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What is VoIP and How Does it Work?

The acronym VoIP refers to ‘Voice Over Internet Protocol’, simply put it is an alternative method to traditional PSTN  (Public Switched Telephone Network) company phone services. VoIP allows digital communication channels between organisational members and with their customers through software or hardware developments.

Opposed to the traditional business telephone systems, using copper wires to transfer data, a VoIP system transmits voice signals through the internet. This makes wireless communication channels possible and the system is only dependent on stable internet connection. The VoIP system converts analog phone signals into digital signals. These digital signals are referred to as ‘data packets of information’ that move through the internet to their desired destination, automatically converted back into audio messages once on the receiver’s end.

VoIP for small business

Why should small businesses invest in VoIP technology?

VoIP is a new age technological advancement that’s popularity has been increasing over the past few decades. Among other benefits, VoIP technology allows organisations to save time and money, positively affecting business productivity and efficiency with communication. Does this apply only to large corporations? Of course not, VoIP is as much of an important technological investment for small businesses as well as larger corporations and many of the advantages are shared no matter the size of the organisation.

Saving Time and Money

The set up and installation cost of VoIP technology is dependent on the size of the business, thus small business expenses are less. The technology doesn’t require much maintenance, saving time and money over the long haul. The occasional upgrading process requires no hardware and is a simple and usually free process. Communication services when using a VoIP business telephone system technology costs less than a traditional business telephone system, some calls, even international connections can even be viewed as free, based on the only costs encountered being internet service connection.

Potential for Growth and Expansion of Functionality

The use of VoIP as the telecommunication method for small businesses expands on the variety of services that were previously not available with traditional means of communication. There is more room for growth, which is a common focus of small businesses. Dependent on the volume of traffic, it is easily possible to add or reduce lines. Different from traditional methods like PSTN which doesn’t offer as much flexibility as the systems are fixed.

With expanding businesses and increasing numbers of employees, more hardware is needed, however, no additional software is required. Adding new employees to the system is as simple as contacting your provider and requesting more ‘seats’ with access to the VoIP system. Thus, limiting the installation and upgrading costs when the business is growing. 

Improved Business Efficiency and Productivity

One of the most attractive features and driving factors for moving to VoIP technology is improving business efficiency and productivity. VoIP saves organisations time and money, usually for smaller businesses this is more of a focus- particularly in the start-up stages of operation. Installing a VoIP system saves the organisation time and money in training, using, travel and maintenance. The time saved for managing the communication system allows businesses to focus more on operations productivity like improving customer satisfaction, sales and ultimately business revenues.

Customer Retention

Customer service is an important and valued aspect of any small business. Making sure customers are satisfied and their requirements are being fulfilled is a top priority and attribution to the bottom line performance. Efforts to retain an existing customer base have been proven more effective with regard to long term business productivity and profitability, in comparison to trying to attain new consumers.

VoIP provides a variety of important communication functions that allow management to monitor and evaluate customer satisfaction levels on a continuous basis. VoIP is easily accessible from anywhere with internet connection. Employee’s incoming calls are automatically directed towards their VoIP phones, no matter the location. This allows businesses to provide 24/7 customer service based on employees being located anywhere in the world.

Variety of Communication Features

VoIP allows for more than just voice calls, the need for separation between data and voice transfer is now merged in a functional and efficient system. Compared to traditional business telephone systems, VoIP allows businesses more communication levels and improved business processes.

VoIP telephony has changed the way communication is managed in all businesses, improved ease, understanding and digital methods of handling consumer issues. Marketing and image building functions by using VoIP allow businesses to have more control over how consumers perceive and interact with their organisation.

For small businesses in particular, investing in VoIP telephony saves organisations time and money, allows more potential for future growth, improved productivity and ways of managing efficiency, as well as managing customer expectations and meeting their demands effectively.

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