A cloud phone system is a hosted PBX solution based on VoIP that allows you to move your business phone service to the cloud.
Cloud phone systems simplify business communications, provide advanced features, and are more secure.
What is a cloud phone system?
A cloud-based phone system is a business communications solution that is hosted and maintained in the provider’s data centers rather than at your office and is delivered over the internet.
It has a hosted PBX capability, which has the same routing and call management features as a traditional PBX while using voice over IP (VoIP) to facilitate internet calls.
It also has features that traditional office phone systems do not or cannot provide at an affordable price, such as long-distance calling.
This cloud solution is frequently provided as a service, allowing smaller businesses to subscribe to it rather than investing heavily in an expensive on-premise system.
Cloud-Based Phone System Features and Benefits
Private branch exchange (PBX) is a type of telephone network used by businesses to route calls to specific departments or phone extensions.
Traditionally, the system is housed on office grounds. The system machines are bulky and necessitate their own storage room, as well as periodic repairs and maintenance.
Only large corporations had the resources to install and manage this type of setup for their office phones in the past. This changed with the advent of cloud computing.
Cloud phone systems have several advantages over traditional PSTN phone systems, including advanced VoIP features, better overall value, and scalable plans based on your small business’s current and future needs.
If you’re new to cloud-hosted phone systems, the overwhelming number of providers can be overwhelming.
Even if your company already uses VoIP software, comparing providers can be time-consuming – especially if your communication strategy has changed in the new year.
We researched the best cloud phone systems for you and condensed our key findings on pricing and plans, features and customer service, network reliability, and more to assist you and your team in finding the perfect provider match.
Cloud Phone System vs Traditional Phone System
A cloud phone system provides an experience that is distinct from traditional PSTN (Public Switched Telephone Network) landlines. But how does this system compare to one of the older business communications systems? Consider the following:
For a Traditional Phone System and a Cloud Phone System Copper lines, phones, private branch exchange (PBX) VoIP endpoints (phones, computers, smart devices), modems, and routers were installed.
Scaling necessitates the acquisition of new licenses, lines, and phones from the telecom carrier.
Online, you can easily add new lines using the “add a line” section of the control panel.
Long-distance calling incurs additional charges.
Most providers include unlimited calling within the United States and Canada, as well as less expensive international long-distance calling.
Services for Emergencies
Dispatchers dispatch responders to the phone line’s registered location.
E911 services dispatch responders to the account’s registered location via the provider’s portal.
Cloud-based faxing converts scanned documents into an electric signal that is transmitted over phone lines. When compared to traditional faxing, online faxing is more secure and has fewer quality issues.
Call forwarding is usually an optional feature.
Many providers offer this feature, and many go above and beyond with features like remote call forwarding.
Call Routing The majority of call routing is hardware-based. Most service plans include advanced call routing, auto-attendant service, and basic IVR.
Sound Quality Voice band audio in an analog format is limited, so sound fidelity varies.
The internet connection strength, packet loss, and other factors have the greatest impact on sound quality.
12 Key Cloud Phone System Features
The most important and effective cloud phone system features are listed below.
Unanswered phone calls are automatically forwarded to another phone number without requiring the caller to physically hang up and dial additional numbers.
If an agent does not answer their desk phone, the call is automatically forwarded to their cell phone number, then to their home phone number, and so on.
Admins and agents can change the order of dialing, add and remove numbers, and forward calls to other agents/departments.
Why Do You Need It? Call forwarding improves agents’ privacy and flexibility while increasing first contact resolution rates.
Advanced Call Routing With Drag-and-Drop Call Flow Design
Call routing allows users to create customizable rules that determine which agents or departments receive calls and what happens if no one is available to take the call. It improves overall call flow management.
This call flow has an easy-to-use drag-and-drop interface and can be changed at any time.
There are several call routing strategies available, including:
Agents take turns answering inbound calls using round robin routing. The first call is routed to agent A, then to agent B, then to agent C, and finally back to agent A.
Skills-Based Routing: Calls are routed to the agent best suited to assist the caller. Callers can either dial a specific number or enter information into the IVR system to be routed to the appropriate agent/department.
It ensures that customers who call for help are not routed to departments such as billing or sales.
Most Idle Routing: Calls are routed to the agent who has not answered a call in the longest period of time.
Priority-Based Routing: Calls from predetermined phone numbers (VIP clients, for example) are routed to preferred agents or bypass the queue entirely.
