Recent Salesforce research shows that although over 90% of consumers rely on telephone calls with live agents for customer support, only 20% of businesses use virtual phone service features like voice-activated assistants.

This leads to longer hold times, miscommunications, and repetitive conversations with multiple representatives.

Switching to a virtual phone system improves much more than customer service alone.

Today’s business VoIP phone systems offer greater flexibility, a higher level of call functionality, lower your business phone bill costs, and actionable insight and analytics into productivity and performance.


Table Of Contents: 



What is a Virtual Phone System?



A virtual phone system is a cloud-based business phone service that operates via an Internet connection as opposed to cell phone towers or POTS copper wiring.

Virtual telephony requires much less hardware than a traditional business phone number and can be quickly set up online. Agents receive both personal and business incoming and outgoing calls on their cell phones, eliminating the need to purchase a separate “work phone.”

Companies select their own toll-free or local virtual numbers and may elect to have specific numbers for different departments. In most cases, each department or an individual employee can be reached via a specific extension code.

Users can keep any existing local numbers by porting them into their virtual telephone system.


How Does A Virtual Phone System Work?



Traditional telephone numbers connect to only one telephone line. So, if the telephone number’s owner doesn’t pick up, the caller’s only option is to hang up and try their additional numbers.

Virtual phone systems aren’t limited to a specific device, line, or physical location.

This is because they operate using Voice Over Internet Protocol (VoIP.) When a call is made over a virtual network, an endpoint connection between the caller and the callee is established. Voice data is then broken up into packets, which allows the data to travel over the Internet to the other line. Once that packet data reaches the intended recipient, it’s changed back into voice data.

When dialed, digital telephone numbers can route calls to traditional analog phones, your cellphone, softphones, and desktops.

Callers no longer need to hang up and redial additional numbers in order to reach the desired party. The cloud-based phone system forwards calls to multiple devices in a customizable order.

A virtual phone system call path might look like:

Incoming call to virtual number → Office Landline → Desktop Computer → Business Cellphone → Personal Smartphone → Voice mailbox or coworker’s phone number 


Hosted Virtual Private Branch Exchange vs SIP Trunking




Hosted PBX SIP Trunking
Third-party offsite PBX Onsite PBX
IT managed by third-party IT managed by your company’s IT staff
Billed per phone line Billed per user
Best for new or small businesses Best for corporations and multi-location businesses
Connects to PSTN Connects to ITSP
Lower startup cost High startup cost


Once a company decides to use a virtual office phone, they’ll need to choose between Hosted Private Branch Exchange and SIP trunking.

Hosted private branch exchange means that the virtual phone system is operated by a third-party vendor with offsite equipment.

This means that there’s no need for companies using hosted cloud Private Branch Exchange to own any software or equipment, nor do they need to worry about running updates or fixing major IT issues on their own.

SIP trunking, by contrast, is ideal for businesses that have their own IT staff and on-premise PBX equipment or VoIP gateway. Session Initiation Protocol (SIP) virtually connects PBX hardware and Voice over Internet Protocol phone lines.

Larger companies or small business owners with high call volumes that already own private branch exchange equipment should select SIP trunking. Hosted PBX is best for smaller businesses that don’t want to handle their own IT issues and are looking for more affordable virtual phone solutions.

Additional Reading: Hosted PBX vs SIP Trunking: Pros, Cons, Features


Key Features of a Virtual Phone System



Business numbers on a cloud phone system allow employees to receive calls on their preferred devices from anywhere with Internet access.

Standard features service providers offer include:

  • Call Routing
  • Caller ID
  • Unlimited calling to US/Canada
  • Personal number
  • Vanity numbers
  • International phone numbers
  • Push-to-talk
  • Custom greetings
  • Audio conferencing


Let’s take a look at some of the more advanced features below.


Call Routing

When someone calls the business number, a virtual receptionist or pre-recorded greeting provides call menu options to connect the customer with their desired department or individual.

This prevents a call transfer to an agent who doesn’t have the skillset to assist them.

Simultaneous call routing contacts every agent within a specific department until the call is answered or is sent to voicemail. Round robin call routes contact agents in a specific order to evenly distribute sales opportunities and workload.


Call Forwarding

Call forwarding sequentially transfers calls across preferred devices.

If an agent doesn’t answer their desk phone, the inbound call is forwarded to their mobile phone.

If unanswered, the call may be sent to their home telephone, the business landline, or another representative. The similar find me/follow me feature initiates the routing sequence immediately or after a certain number of rings.

Remote call forwarding provides greater employee flexibility, meets business needs, and ensures callers can speak to a live agent.


Call Screening

Since business and personal calls are sent to the same device, call screening features make it easy to know who is calling.

Screens also show the option a business caller selected from the call menu, so the agent knows exactly what they need help with.

Agents can then choose to accept, decline, escalate, or forward calls to voicemail.


Business SMS Text Messaging

Business SMS messaging lets agents send texts to coworkers or clients over the Internet.

This is ideal for sending quick updates and communicating with remote teams instantly.

In addition to SMS text messages, some business phone systems come with live internal chat messaging tools or AI chatbots.


Calling Analytics

Business phones provide invaluable employee and client data regarding:

  • The average duration of calls by agent
  • Number of phone calls made
  • Caller location
  • Time of call
  • Call center abandonment rate
  • Call volume by department
  • Speech analytics
  • Conversion rate
  • Customer satisfaction


Hot Desking

Hot desking allows any employee to log onto any device and immediately access their profile.

Agents can continue to make/receive calls even if they’re not at their specific desk. This is ideal for mobile workforces or small businesses looking to cut costs and save space.


Voicemail to Text Transcription

This feature transcribes voice messages and emails them to an agent’s preferred email address or via SMS texting.

