive feature sets. For a monthly subscription fee, users can access features like call analytics, automated receptionist, video conferencing, and more. Different providers will offer different functions, and this, of course, will have an impact on price.
Costs
A typical VoIP phone system will probably cost in the region of $10-$30 per user, per month – not including any potential additional fees, such as hardware. Costs can vary hugely depending on whether you opt for hosted or on-premises.
Customer support
Given that customer communications forms such an integral component of modern business, it’s essential that you pick a VoIP provider that offers a good level of customer support. With some services, you’ll be able to access 24/7 support; some might only offer email support.
Tech.co’s VoIP quiz can help connect you with the best provider for your business needs. Pick your favorite options from the top VoIP providers available today, and you’ll be able to trial the software to make sure it handles all your business needs.