Phone extensions are short numerical codes integral to directing calls and responding to inquiries. Small business owners often use phone extensions to organize communication flows, resulting in more efficient and cost-effective call management. To answer the question “What is a phone extension?”, we’ve outlined key features, examples, and benefits for solopreneurs, multi-location teams, and small business owners with one location.
How Do Phone Extensions Work?
As the name suggests, phone extensions are three- to five-digit additions to a standard phone number. Once the phone extension is programmed, it provides direct connections to an individual, an office, or a department within a business or organization.
For example, if a business phone number is 1-800-COM-PANY, a phone extension could be any short number sequence, like ext. 224 or #321, that a caller can dial to reach a specific line. In this sense, phone extensions route calls from the main number to additional devices. Due to this fact, setting up phone extensions requires careful planning and organization, which is where phone systems come into play.
Phone systems allow business owners to organize a network of telephones using a combination of hardware and software. Although the market is saturated with voice services, VoIP phone systems provide the most flexible and cost-effective option for small businesses.
Unlike landlines, phone systems that use a voice-over-internet-protocol are easier to establish and create new phone extensions. In most cases, VoIP phone systems also benefit small business owners by improving call management with fewer resources.
Benefits for Small Business Owners
More than half (56.6%) of all US businesses have fewer than five employees, according to the most recent statistics from the US Census Bureau. This lack of staff and resources means that many small business owners are tasked with the time-intensive work of managing inquiries from customers and clients.
Even with larger teams, owners are still tasked with creating a call management system to ensure customers and clients can access the individual or the information they need. In light of these concerns, small business owners can use phone extensions to save time and resources. Specifically, there are several benefits to creating phone extensions and using a VoIP phone system.
Call Management
Phone extensions often improve call management because they allow for simplified call routing, or sending calls from one place to another. Whether you’re a solopreneur or a multi-office operation, creating a system for managing calls is essential to communicating with customers and clients.
However, many small business owners mistakenly start with one business phone number. Like a store with one door, businesses with one phone number make it more difficult for customers to receive timely service. In contrast, setting up multiple phone extensions helps manage an influx of calls because each extension can be routed to a specific person or piece of information.
Automation
When creating your call management system, you can simplify interactions with customers or clients by routing them through an automated system. For example, you can program specific phone extensions to provide automated messages about business hours or scheduling options. Therefore, automation benefits solo entrepreneurs or business owners who need digital assistance to manage calls.
Speed & Efficiency
Setting up phone extensions for each part of your business makes navigation easier for clients and customers because they have a direct route to service. Instead of waiting for a single person to answer the phone, phone extensions ensure your customers and clients can quickly find the information they need.
Phone extensions can also decrease the upfront time spent responding to customer inquiries because you can spend less time responding to frequently asked questions. Many small businesses can benefit from collecting data on common customer inquiries and wait times to set up phone extensions that directly respond to customer needs.
Positive Impression
If you’ve heard the popular adage, “You never get a second chance to make a first impression,” then you know how important impressions are in building a business relationship. For your customers and clients, a phone call is often their first interaction with your business. However, having customers waiting to reach you is an easy way to make a bad first impression.
For many small businesses, longer wait times are caused by a lack of staff or inefficient call management strategies. Therefore, setting up phone extensions to route calls ensures your business will look more professional and well-staffed, even on your busiest days.
Team Collaboration
Phone extensions are not only for working with clients or receiving customer calls. Setting up phone extensions can also improve team collaboration and engagement. For remote teams or businesses with multiple offices or team members, phone extensions provide direct access to each person on staff.
Within a VoIP phone system, extensions can also improve internal communication, like convening conference calls or roundtable discussions. Integrating phone calls into team meetings can also alleviate “Zoom fatigue” or video-conferencing burnout for remote teams.
Cost-effective Scalability
Even if your business is small, there’s always room to grow. Instead of establishing a new number every time you hire staff or open an office, creating phone extensions is a simpler way of adding lines of communication without purchasing or installing new equipment and software.
For business owners who want to save money on call management, VoIP phone extensions are more cost-effective because you don’t have to purchase separate phone numbers. Additionally, some VoIP providers offer unlimited phone extensions, so your phone system can grow at the same rate as your business.
The Difference Between Virtual Phone Numbers & Phone Extensions
Although phone extensions offer many benefits to small business owners, they can complicate choosing a phone number. Within a VoIP phone system, you not only have the option to create phone extensions, but you can also select a virtual phone number. However, virtual phone numbers and phone extensions are not the same thing.
Within a VoIP system, virtual phone numbers are similar to a standard phone number but are not connected to a phone line. Instead, virtual phones or phone numbers use cloud-based systems to direct calls to various devices. So, while virtual phone numbers are part of a VoIP phone system, each number is connected to a corresponding IP address or device.
