Many small businesses are making the switch from traditional PSTN telephones to cloud based phone systems — and thanks to the advanced features they offer, it’s not hard to see why.
If you’re new to cloud-based VoIP phones, figuring out which features your business needs is confusing, and learning which providers and plans actually offer these features is even more complicated.
That’s why we’ve created this breakdown of the top cloud based phone system features, why you need them, and which providers have them.
Table of Contents
- What is a Cloud Phone System?
- How Does a Cloud Phone System Work?
- Cloud Based Phone System vs Traditional Phone System
- 18 Most Important Cloud Phone System Features
- 7 Best Cloud Based Phone Systems + Pricing
- Additional Resources on Top Cloud Phone Systems
- Cloud Phone System FAQs
A cloud phone system is a Voice Over Internet Protocol (VoIP) business telephone solution that a third-party provider hosts on a cloud server (hosted PBX) as opposed to on-premise PBX (Private Branch Exchange) hardware.
Therefore, cloud phone service is accessible via any device with Internet access, including desktop computers, laptops, mobile phones, tablets, and even compatible desk phones.
Enterprise VoIP solutions allow for more advanced features and functionalities than traditional landlines, offer a higher level of flexibility for a lower price, and streamline business communication within a single platform.
You’ll also hear cloud based phone system referred to as cloud phone, virtual phone, cloud VoIP service, or cloud PBX.
For more detailed information on the difference between a traditional and cloud phone system, check out our VoIP vs landline comparison.
Cloud Phone System Pros and Cons
Given that close to 80% of companies in the United States use VoIP telephony in at least one of their locations, it stands to reason that cloud solutions offer far more benefits than traditional phone systems ever could.
Plus, cloud phone systems offer plans for businesses of all sizes, often letting companies choose between bundled, all-in-one services or a la carte features that are purchased on an individual basis.
But what are the downsides of business cloud communications?
The below table outlines the pros and cons of a cloud-based phone system.
Cloud Phone System Pros
Cloud Phone System Cons
|Reduces the cost of business communications by 30-50% when compared to traditional landlines||Can have a steep learning curve (look for service providers offering user training and 24/7 support)|
|Virtual PBX systems save 115 minutes per day, per employee — equivalent to roughly 49,660 hours saved each year||Depending on the features needed and the specific plan selected, users may need to purchase add-ons or integrate additional business communication software|
|High level of reliability and guaranteed uptime through numerous remote data centers||Call quality is impacted by issues like jitter, latency, and packet loss — as well as your overall Internet connection|
|Ease of setup (often same-day) and much lower maintenance when compared to traditional business phones||Often requires upgraded networking equipment such as VoIP routers, stronger Internet connections, and higher bandwidth|
|Scalable solutions let your business phone system grow alongside your company||Usually requires a commitment/contract for at least one year, often two years|
How Does a Cloud Phone System Work?
Cloud phone systems are powered entirely by VoIP (voice over internet protocol). In a way, a system like this uses a very similar method to traditional phone systems for transmitting voice messages. PSTN (public switched telephone network) landline phones convert audio into electrical signals that are sent over copper wires to the recipient. Rather than change audio signals into pure electricity, the cloud phones break down the audio into data packets using codecs that are transmitted over the internet.
Phones on one of these systems differ significantly from traditional phones. A VoIP phone, rather than use an RJ11 traditional phone wire, actually uses an Ethernet cable to transmit directly through the internet. Internally, these phones are also often much more complex than traditional phones. VoIP phones are more like small computers than analog devices.
Since cloud based phone systems aren’t limited to a specific location, an entire company with globally disparate offices can connect under the same service. Many providers allow for free extension calling within the same network, which is useful for collaboration.