Transcription ensures telephone numbers and other important details are understood correctly and streamlines voice message organization.


Video Conferencing

Web conferencing improves remote team collaboration by allowing for face-to-face real-time communication.

As with standard audio calls, employees can make/receive video calls from tablets, desktop computers, or smartphones. Some desk phone hardware also has a built-in video screen.

Users can connect with customers via an HD video call and remotely control a client’s computer to assist with a technical issue.


Call Monitoring

Whether training new employees or addressing a sales slump, call monitoring provides valuable insight into how agents interact with customers.

Managers can use the barge feature to listen in on live customer service calls, while the whisper feature lets managers coach employees through important calls without the customer’s knowledge.


Pros and Cons of Virtual Telephony

Before making the switch to a virtual system, familiarize yourself with its top pros and cons, compiled from user feedback.


Pros Cons
Lower Cost: The majority of users save anywhere from 50-75% on communication costs when switching to a virtual phone system  Relies on WiFi Availability and Connectivity: You’ll likely need to upgrade your bandwidth when switching to virtual calling, and if your Internet goes out, you won’t be able to make/receive calls. 
Ease of Setup: There’s no need to purchase additional hardware, and setup can often be completed in about half an hour Potential VoIP Security Vulnerabilities: DDoS attacks, spam over IP, data packet loss, and overall network security issues can happen when calling over the Internet.  
Improved Call Quality: HD audio offers crystal-clear conversation, while call transcription services can further prevent miscommunications.  Lengthy Vendor Contracts: Though most contracts do offer an SLA with guaranteed uptime, you’ll likely need to commit to 1-2 years with a provider — and pay fees if you wish to end the contract early. 
Customized Call Forwarding Paths: In addition to determining the specific device order, users can set business hours, recorded messages, and adjust them at any time based on their schedules and preferences   Occasional Dropped Calls: VoIP telephony results in occasional dropped calls, which can interfere with business operations and frustrate clients. Read provider reviews to ensure that dropped calls aren’t a common complaint. 
Greater Employee Flexibility: Employees can make/receive calls from anywhere, leading to fewer missed calls and a higher level of employee satisfaction. This also allows for a more connected remote workforce Occasional Call Lags: Because calls are made over the Internet, network issues can create lags or cause service to go in and out.  
More Features Than Traditional Business Phones: For example, an IVR auto-attendant allows for a higher level of customer self-service, freeing up agents to take more pressing calls.  Some Features Are Add-Ons: Make sure to review which features are included in standard plans, and which ones require you to pay an additional, separate monthly fee. 



How To Know If You Need A Virtual Phone System

It’s time to consider making the move to virtual telephony if:

  • Your business has a high number of remote employees, or if your team members are frequently away from their desks on business or sales trips, in client meetings, or on service calls.
  • You use multiple business communication tools, and are tired of constantly having to switch from one platform to another while on calls. Virtual phone systems offer a high level of integration with third-party software like CRM tools, so you can see all the essential information within a singular dashboard.
  • Your daily call volume has exceeded your current number of available agents or has grown exponentially within the past few months. A good sign that you’ve exceeded capacity is an increase in missed business calls or voicemail messages.
  • An increase in business or number of employees has caused your telecommunications costs to skyrocket
  • You’ve recently opened a new location, or are interested in expanding your business to multiple locations. A virtual phone system makes it much easier for team members working across several locations — and remote employees — to connect with each other. It also reduces customer support resolution time, since clients can reach a representative faster.


Which Company Provides the Best Virtual Systems?


Features Nextiva RingCentral GoToConnect Dialpad 8×8
Price $19.95-$27.95/user per month $19.99-$49.99/user per month Starting at $19.95/month for 50 users $15.00-$25.00+/user per month $12.00-$45.00/user per month
Unlimited US/CA calls
Local/Toll-Free Numbers
Toll-free minutes 10,000/month 10,000/month Charged per minute Charged per minute Charged per minute
Business SMS US/Canada only
Audio and Video Conferencing
Team Chat Messaging
Auto Attendant
Call Recording
Voicemail to Text and Email
Salesforce Integration
Number Porting
Enhanced Call Logs
Call Routing and Forwarding
Android and iOS mobile app
Call Analytics
Call Monitoring
24/7 Customer Support Team


Nextiva is Best For: Enterprise-level corporations with a high daily call volume and employees that work across multiple locations. For more information, read our complete review of Nextiva pricing and plans.


RingCentral is Best For: Companies of any size that need a phone system with robust internal team collaboration and communication features. For more information, read our review of available RingCentral pricing and plans.


GoToConnect is Best For: Small to midsize companies that need a phone system offering superior video communications. For more information, read our review of GoToConnect pricing and plans.


Dialpad is Best For: Newer companies or startups that prioritize low-cost virtual telephony options. Read our review of Dialpad pricing and plans to learn more.


8×8 is Best For: Companies that require a large amount of customer support and user training, as well as those interested in a more customizable virtual phone system. Read our post on 8×8 vs. RingCentral to see how its features stack up against the competition.


Frequently asked questions

Studies show that virtual phone systems save the average company 30-50% of the cost of business communications and save individual team members over 30 minutes of call time every day.
Yes. Google Voice is the most well-known free virtual number provider, though it will have limited features when compared to paid accounts. Google Voice numbers can make/receive calls and SMS text messages. Users can also link their mobile device or landline phone numbers to their Google Voice account.
Yes, and you should also be able to port that number in or out if you decide to switch service providers. 
Most providers allow users to receive incoming faxes on their virtual phone lines, but do not support outbound faxing.
Most providers allow you to purchase as many phone lines as you’d like.
We’ve researched the top business VoIP providers and compiled the above interactive table below to compare pricing and plans, available features, and overall user satisfaction.