Why Do You Need It? Call routing provides personalized call flow management, reduces wait times and call lengths, and ensures callers speak with relevant and available agents.
IVR (Interactive Voice Response)
Cloud IVR employs pre-recorded automated messages and call menus to connect callers to the appropriate departments, process payments, view account status, and more without requiring them to speak with a live agent.
Customers respond to voice prompts via dial pad touch-tone or speech. The IVR system guides callers through relevant call flows using NLP, voice recognition, and DTMF dial tones.
Why Do You Need It? IVR provides high levels of customer self-service and convenience while freeing up more agents to handle more complex calls.
Call Monitoring and Call Recording
Managers and administrators can listen in on live phone calls, use call whisper to give agents advice in real time without the customer’s knowledge, or use call barge to completely take over the call.
On-demand or automatic call recording captures phone and video calls, as well as screen streams during video meetings. When discussing sensitive information, the recording can be paused and resumed.
Automatically generated searchable call and meeting transcriptions are stored in the cloud or sent to participants.
Before using this feature, familiarize yourself with call recording laws.
Why Do You Need It? Users can use call monitoring to:
- Assess the efficiency and performance of sales and customer service representatives.
- Learn about common issues or reasons for contact.
- Find out more about your customers.
- Take no notes during meetings.
- Confirm conversations
Unified Communications (UC) or Unified Communications as a Service (UCaaS) simplifies business communication by providing a centralized dashboard for multiple communication channels, such as:
- Calling by phone
- Texting via SMS
- Video conferencing
- Messaging via instant messaging (internal or live website chat)
- Faxing over the internet
All communication is automatically and in real-time synced across channels.
Why Do You Need It? UC has numerous advantages, including:
- There is no need to switch between channels or applications throughout the day.
- avoiding the need for customers to repeat themselves to multiple agents
- Productivity and customer satisfaction have increased.
Local Presence and Toll-Free Vanity Phone Numbers
Businesses can either port existing phone numbers into their cloud phone system or buy new phone numbers directly from the provider.
With most VoIP plans, you get at least one free local phone number.
Regardless of a company’s physical location, purchasing several local phone numbers provides them with a local presence in every region they target.
Toll-free vanity phone numbers (for example, 1-800-DOGWALK) make it clear what products/services your company provides. Clients and leads can contact businesses for free as the caller.
Why Do You Need It? Business phone numbers give your company a more professional appearance, are easy to remember, and provide you with a local phone number in a variety of area codes/locations.
Video Calling With Team Collaboration Tools
Face-to-face real-time communication between colleagues, entire departments, and even external participants is possible with video conferencing.
With a single click, users can switch from VoIP phone calls or team chat messages to ad hoc video calls. Meetings can be scheduled with automated reminders, attached files, guest lists, and meeting descriptions.
Collaboration features such as in-call instant chat messaging, screen sharing, remote screen control, file co-editing, and whiteboard tools make it easier to simulate in-person meetings.
Task management, in-meeting polling, user presence (status) updates, breakout rooms, and virtual hand-raising are frequently available.
Why You Need It – Tools for video conferencing and team collaboration:
- Reduce the need for frequent in-person meetings.
- Join remote/mixed teams.
- Boost employee engagement
- Reduce miscommunications
- Voicemail on Display
Visual voicemail (also known as voicemail-to-text) automatically transcribes voicemail messages and sends the transcription as well as the original audio files to users.
This means that instead of listening to each voice message, users can read them visually. Voicemail notifications are also sent to agents, ensuring that missed calls are returned as soon as possible.
Why Do You Need It? Agents can prioritize callbacks, determine if a callback is required, and even respond via text or email because they can read voicemail messages.
Voicemail transcription also ensures that the caller’s message is understood correctly, reducing miscommunications.
Call Pops and CRM Integrations
CRM integrations and communication APIs enable users to integrate existing business software and applications into their cloud phone system.
Call Pops uses the integrated CRM system to display recent customer data for inbound/outbound calls within the softphone interface, eliminating the need to switch between apps.
If you integrate Salesforce into your VoIP platform, for example, when you receive an incoming customer call, Salesforce will immediately provide you with a Call Pop of available caller information.
Why Do You Need It? Integrations enable teams to keep using familiar/preferred business software and tools within the phone system interface.
They also provide instant access to additional features that may not be native to the platform of the VoIP provider.
Furthermore, call pops ensure that critical customer data such as contact information, order history, and more is quickly and easily accessible.