Cloud Phone System vs Traditional Phone System
A cloud phone system brings with it a unique experience that differs significantly from traditional PSTN landlines. But how does this system measure up against one of these older business communications systems? Let’s take a look:
Traditional Phone System
Cloud Phone System
|Hardware Requirements||Installed copper lines, phones, private branch exchange (PBX)||VoIP endpoints (phones, computers, smart devices), modems, routers|
|Scaling||This requires purchasing new licenses, lines and phones from the telecom carrier.||When you need new lines, adding them is easy through a modern provider. Typically, there’s an “add line” section in the control panel.|
|Long Distance||Even long-distance requires extra charges thanks to the maintenance requirements of PSTN lines.||Most providers include unlimited calling in the U.S. and Canada. International long distance generally is also much cheaper.|
|Emergency Services||For PSTN, 911 services have been available for more than 50 years. Dispatchers send responders to the registered location of the phone line.||E911 services send responders to the location registered to the account via the provider’s portal. Not every provider has emergency services.|
|Faxing||Traditional faxing converts scanned documents into an electric signal that’s transmitted via phone lines.||Cloud-based faxing sends faxes over data networks. Online fax is secure, and there are fewer quality issues compared to traditional faxing.|
|Call Forwarding||Call forwarding typically comes as an extra feature for PSTN lines.||Many providers have this feature, and many take it to the next level with features like remote call forwarding.|
|Call Routing||Most call routing on PSTN is hardware-based.||VoIP providers make it a point to include call routing in most service plans. At base, you’ll receive an auto-attendant, and some providers include IVRs with advanced routing features.|
|Sound Quality||PSTN is limited to voice band audio in an analog format. As a result, sound fidelity varies greatly based on several factors.||VoIP is less of a mixed bag. Sound quality is primarily affected by the internet connection, but factors like packet loss can also reduce fidelity.|
Below, we’ve outlined the most important and effective features that cloud phone systems offer your business.
We’ll tell you what these features do, why you need them, and which providers offer them.
Call forwarding automatically forwards phone calls to another telephone number if there’s no answer at the first number — without having the caller physically dial the additional number.
Instead, the phone system automatically forwards the call to another device/phone number the same agent uses. Admins and agents can customize the order in which numbers are dialed.
For example, if an agent doesn’t answer their desk phone, the call is automatically forwarded to their cell phone number, then home phone number. However, the agent’s personal phone numbers would be protected, as dialing the same number can send the call to many different ones.
Why You Need It – Call forwarding offers agents enhanced privacy, increases the chance for first contact resolution, and lets clients reach agents when they are out of the office.
Call Hold and Call Transfer
Call hold allows agents to place callers on hold until a preferred agent becomes available, while they get answers to a question, or for any other reason. Custom hold music is available.
Call transfer lets agents send a call they’ve received to another agent with the push of a button.
Why You Need It – Call hold and call transfer helps to prevent callbacks, ensures that clients get the best possible help from the most qualified agent, and lets overwhelmed agents send calls to available coworkers.
Advanced Call Routing With Drag-and-Drop Call Flow Design
Call routing allows you to set customizable rules to determine the call flow of incoming calls — in other words, which agents or departments calls are sent to, and what happens if no one is available to take the call.
There are several call routing strategies, such as:
- Round Robin Routing: Agents take turns answering inbound calls. The first call goes to agent A, then agent B, then Agent C, then back to Agent A again. This is ideal for sales teams where everyone needs to have equal access to potential sales.
- Skills-Based Routing: Calls are sent to the agent who is the most qualified to assist the caller. Callers can dial a specific number to reach a certain department, or enter information into the IVR system to be directed to the appropriate agent/department. It ensures that customers calling for support aren’t redirected to, for example, the billing or sales departments.
- Most Idle Routing: Calls are automatically sent to the agent that has not answered a call in the longest amount of time
- Priority-Based Routing: Calls from predetermined phone numbers (for example, VIP clients) are sent to preferred agents or skip to the front of the queue.
Why You Need It – Call routing, as with all call management features, decreases overall call times, increases first contact resolution rates, and ensures that valued customers get the best support possible.
