What is VoIP and how does it work? An idiotproof guide

VoIP has changed the way businesses communicate. But, what exactly is it and how does it work? Fret not as we break down this confusing term in this article!
Faye Chong
Faye Chong

Digital Marketing Executive

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What is VoIP and how does it work? An idiotproof guide

Over the years, there has been a steady increase in Voice over Internet Protocol (VoIP) adoption rates by many businesses.

Why is that, you ask?

Other than advancements in technology, customer demands are increasing. Not only do 62% of customers prefer phone calls over other methods of communication, they expect you to be fast.

While VoIP has indeed changed the way businesses communicate and even helped speed up the sales cycle, what exactly is it and how does it work?

While it sounds like a confusing term, it’s much simpler than you think. In this article, we’ll break down what VoIP means and how you can benefit from it.

Let’s dive right in! 👇

What is VoIP?

Let’s break this term up and explain what it means part by part.

  • Voice: Refers to the sound produced as a speech, a.k.a communication from one receiver to another

  • Over: A preposition. Expressing passage or trajectory across. (So, ‘voice over’ means getting your voice across to the intended destination.)

  • Internet Protocol: A.k.a IP address, it refers to how computers and devices communicate with each other on the internet.

When put together, VoIP refers to different types of technologies that allow for voice and video communication via internet connection. In other words, instead of using traditional landlines or a mobile network, you can now connect with a person over the internet.

 

VoIP refers to different types of technologies that allow for voice and video communication via internet connection.

 

💡 P.S. VoIP is often confused with Session Initiation Protocol (SIP). But SIP initiates (and ends) a session between 2 or more people. Each individual is known as a SIP client, who owns a SIP address.

How does VoIP work?

A VoIP system works by converting your voice into a digital signal, then sending these signals as data packets over the internet. These data packets travel between your device and VoIP provider.

This means that as long as you have an internet connection, you can use VoIP. This bypasses the need for traditional phone lines.

Here’s a visual representation of how VoIP works:

A VoIP system works by converting your voice into a digital signal, then sending these signals as data packets over the internet. These data packets travel between your device and VoIP provider.

There are also many ways you can make calls over the internet, such as using your smartphone or computer (yes, you can call someone from your computer 😛).

Benefits of a VoIP system

Advanced call features

Using a VoIP system grants you access to several call features that enhance the call experience for both you and your customers.

Some of these features include call recording, lead routing, call forwarding, and many more. They’re often already included in business phone system plans, even at the most basic tier.

Furthermore, these premium features usually incur additional charges by telecommunication companies if you’re using traditional landlines. 😩

Higher call quality

VoIP providers are built to connect you to your prospects and leads. They wouldn’t compromise on the call quality because what good is it if they don’t have good sound and connection?

With that said, there will be a noticeable difference in call quality between a VoIP provider as opposed to a traditional phone system. You wouldn’t have to deal with muffled voices or static noises.

Scale internationally

If your business operates internationally (or you’re planning to), using a VoIP provider will certainly do you a huge favor.

You can make international long-distance calls at extremely low rates, starting from $0.05 per minute to call Denmark or $0.03 per minute to reach the United Kingdom.

This makes it easier to get in touch with prospects and leads from all over the world without the fear of overpriced fees charged by telecommunication companies.

Lower costs

Aside from saving on international calling fees, businesses can also save substantial amounts by using a VoIP system.

Research has shown that businesses lowered their phone bills by over 60% after using a VoIP provider. That’s because calls made over the internet are cheaper compared to traditional phone systems that make calls through telephone networks.

Furthermore, VoIP software require no hardware or physical installation. This means that you can completely eliminate the extra expenses of copper wiring and desk phones.

Easily scalable

Having VoIP software allows you to easily scale your business. Because you’re doing away with desk phones and hardware, you don’t have to worry about purchasing expensive hardware or a dedicated phone line as you grow.

For example, if you’re opening a new office branch or expanding business operations to the USA, you can easily upgrade your plan with your VoIP provider to meet your needs.

Supports remote working

Once again, doing away with the hardware means your reps have the option of working remotely. You’re not bound to your desk because of a physical phone and you can work from home or on the go.

All you need is a stable internet connection and you’re good to go! 😉

What makes a great VoIP software

Call recording

Call recording capabilities allow you to capture phone calls with prospects and leads. You can listen in on the recordings to pick out important information and key insights that you might have missed during the call.

The call recording function allows you to capture phone calls with prospects and leads.
The call recording function allows you to capture phone calls with prospects and leads.

Listening to multiple call recordings can also help you pick out patterns and trends that occur across all calls.

Furthermore, you can use the call recording feature to monitor your reps’ performances and offer training opportunities for underperforming reps.

Lead routing

Lead routing helps to automate a part of your lead generation process. Using a variety of predetermined rules, they help decide which sales rep each lead should be assigned to in order to maximize the odds of closing a deal.

Some lead routing rules include:

  • Availability of reps
  • Location of caller
  • Business function

And many more!

CRM integrations

Your VoIP provider should offer integrations to your existing customer relationship management (CRM) tools so that all lead data are on one platform.

Integrating with a CRM software allows you to automatically log new contacts in the system. Source: Novocall
Integrating with a CRM software allows you to automatically log new contacts in the system. Source: Novocall

By integrating with a CRM software, you can automatically log in new contacts from your inbound or outbound call efforts. This helps to automate sales processes and reduce the workload of your reps, ultimately leading to a quicker sales cycle.