Customers no longer have to wait on hold to speak with an agent thanks to customer callback capabilities. Instead, callers can request a callback for a specific date and time.
The agent and the customer will both receive reminders of the upcoming call.
Why Do You Need It? Giving callers the option to be called back instead of waiting on hold improves the customer experience, lowers call abandonment rates, and better manages peak call times.
Real-Time and Historical Call Data & Analytics
Call analytics provide real-time and historical data about callers and agents over a predefined, programmable time period.
VoIP analytics include pre-built templates or fully customizable reports centered on popular metrics and KPIs such as:
- Average call length
- The average response time
- Call volume (inbound/outbound) daily/weekly/monthly
- Rate of first-call resolution
- Average agent talk time
- % of calls routed to voicemail
- Price per call
- Conversion rate on average
Why Do You Need It? Call analytics provide invaluable insight into agent productivity levels, current training quality, call volume management, peak times, and much more.
Automation and AI
Auto-attendants or bots that automate common business processes, eliminating the need for agents to handle them manually, are examples of automation and AI (Artificial Intelligence).
Conversational AI and NLP (natural language processing) recognize keywords and trigger predefined automations.
NLP tools, for example, “understand” the words “paying,” “bill,” and “help” if a client calls and says, “I need help paying my bill.” The caller is then routed to the billing department or assisted in paying the bill over the phone using AI and automation tools.
Other examples of automation and artificial intelligence include:
- Obtaining and updating customer contact information
- Automation of work processes
- Dial-by-name telephone directories
Why Do You Need It? Automation automates routine tasks, saving time and increasing productivity.
Automation and artificial intelligence handle tasks such as:
- Entering data
- Call distribution
- Transcription of phone calls
- Generations of reports
Top 3 Cloud-Based Phone Systems + Pricing
The section that follows goes into greater detail about some of the most popular cloud phone systems.
All of the features listed above, as well as many more, are available from the providers listed here.
Learn about the pricing, the most competitive features, who each system is best for, and where you can find out more about individual providers.
Dialpad: Ideal for small or new teams looking to increase agent productivity
Dialpad Business Communications is a cloud phone system that provides voice calling, online faxing, video calling, team chat, and business texting in a unified interface for desktop and mobile users.
Its main selling points are its advanced built-in AI, clean and user-friendly interface (shown above), and overall affordability. There are toll-free numbers, local phone numbers, and number porting options.
What Makes It Unique
The impressive AI tools in Dialpad are easily the best parts of the phone system.
Dialpad’s AI-powered NLP and machine learning platform, Vi (Voice Intelligence), includes in-call agent coaching.
It provides real-time, speaker-differentiated call transcription that agents can view while speaking with a customer. It also detects action items and analyzes caller sentiment by “listening” for keywords and phrases.
The best part is that it includes Real-Time Agent Assist (RTA) features that streamline the onboarding, training, and support/sales processes.
When the AI feature detects “trigger” keywords, it automatically provides relevant advice to the agent, even reminding them to slow down if they are speaking too quickly.
It retrieves data from internal knowledge bases and customer accounts to ensure that data agents require is always instantly available.
Dialpad also includes advanced call routing options such as skills-based, language-based, department-based, most idle, fixed order, round-robin, and random routing.
Calls can be routed to voicemail boxes or the IVR menu, but administrators can create “fallback” routing plans to prevent calls from going to voicemail.
Nextiva: Advanced Native CX and CRM Features for Teams
Nextiva is a cloud PBX business phone system that combines VoIP voice calling, video meetings, SMS, and team chat messaging in a single dashboard.
Users communicate seamlessly within the Nextiva App softphone interface (shown below), seamlessly switching between communication channels and even devices.
What Sets It Apart
Nextiva is the most “complete” phone system on this list, with robust native features that other providers do not provide.
Rather than relying on a plethora of third-party integrations and APIs, Nextiva already includes its own CRM capabilities, team collaboration and project management tools, and even features specifically designed for customer service and sales teams such as case routing and customer journey analytics.
It’s perhaps best known for its Call Pop feature, which displays key caller information such as contact information, last interaction date, customer experience ratings, account value, and any notes from previous agents/conversations.
Sentiment Analysis, for example, instantly recognizes positive and negative “trigger words,” and dissatisfied customers are automatically flagged for review and escalation.
Trend forecasting, call topic filters, customer survey analytics, and KPI-based reporting templates all help you be more informed.
RingCentral MVP: Designed for Small to Midsize Hybrid Teams
RingCentral MVP (Message, Phone, Video) is a unified communications platform for smaller teams that provides high-level communication features.