Best of all, most cloud phone and contact center providers allow users to design call routing and call flow via a user-friendly, drag-and-drop interface. The call flow can be redesigned at any time, offering added flexibility and scalability.
Call Screening and Call Blocking
Call screening, often referred to as Caller ID, identifies inbound callers (or displays your company’s information to call recipients) so that agents can determine the right way to respond to an individual call.
Agents can choose to accept the call, reject it, send it straight to voicemail, or transfer the call to another agent.
In some cases, agents may choose to block the phone number outright, preventing that phone number from being able to contact your business phone number in the future. Spam call filters can automatically block numbers from likely spam calls.
Why You Need It – First, call screening makes it easy to prioritize calls according to the individual caller or issue at hand.
This increases customer retention rates, cuts down on the number of pesky spam calls and the time they waste and helps to decrease the overall call abandonment center rate.
Unified Communications (UC or UCaaS) streamlines business communication by providing a central, single dashboard for multiple communication channels, including:
- Business audio calling
- Business SMS texting
- Video calling
- Internal and external messaging/chat
- Online/virtual faxing
- Multi participant Web conferencing
Why You Need It – UC has an abundance of benefits, including:
- No need to switch between multiple channels or applications throughout the day
- Preventing customers from having to repeat themselves to multiple agents
- Increased productivity
- Increased customer satisfaction due to ability to communicate via their preferred channel
Local Presence and Toll-Free Vanity Phone Numbers
Companies can port existing phone numbers into their new cloud phone system, or they can purchase new phone numbers from providers.
Most VoIP providers include at least one free local phone number with their plans.
Regardless of a company’s actual geographic location, buying several local phone numbers gives them a local presence in every region they target.
Toll-free vanity numbers (such as 1-800-DOGWALK) are easier to remember and clearly state the types of products or services your business offers, and clients and leads can contact businesses at no cost to them.
Why You Need It – Business phone numbers make your company look more professional and allow employees to keep their personal telephone numbers private.
Plus, local phone numbers will make it look like you have a local presence in a city even if you don’t — and prospects are much more likely to answer calls from their own area code.
Business SMS lets users send and receive SMS and MMS text messages via their business VoIP phone system provider.
Users can send/receive these texts via mobile devices or using the softphone interface of the desktop application from providers like RingCentral.
SMS allows for individual, small group, or bulk texting, and both one-way and two-way business texting are often available with top providers. Dedicated texting phone lines are standard.
Why You Need It – Not only is SMS messaging a highly effective form of marketing (with shortcodes and opting in/out of receiving messages.)
It also allows agents to quickly text co-workers or clients when they’ve missed an important call or if they’re in a meeting/on another call when someone attempts to contact them.
Agents can quickly send pre-written text responses like, “Call you in 10,” or “Can you talk later?” This saves time, prevents phone tag, and ensures other customers know you received their call.
Call presence lets team members view one another’s “status” throughout the workday, so they can determine the best time to contact one another or structure their own work days more effectively.
Common call presence status indicators include, “Online,” “Do Not Disturb,” “On a Call,” “Away,” “Notifications Snoozed,” “Lunch Break,” or “Out of the Office.”
Often, VoIP phone systems will automatically update an agent’s status when they take a call or video meeting.
Why You Need It – Call presence helps to save time, prevents endless phone tag, and lets agents see who else is available to assist them in the event that the person they wanted to connect with is unavailable.
Plus, it helps managers keep track of where team members are and how they’re spending their workday.
The “Do Not Disturb” status, in particular, allows agents to set aside uninterrupted time to focus on time-sensitive or difficult projects without intrusion, meaning greater productivity and fewer missed deadlines.
Cloud IVR (Interactive Voice Response) uses pre-recorded automated messages and call menus to let customers connect to the appropriate departments, make payments, view account staus, and more without ever needing to speak to a live agent.
If you’ve ever heard a call menu that sounds something like, “Press 5 to speak to the sales department,” then you’ve interacted with an IVR system.
