What Is VoIP? Features & Benefits To Your Business

As a business owner, you’ll likely find yourself faced with the task of setting up phone service for your office or store. At that point, you’ll need to decide between a traditional landline or VoIP phone service from your internet service provider (ISP).

But VoIP systems aren’t just an alternative to landlines—they’re a flexible, scalable communication tool. Whether you’re managing customer service, coordinating with suppliers, or handling calls from remote team members, you may benefit from leveraging a VoIP phone system in your workplace. Here’s an overview of VoIP technology and tips for selecting a VoIP service provider.

What is VoIP?

VoIP, which stands for Voice over Internet Protocol, is a technology allowing you to make voice and video calls, engage in text messaging, and share files without a traditional phone system. Instead, you use a high-speed internet connection that works on a broad array of computers and mobile devices, leveraging internet access from a broadband provider.

How VoIP phone service works

VoIP providers transmit voice calls over IP networks by converting your voice into digital signals, breaking them into small data packets, and sending them over the internet. Here’s how the Voice over IP process works in more detail.

1. Analog to digital conversion. You can place VoIP calls via a traditional phone connected to a special modem, a computer using ethernet or Wi-Fi, or a mobile phone. Some businesses even have dedicated VoIP phones for such calls. When you speak into these devices, an analog-to-digital converter (ADC) converts your voice waves into digital signals. Your VoIP device or software comes with a built-in ADC.

2. Packetization. Next, the system uses a VoIP codec to compress and break down your digitized voice data into small, manageable data packets. Each digital data packet contains a small piece of your voice and "header" information instructing VoIP networks how to route the call.

3. Internet transmission. Your VoIP provider leverages a broadband internet connection (e.g., cable, fiber, 5G, LTE) to route these digital packages to their proper destination. The system hands them off to interconnected VoIP providers as they make their way to the intended recipient.

4. Reassembly to an analog signal. When the data packets reach your recipient, a digital-to-analog converter (DAC) in the recipient’s device (whether that’s a computer or mobile device) reassembles them in the correct order and converts them back into analog voice signals.

Your recipient does not need a VoIP phone system to receive your VoIP call. When you call a landline or mobile phone that’s on a non-VoIP network, your VoIP service provider uses a media gateway to instantly convert digital packets back into the standard analog signals. This is required for the Public Switched Telephone Network (PSTN)—the backbone of landline phone service. Your recipient will have no signs you’re calling via a VoIP telephone service.

Landline vs. VoIP

While you can use either a landline or VoIP to reliably place and receive telephone calls, they operate on different technologies. As such, they offer distinct advantages and disadvantages. Here’s a chart comparing the two communications services.

VoIP for business

• Auto attendant
• Call encryption
• Call recording
• Call forwarding
• Voice-to-text or voice-to-email
• Conferencing capabilities
• Virtual numbers
• Integration with other business tools

Many IP telephony providers offer VoIP solutions aimed at business clients. In addition to standard voice services, these solutions offer a robust set of features to enable efficient communication throughout an organization. Here are some features to look for when shopping for a VoIP telephone service.

Auto attendant

An auto attendant is an automated digital receptionist that greets callers with a professional, customizable message. It also provides them with a menu of options (e.g., “Press 1 for sales, press 2 for support, or enter the extension of the person you wish to reach”).

It efficiently routes incoming calls to the correct department or individual without the need for a human operator, even outside business hours. In addition to reducing the workload on your administrative staff, an auto attendant can project a professional image for even the smallest of businesses.

Call encryption

Call encryption is the act of scrambling the digital voice data packets during transmission over the internet, using protocols like secure real-time transport protocol (SRTP) and transport layer security (TLS). When implemented, only the sender and receiver can decrypt the conversation. Call encryption gives you peace of mind when discussing financial data, client details, and confidential information. It also helps your business comply with privacy regulations that may apply to your industry or location.

Call recording

This feature lets you record inbound or outbound calls for quality assurance, training, or legal documentation. Most VoIP providers give you the option to store your recordings locally or on the provider’s servers, where they’re searchable by date or contact.

Call forwarding

Call forwarding automatically redirects incoming calls to another phone number (e.g., a mobile phone or another desk phone). There’s also an advanced VoIP feature known as “find me/follow me,” which attempts to reach the user at multiple designated numbers sequentially or simultaneously until they answer. This ensures the recipient never misses a call.

Voice-to-text or voice-to-email

This feature sends audio voicemail files or transcriptions directly to your email or SMS. It improves productivity by allowing employees to listen to or read voicemails without dialing into a system. They access messages from their device of choice and prioritize urgent calls based on their transcripts. Using this feature can cut down on time because it can be faster to read the text than to listen to the audio.

Conferencing capabilities

Conference calling, which has long existed on traditional landlines, lets multiple participants from different locations join a single phone call. VoIP systems often support larger-scale audio conferencing than landline providers and can thus be more useful for large organizations.

Many VoIP platforms support integrated video meetings and screen sharing. This facilitates multifaceted discussions where audio alone won’t be sufficient. It’s also an ideal tool for remote teams and client presentations delivered virtually.

Virtual numbers

Also known as direct inward dialing (DID), this feature provides local phone numbers in various geographic areas, even if your business isn’t physically located in those areas. You can also set up direct lines to individual employees, bypassing the main reception.

Integration with other business tools

VoIP services can fluidly integrate with customer relationship management (CRM) software. The CRM feature can be especially helpful to sales and customer service teams because it instantly provides agents with context about the caller, including their past interactions with the business. This feature logs each customer call or even records it for future reference.

How to choose a VoIP provider

If you want your business to use VoIP telephones and services, you’ll want to research the various VoIP providers in your industry and region. Here are the key features and criteria to consider when selecting a VoIP system.

• Look for robust calling features. The core reason to get a VoIP system is to make phone calls, so choose a service that excels at call quality. Prioritize clear voice quality, reliable uptime (which means very few dropped calls), and features like call forwarding, voicemail, call waiting, and caller ID.

• Ensure seamless integration. Whether you use Shopify or another ecommerce platform, look for a VoIP provider whose services integrate with your business software. This includes your CRM and customer service software. VoIP providers Aircall, Nextiva,and RingCentral RingEx are known for their extensive integration ecosystems.

• Aim for effective customer service. When customers call your VoIP line, they should be able to quickly navigate to the desired department or individual. Look for providers offering customizable call routing, after-hours rules, and call forwarding. An auto attendant can come in handy as well.

• Seek out scalability. Ecommerce businesses experience rapid growth and seasonal fluctuations. A scalable VoIP system allows you to quickly add or remove lines, users, and features as your business grows or contracts. VoIP providers Ooma and Dialpad offer flexible plans that let you add users on demand, which is perfect for small Shopify stores looking to grow.

• Prioritize security and encryption. With customer data at stake, your VoIP provider should offer call encryption and data compliance if your industry requires it (e.g., HIPAA compliance for medical providers). RingCentral RingEx and Nextiva offer enterprise-grade call security and two-factor authentication to help protect customer interactions and business data.

• Take advantage of productivity tools. VoIP protocols can support many related productivity tools. These include call recording, voicemail-to-email transcriptions services, business SMS texting, and video conference features. These tools expand the utility of your VoIP software and help you communicate via a single platform, rather than force you to bounce from one app to another. Look into providers like 8x8, OpenPhone, and Dialpad for packages that include these features.