What is a Virtual Phone System? How Does it Work?

Simply put, a virtual phone system is an easy, flexible, and affordable business phone system. Virtual phone systems are easily set up on the web or, for smaller businesses & entrepreneurs, with a mobile app. They work with office phones, cell phones, computers, laptops, tablets, and landlines – empowering employees to work from anywhere.

Virtual phone systems are ‘in the cloud’ so there is no expensive computer equipment to buy or maintain. They are substantially cheaper than traditional business phone systems and come with modern features like text messaging, auto-reply, call menu options, and customer service software.

It goes without saying that technology has added substantial value, fun, and efficiency to our daily lives. Video calls, not long ago the stuff of science fiction, is now a common way to stay in touch. Need a date? Simply swipe your finger across the pixels of your smartphone. The way in which technology has enhanced our day-to-day is nothing short of astounding.

While technology has enhanced our personal lives, why have business phone systems been stuck in a time loop? We’re all familiar with those big clunky machines sitting on every office desk. Today, most companies still operate phone systems that are costly, equipment-intensive, and rigid. Although late to the game, things are finally evolving. Virtual phone systems, a new and fast-growing technology, are quickly disrupting how businesses set up and manage their telecommunications needs.

Let’s define, in simple terms, what exactly a virtual phone system is and build up from there. The first thing you need to know is that all business phone systems use a special type of computer called a ‘server’ to manage things like phone numbers, greetings, voicemail, hold music, and call routing. These are standard professional-grade features.

Servers are complemented by devices called ‘clients’. A ‘client’ is tech-speak for a device that receives information from the servers. Think of servers as the hub and clients as the spokes. For business phone systems, clients include things like desk phones, computers, cell phones, tablets, and laptops.

Building upon this, the next thing to know is that business phone systems come in two basic flavors – ‘traditional’ and ‘virtual’ – which are defined primarily by 1) where these servers are located and by 2) who maintains the servers and its software.

With definitions out of the way, let’s briefly dive into how business phone systems work and how they’re evolving. Historically, businesses relied on operators to connect two sides of a call – initially by manually connecting the wires of the call and later, more familiarly, through a receptionist’s desk phone with buttons for each employee at the business. Today, businesses use servers to automate the call connection process.

While we’ve moved past operator-assisted switchboards, traditional business phone systems haven’t really evolved much over the last few decades. Traditional business phone systems use servers called ‘Private Branch Exchange’ switches, or PBX for short. They are usually housed in an office ‘server’ closet. Think of PBX as an automated telephone switchboard dedicated to a single business. When the PBX receives incoming calls it instantly routes them to the appropriate employee. It also takes outgoing calls from employees and routes them to the appropriate call recipient.

Fun Fact: When you dial 9 from a traditional office phone, you’re actually instructing the phone system to dial someone outside of the company.

Traditional business phone systems can take weeks to set up. Companies with traditional PBX phone systems typically work with their local telephone company. Businesses must buy or lease PBX equipment in addition to wired desk phones for each employee.

These wired phones come in two flavors – landlines and VoIP phones (voice-over-internet-protocol means the phone is wired directly to the internet instead of a traditional landline). Each wired phone is subject to additional wiring costs and ongoing connection fees. Traditional business phone systems generally only work with wired desk phones. Cell phones, computers, laptops, tablets are not compatible.

Depending on the size of the company and the complexity of the phone system, companies may hire dedicated IT specialists to customize and maintain the phone system. The expertise required is substantial and supporting documentation can be thousands of pages long. Businesses are usually locked into restrictive long-term contracts with their phone company.

For employees, traditional phone systems lack flexibility and provide few options for mobility. Passing out personal cell phone numbers to clients and teammates is the typical work-around. In our view, this can dull the professional polish needed for a small business to thrive.

A virtual phone system basically takes a traditional business phone system and puts it in the cloud. You won’t have to deal with servers, cables, wires, software updates, or IT personnel. Virtual phone system providers take care of all of that for you. Since virtual phone systems work with cell phones, laptops, computers, and tablets, there is generally no new hardware to buy. However, if your needs require desk phones, that would be the only hardware expense for a virtual phone system. Good quality VoIP desk phones can be purchased for around $100.

Virtual phone systems can be set up online or through a mobile app. The best virtual phone systems invest time in creating a user-friendly set-up process that requires little tech knowledge. You can set up a phone system for your entire business in just a few minutes – whether you’re a business of one employee or many.

Simply select a local or toll-free phone number (or transfer your current business phone number to a virtual phone system provider), add team members, assign extensions, add the devices that will ring when a customer dials your business number, create greetings, set up voicemail, and set up call menu options. If you’d like to use a VoIP desk phone, your virtual phone system provider will provide log-in credentials for that phone.

Before virtual phone systems, phone numbers were attached to a single device. For example, when you dial a friend’s work number, her desk phone rings, not her cell phone.

Virtual phone systems use what are known as ‘virtual phone numbers’. Virtual phone numbers look and act like traditional phone numbers except they are not attached to a specific device. They are ‘in the cloud’ and can be configured to route calls to any device you want – a desk phone, home phone, cell phone, laptop, tablet, or computer.

Good To Know: You ‘own’ a virtual phone number just as you would a traditional phone number. Virtual phone numbers can be ported to a different provider at any time. Virtual phone numbers and traditional phone numbers are interchangeable, meaning traditional phone numbers can become virtual phone numbers and virtual phone numbers can become traditional phone numbers. If you have a current business number attached to a landline, you can port the landline number to a virtual phone system provider and turn it into a virtual phone number.

The best way to put your arms around virtual phone numbers is to think about cloud-based email, like Gmail. Gmail enables you to read, send, and receive email on any device you choose. Your email address isn’t attached to a specific device. Virtual phone numbers empower you with the same flexibility.

We’ll highlight the advantages of virtual phone systems in this section. Since not all virtual phone systems offer the same features, we’ll also highlight some of the features specific to LinkedPhone.

In this section, we’ll speak specifically to LinkedPhone as not all virtual phone systems offer the same level of connectivity.

The set-up experience varies from provider to provider. The best virtual phone system providers invest time in creating a user-friendly experience requiring minimal tech knowledge.

LinkedPhone enables you to set up a phone system in 3 easy steps. You can set up your phone system on the web or with our mobile app. Start using your new business phone number immediately. If you decide to port a business phone number that you already have, it can take anywhere from a few days to a few weeks to complete the transfer.

We are very focused on providing a clean and intuitive work environment while preserving power and functionality. For example, the images below illustrate how easy it is to set up a call menu option that routes calls to select team members with our mobile app.

We hope this article provides the information you need to make an informed decision. If we missed something or if you have any questions, please click on the ‘contact us’ link below. One our knowledgeable Customer Success Associates will get back to you as soon as possible.