Customers can enter in their responses to these voice prompts using their phone’s dial pad, or by speaking their response out loud into the phone. Using NLP, voice recognition, and DTMF dial tones, the IVR system guides callers through relevant call flows.
Why You Need It – IVR offers a high level of customer self-service and lets customers get answers to questions as quickly as possible.
It also frees up agents to take that require a high level of personalized attention.
Keep call menu options as brief as possible, as callers don’t want to waste time with lengthy pre-recorded messages. Always provide the option to switch to a live agent at any time.
Nearly 50% of remote and in-house teams currently use video conferencing (web conferencing) for communication.
It allows for face-to-face, real-time communication between two colleagues, entire departments, and clients and agents. Web conferencing has become especially invaluable in the wake of the COVID-19 pandemic.
When used with a VoIP phone system, users can instantly transition from a chat message to a video call, click a button to make a video call to a contact, and start both ad hoc and scheduled meetings.
Collaboration features like in-call instant messaging, screen sharing, remote screen control, and whiteboard tools make replicating an in-person virtually even more realistic.
Why You Need It – Not only does video calling help remote or blended teams feel more connected, but it also helps to cut down on the number of in-person meetings.
Meeting participants receive meeting notifications and reminders to ensure they don’t forget upcoming scheduled video calls, and meeting hosts can virtually distribute handouts or other information to be accessed during the conference. Afterward, they can choose to send meeting recordings and accompanying chat transcripts to participants.
Features like virtual hand-raising ensure that everyone has a chance to speak, while in-meeting virtual polls let hosts measure engagement rates and collect real-time feedback. In larger meetings, breakout rooms allow for small group conversation, provide opportunities for cross-departmental collaboration, and help to identify leaders.
Team Collaboration & Messaging
Team collaboration features are designed to foster live communication and collaboration between your team members by replicating some of the in-office tools commonly used during meetings.
For example, a whiteboarding tool will allow meeting hosts to illustrate concepts to conference participants, jot down notes or keywords, or even choose from pre-determined drawings and shapes to include on the whiteboard. Whiteboards can be saved, edited, and shared.
Team chat messaging is the most well-known collaboration tool, allowing for group instant messaging, private one-on-one communication, or public channel creation. Organize chats by department or by individual projects, and add new team members to chats at any time. Users can receive or snooze notifications, update their chat status, and tag other users to make sure they don’t miss key information.
Screen sharing is another essential collaboration feature, letting users see one another’s entire desktop or individual application in real-time. This is especially helpful when explaining how to use new software.
Remote screen control even lets users “take over” one another’s screens to provide even better assistance.
Why You Need It – Team collaboration suites allow for real-time editing, easy file sharing, file version control, and additional tools your teams can use to improve communication and collaboration.
These tools make it easier to explain complex concepts, are an excellent way to take notes, offer the chance to provide hands-on training from anywhere, and ensure that all your team members are working with the most recent file drafts.
Team collaboration also stores relevant files, whiteboards, and more for instant access from any device.
These features mean fewer meetings, more met deadlines, stronger internal teams, and a more productive environment with far fewer miscommunications.
Visual voicemail is the upgraded version of traditional voice messages.
Instead of simply taking audio messages that users have to access later, visual voicemail (sometimes called voicemail-to-text) transcribes the voicemail and automatically sends both the audio file and message transcription to users on their preferred channel/device.
Voicemail-to-email sends audio files and transcriptions directly to a user’s email inbox. Most importantly, it also sends notifications of a new voicemail, ensuring that agents promptly return missed calls.
Users can easily access a list of their current voicemails, allowing them to prioritize missed calls.
Why You Need It – Visual voicemail lets users receive instant notifications on the channel of their choice whenever they have a new voice message. Plus, because agents can simply read the voicemail message, they may be able to respond to its content via text message or email, eliminating the need for a callback.
Voicemail transcription ensures that the message is understood correctly, and allows agents to read and respond to messages while on a call. Agents can even return voice messages from the voice mailbox interface.