The provider has recently focused on providing innovative solutions and capabilities to the new hybrid workforce, particularly in terms of team collaboration.
RingCentral provides virtual faxing and SMS in addition to chat, voice calling, and video.
What Sets It Apart
RingCentral truly bridges the communication gaps that frequently occur when remote teams and in-house employees collaborate.
Call forwarding options for various devices and departments are numerous, including call blasting and the ability to specify the number of rings before a call is forwarded.
Finding the right person is simple because each user receives a dedicated phone number and a dial-by-name directory. Call delegation, call flipping, and ring groups of up to 16 phones all help to keep bottlenecks at bay.
A maximum of 250 programmable IVR call menus and submenus, advanced NLIP, and a drag-and-drop Visual Dial Plan Editor make self-service simple.
GoToConnect: For Small Teams Requiring Customizable Call Management Solutions
LogMeIn’s GoToConnect is a cloud phone system that combines voice calling, video communications, and messaging into a single interface. Number porting and local, toll-free, and vanity numbers are all available.
Remote or blended smaller teams of up to 25 employees, as well as current GoTo universe users (GoToWebinar, GoToMeeting, etc.) in need of a business phone solution, will benefit the most from GoToConnect.
What Sets It Apart
GoToConnect has over 100 call center management features, but the Dial Plan Editor tool is one of the best.
This user-friendly call flow management tool allows users to configure advanced call routing, forwarding, waiting, and multi-level IVR strategies.
Best of all, GTC provides an unlimited number of auto-attendants and submenus, allowing users to be far more specific with custom self-service menus that keep agents free.
Although GTC offers fewer third-party integrations than other providers, it does have an excellent and active developer community with open source APIs and SDKs. This enables a high degree of customization.
Ease of use is also a priority, as evidenced by features such as always-on visual notifications, a recent contacts list, and an intuitive sidebar that allows users to see all current parked calls, recent chat conversations, and favorite contacts at all times.
Its Activity Stream consolidates all recent activity, regardless of channel, into a single user interface (see image below.) Users can also filter recent activity by channel, making it easier to keep track of tasks and follow-ups.
What is a Cloud Phone System?
A cloud phone system is a Voice Over Internet Protocol (VoIP) business telephone solution hosted on a cloud server (hosted PBX) by a third-party provider, as opposed to on-premise PBX (Private Branch Exchange) hardware.
Cloud phone systems (also known as virtual phones or cloud PBX) are not restricted to a single physical location and can be accessed from any device with Internet access.
This means that users can use desktop computers, laptops, mobile phones, tablets, and even compatible desk phones to access their business phone system.
Cloud hosted phone systems provide more advanced features than traditional landlines, provide greater flexibility at a lower cost, and streamline business communication within a single platform.
Check out our VoIP vs landline comparison for more information on the differences between traditional and cloud phone systems.
How Does a Cloud Phone System Work?
VoIP powers cloud phone systems, whereas landline phones convert audio into electrical signals and transmit them over copper wires.
Rather than converting audio signals into pure electricity, cloud phones convert audio into data packets that are transmitted over the Internet via codecs.
A VoIP phone connects to the Internet via an Ethernet cable, whereas a landline connects via an RJ11 traditional phone wire. Internally, VoIP phones are far more complicated than traditional phones, resembling small computers rather than analog devices.
Because cloud-based phone systems aren’t limited to a single location, your entire remote and/or blended team connects under the same service regardless of where they are. Furthermore, most cloud phone systems include free calls between in-network extensions.
Cloud Phone System Pros and Cons
Given that nearly 80% of businesses in the United States use VoIP telephony in at least one of their locations, it’s clear that cloud solutions provide far more benefits than traditional phone systems ever could.
Unlike their landline counterparts, cloud phone systems offer plans for businesses of all sizes and allow businesses to choose between bundled all-in-one services and a la carte features that can be purchased individually.
Additional Resources on Cloud Hosted Phone Systems
You should have a better idea of which platforms seem like the right fit for your business after reading this overview of some of the top cloud phone system providers.
As a business owner, now is the time to either switch to a cloud-based platform or re-evaluate your current virtual phone system or call center.
Want to learn more about the virtual phone system providers mentioned in this post, including actual customer reviews, complete cost breakdowns, and more?
Check out our Business VoIP Buyer’s Guide or our in-depth comparisons of top providers like Vonage vs RingCentral and RingCentral vs Nextiva.