HD call quality

Call quality is extremely important, especially if your business is heavily reliant on calls. What’s worse than having a muffled and fuzzy call with a potential customer? 😖

Fortunately, most VoIP software do not compromise on call quality since their whole business idea centers around connecting businesses to their customers.

The best VoIP phone systems

Grasshopper

Grasshopper is a virtual phone system designed for entrepreneurs and small businesses.
Grasshopper is a virtual phone system designed for entrepreneurs and small businesses.

Grasshopper is a virtual phone system designed for entrepreneurs and small businesses.

Grasshopper works just like a traditional phone system, except that it doesn’t require any hardware. You can simply communicate with your customers through Grasshopper’s mobile and desktop app from anywhere.

💡 Best known for: Unlimited texts, domestic calls and voicemails

💡 Standout feature: Grasshopper’s automated attendant allows you to provide 24/7 service to customers. It functions like an answering machine that interacts with your callers when you’re unavailable.

💡 Pricing: Solo – $26/account/month, Partner – $44/account/month, Small Business – $80/account/month

Nextiva

Nextiva is a VoIP phone service offering cloud-based and on-premise implementations.
Nextiva is a VoIP phone service offering cloud-based and on-premise implementations.

Nextiva is a VoIP phone service offering cloud-based and on-premise implementations. It is known for its SIP trunking service and contact center solution.

The platform brings all communication channels such as voice, video, collaboration, SMS, chat, and surveys, together in one place. Nextiva also has CRM capabilities that allow businesses to view all customer data on a single dashboard.

💡 Best known for: SIP trunking services

💡 Standout feature: It’s smart automation feature automatically sends welcome emails, detects subjects related to a conversation, and follow-up and check-in on your customers.

💡 Pricing: Contact center (Voice) – $87/user/month, Contact center (omnichannel) – $107/user/month, Contact center (advanced) – $146/user/month

Novocall

Novocall is a business phone system with a suite of call management features to support both inbound and outbound call-driven lead generation efforts.
Novocall is a business phone system with a suite of call management features to support both inbound and outbound call-driven lead generation efforts.

Novocall is a business phone system that comes with a suite of call management features to support both inbound and outbound call-driven lead generation efforts.

Its click-to-call widget can be embedded onto your website and collects contact details when inbound leads use it to schedule calls with you.

The software’s autodialer allows you to create cold call campaigns. You can upload long lists of contacts into the software and it will automatically dial all the numbers on the list. This helps you save time that otherwise would have been spent on manually dialing the numbers.

Its call tracking tool helps you to track all your calls and attribute them back to each marketing source. This gives you a more holistic view of the campaigns that drive calls to your business.

Novocall also integrates with popular CRMs such as Salesforce so that your data is automatically recorded in the system.

💡 Best known for: A business phone system for inbound and outbound calls

💡 Standout feature: Suite of call management features that support call-driven lead generation

💡 Pricing: Starter plan – $19/user/month, Pro plan – $39/user/month, Custom plan – Request for a quote

Ooma

Ooma is a VoIP telephone service provider that targets both businesses and residential homes.
Ooma is a VoIP telephone service provider that targets both businesses and residential homes.

Ooma is a VoIP telephone service provider that targets both businesses and residential homes at an affordable price.

Ooma provides advanced features such as team messaging, video conferencing, and integrations with Salesforce, G Suite, and Zendesk. Other features include caller identification, call holds, and number blocking.

The software is also compatible with mobile phones so you can take calls on the go. Calls can be transferred easily between devices like your laptops, smartphones, or tablets.

💡 Best known for: Value

💡 Standout feature: Ooma’s ‘ring groups’ feature allows you to ring multiple agents simultaneously to make sure that calls are answered in a timely manner and your customers don’t have to wait on hold for too long.

💡 Pricing: Ooma Office – $19.95/user/month, Ooma Office Pro – $24.95/user/month

Vonage

Vonage is an all-in-one UCaaS that provides voice, text messaging, video conferencing, team collaboration tools, and more.
Vonage is an all-in-one UCaaS that provides voice, text messaging, video conferencing, team collaboration tools, and more.

Vonage is an all-in-one UCaaS that provides voice, text messaging, video conferencing, team collaboration tools, and more.

It has a desktop and mobile app that allows you to access all your business activities in one place. Vonage’s prices are on a pay-as-you-go model, rather than by user, with no monthly or annual subscriptions. The pricing will be more cost-efficient for small businesses and startups as compared to Ringcentral.

💡 Best known for: VoIP solution

💡 Standout feature: Vonage provides 24/7 service and tech support, which is rare to find in many software companies.

💡 Pricing: Voice API – From $0.015/minute, Verify API – From $0.06/minute, Video API – From $0.005/minute, In-App Voice – From $0.005/minute, SIP Trunking – From $0.005/minute, Enterprise service plans – $1,500/month

Who should use VoIP software?

Well, everyone really.

We can’t stress enough how much using a VoIP system can benefit your business operations. Those who are still relying on traditional phone systems would have felt the inconvenience caused by it one way or another.

VoIP software are all relatively affordable and the benefits you reap from these software far outweigh the upfront costs.

Also, since using VoIP software can help you save A LOT on international calling fees and direct/indirect costs in general, we don’t see why you shouldn’t make the switch. 😊

Conclusion

We hope that we were able to break down this complicated and technical topic into digestible bites!

When it comes to using VoIP software, one cannot deny the many benefits and improvements it brings about to a business.

To find out more about how such technology can help your business, get started with us today!

Faye Chong
Faye Chong

Faye is a digital marketing executive at Novocall. When she’s not busy writing articles for Novocall’s blog, she spends her time baking and playing with her dogs.

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