Call Pops and CRM Integrations
CRM integrations and communication APIs allow users to integrate existing business software and applications into their cloud phone system.
Call Pops use the integrated CRM system to automatically display recent customer data for inbound/outbound calls within the softphone interface, so there’s no need to constantly juggle between several apps.
For example, if you were to integrate Salesforce into your VoIP platform, when you receive an incoming customer call, Salesforce will instantly provide you with a Call Pop of available caller information.
Why You Need It – First, integrations prevent users from having to rotate between numerous applications throughout the day.
They also make it possible to continue to use the business tools your team relies on while benefiting from an upgraded cloud phone solution. Integrations provide a higher level of overall customer service, ensuring that client data like contact information, order history, and more are quickly and easily accessible.
Given that over 60% of customers say even waiting on hold for one minute is too long, there’s a good chance that callers — including excellent leads — will simply hang up. Sometimes, they’ll call back.
But 30% of them never will.
Customer callback tools eliminate the need for customers to wait on hold.
Instead, it lets customers select a date and time to receive a callback from an available agent. Both the agent and the customer will receive reminder notifications of the upcoming call.
Why You Need It – Providing callers with the option to receive a callback instead of wasting time on hold drastically improves the customer experience — and means agents spend less time talking to frustrated customers.
It also leads to fewer missed sales opportunities, decreases call abandonment rates, and makes it much easier to manage peak call times.
Plus, customer callback tools save your company money, since you won’t be charged for the time the customer spends on hold.
Find Me, Follow Me
Find Me, Follow Me (sometimes referred to as “Never Miss a Call”) simultaneously rings multiple devices when an agent receives an incoming call.
For example, when an agent receives a call, their desk phone will ring — but so will their Apple or Android smartphone or home phone. Best of all, these simultaneous rings mean that agents no longer need to give or multiple phone numbers, nor do callers need to dial them.
Why You Need It – According to 77% of VoIP users, Find Me, Follow Me is the most effective tool for increasing team productivity.
It also offers a high level of team flexibility and mobility.
Real-Time and Historical Call Data & Analytics
Call analytics provide both real-time and historical data about both callers and agents.
VoIP systems allow users to create custom reports or to choose from a variety of pre-made templates, which can be automatically sent to users at preset intervals.
Popular metrics and KPIs include:
- Average call duration
- Average speed of answer
- Daily/Weekly/Monthly call volume (inbound/outbound)
- First call resolution rate
- Average talk time per agent
- Percent of calls sent to voicemail
- Cost per call
- Average conversion rate
Why You Need It – Call analytics provide invaluable insight into agent productivity levels on an individual and departmental level. Managers can identify their strongest agents as well as which ones may need more training.
Managers can also use these analytics to understand when they need to hire more agents, or simply how to optimize the agents they currently have. They can also identify busy times of the year, discover popular call sources, and more.
Automation and AI
Automation and AI (Artificial Intelligence) are auto-attendants or bots that improve communication, collaboration, and automate business processes.
Conversational AI and NLP (natural language processing) provide excellent insight into agent and customer behavior by identifying keywords/phrases that trigger set automations.
For example, if a client calls and says, “I need help paying my bill,” NLP tools “understand” the words “paying,” “bill,” and “help.” AI and automation tools then send that caller to the billing department or help them to pay the bill over the phone.
Additional examples of automation and AI include:
- Collecting/updating customer contact information
- Workflow automation
- Dial-by-name directories
Why You Need It – Automation eliminates tedious, routine tasks that eat up a huge portion of the workday, saving serious time and boosting productivity levels.
Automation and AI handle Tasks like:
- Data entry
- Call placement
- Call transcription
- Analytics reports are done automatically instead of manually
These tools give agents more time to make sales calls or offer personalized support to clients.
Call monitoring lets users listen in on live phone calls between representatives and clients (or any other type of business call.)
Those listening can listen only or use call whisper to provide instructions or advice to the agent without the customer on the other end of the line being able to hear them.
Call barge allows managers to take over a call at any moment, meaning that they’ll be the ones speaking directly to the client, not the original agent.
Call recording lets users record a phone call and video audio, as well as screen streams.
Users can set individual recording preferences, automatically record all inbound/outbound calls, record calls on-demand, and pause/restart call recordings if extremely sensitive information is discussed at a certain point.
Transcripts are automatic transcriptions of voice/audio conversations that users can read over after the call is finished, or at any point in the future.
Recordings will be stored in the cloud, and can also be emailed to the conference or call participants as an audio file or transcripts.
Familiarize yourself with call recording laws to avoid any legal issues.
Why You Need It – Call monitoring is an excellent way to monitor not only sales and customer service support reps, it’s also a great way to get insight into consistent reasons why your customers contact your business.
Call recording allows you to correct any potential misunderstandings/miscommunications between coworkers or clients. It’s also a valuable tool for evaluating the quality of your customer service, customer support, and sales reps.
Users can also:
- Avoid taking notes during meetings
- Identify common support issues
- Learn more about customer personas
- Train new employees
- Save deals
- Search the recording transcript by keyword
The table below offers a brief overview of some of the most popular business cloud phone systems.
The providers listed here offer all of the features listed above, plus many more.
Discover the pricing, most competitive features, who each system is best for, and where you can find more information about individual providers.
|Cloud Phone Provider||RingCentral MVP »||Nextiva ONE »||Vonage Cloud »||8×8 »||GoToConnect »||Dialpad Talk »||Zoom Phone »|
|Pricing||4 paid plans from $19.99/user per month to $49.99+/user per month||4 paid plans from $18.95/user per month to $57.95+/user per month||3 paid plans from $14.99/line per month to $34.99+/line per month||3 paid plans from $12.00/user per month to $44.00/user per month||3 paid plans from $22.00/user per month to $39.00+/user per month||3 paid plans from $15.00/user per month to $25.00+/user per month||3 paid plans from $10.00/month per user to $20.00/month per user|
|Best For||Remote or in-house SMBs with less than 100 employees within the tech or education industries||Larger companies or businesses with a high daily call volume made up of remote geographically diverse team members||SMBs of 50 or fewer in-house or blended employees with more basic business communication needs, that prefer to buy features a la carte||Midsize and above businesses that have a high volume of daily internal and external communication, especially popular with accounting, healthcare, and government agencies||Micro businesses or startups of under 10 employees that need a highly scalable phone system||Businesses of any size looking for a cost-effective solution||Current Zoom Meetings users that want to upgrade to include a business phone system but who still primarily communicate via video calling|
|More Information||RingCentral Pricing||Nextiva Pricing||Vonage Pricing||8×8 Pricing||GoToConnect Pricing||Dialpad Pricing||Zoom Phone Pricing|
Now that you know more about the incredible features that cloud phone providers offer, as a business owner, it’s time to either make the switch to a cloud-based platform or re-evaluate your current virtual phone system or call center.
Curious to learn more about the providers we’ve mentioned in this post, including reviews from actual customers, complete cost breakdowns, and more?
Below, we’ve answered some of the too-cloud phone system FAQs.
Cloud phones work by breaking up VoIP voice data into packets that travel to the call recipient across the Internet -- not the PSTN telephone network.
Once the packets reach the recipient, they reassemble, delivering clear voice communication. This process is managed by your PBX solution.
Cloud phone systems cost $15.00-$50.00/user per month, depending on the provider and specific features you choose.
Opting for annual payment plans usually result in significant cost savings.
Top cloud phone system benefits include:
Lower costs than traditional business telephones
Advanced calling features like IVR, SMS messaging, and call routing
Scalable phone system solutions
Greater flexibility, specifically for mobile users
Little equipment/hardware required
Integrates with existing business communications software
Excellent analytics offering insight into agent/department activity and customer contact