Virtual Phone Numbers | Phone Extensions | |
|---|---|---|
Structure | Traditional phone number (e.g., 800-123-4567) | Numerical code added to a phone number (e.g., #890) |
Length | 10-15 digits with the option of local area codes at the beginning of the number | 3-5 digits at the end of a standard phone number |
Connection | Linked to an IP address or device | Integrated into a VoIP phone system |
Service | Requires setup from a phone service provider | Simple setup by adding extensions within a virtual phone system |
Benefits | Great for remote businesses with multiple geographic locations | Great for internal call management and external inquiries |
Although phone extensions can also be included in a VoIP phone system, the term doesn’t only apply to VoIP. Depending on the service provider, phone extensions can use landlines and they do not require an internet provider or IP address to send and receive calls.
Because virtual phone numbers are not tied to a specific phone line, they are stand-alone numbers that do not require an additional code. Therefore virtual phone numbers can have a local area code. In contrast, phone extensions are an addition to an established phone line that is linked to the area code or designation of the primary number.
Virtual phone numbers are best for businesses that need a local number for different geographic locations or remote teams. However, small businesses with multiple departments that require an internal call management system would benefit from phone extensions. Additionally, you can combine virtual phone numbers and extensions to create a more robust VoIP phone system.
Phone Extension Examples & Best Practices
If phone extensions are the right choice for your business, the next step is creating a clear strategy for organizing calls and communication flows. Although phone extensions are simple, establishing a clear system can streamline the process.
1. Assign Extension Numbers
The first step in setting up phone extensions is programming the extension numbers in your phone system. Most providers in a VoIP phone system allow you to assign extensions to any individual or department using the digital platform. Smaller teams can also advise employees on programming their own extensions.
Within small businesses, it’s best to use extension numbers that are easy to remember and understand. For example, suppose you have multiple extension numbers in a department. In that case, you can group the numbers by providing the same starting digits, such as beginning all extensions in the marketing department with #2.
Depending on the needs of your business, you can also assign extension numbers to voice mailboxes. These extensions can collect messages from customers or clients who are scheduling appointments or voicing concerns.
2. Develop a Directory
After assigning extension numbers, a great next step is creating a phone extension directory. A phone extension directory is an internal document listing extension numbers, names, and departments. Some VoIP phone systems also offer the option to create an online directory, making it even easier to access each phone extension.
To create a directory, first examine the structure of your office and extensions. For businesses with extensions for specific employees, create a directory with names, office numbers, and phone extensions. Small businesses with multiple employees per department can develop a directory with employee names, department/location, and phone extension numbers.
Name | Department | Phone Extension Number |
|---|---|---|
John Smith | Marketing | 201 |
Susan Johnson | Sales | 301 |
Adam Howard | Customer Support | 401 |
Michelle Torres | Human Resources | 501 |
3. Create a Call Flow Diagram
Another way to make call management easier is creating an outline or chart that includes directions on how calls are routed from one place to another. Specifically, you can use a call flow diagram to simplify the organization of a VoIP phone system. Call flow diagrams, or phone tree templates, trace the flow of communication from one point of contact to another.
If you have a small team, you can use your phone extension directory to divide the labor of fielding customer inquiries, scheduling clients, and managing vendors. Using a basic phone tree, begin with a greeting message with several menu options for different customer or vendor needs.
While some phone extensions can be programmed with automated messages, such as answering frequently asked customer questions, you can also program some numbers to go to a specific person, like a sales or support employee.
Larger teams or businesses with several offices can use a multi-location phone tree to manage calls. This phone tree routes calls from a phone greeting to multiple offices. Then, you can program phone extensions for each office or team (e.g., management, marketing and sales, customer service, or HR).
This method also minimizes call transferring and is useful for businesses that require a direct line to specific team members or customer support.
Regardless of size, small business owners can benefit from best practices like developing a directory or using a phone tree template to outline a call management system. These examples also serve as the first step in distributing calls and creating an automated VoIP phone system.
VoIP Phone Extension Features
When using a VoIP phone system, phone extensions have distinct features that improve business communication. For customer and client interactions, phone extensions allow small businesses to present as a unified support team with a central phone number and clear distinctions between the additional lines.
A remote business can also use VoIP phone extensions to connect teams or multiple offices with the same phone service or system. Compared to setting up the phone lines and call systems required for landline extensions, several features within VoIP phone extensions are important to consider.
One of the best features of VoIP phone extensions is how they simplify call routing. After creating a call management system or phone tree, call routing distributes your incoming calls to specific numbers or extensions. For example, you can use an automatic call distributor (ACD) to create queues and immediately send calls from a primary business phone number to a phone extension.
Interactive voice response, or IVR, is one of many phone extension features that create more effective call routing. Using automation and voice recognition technology, IVR allows businesses to set up prerecorded greetings or questions that direct callers to specific phone extensions. Depending on the caller’s responses, the phone system will route them to an individual, voicemail, or automated message.
While an IVR uses smart technology to interact with callers, automated call attendants distribute incoming calls to specific phone extensions using menu options. Auto-attendant phone systems are a VoIP feature that lets you set up an automated message that directs callers to specific phone extensions.
For example, an automated call attendant can outline a business directory and extension numbers by department (e.g., “To speak to a customer representative, press 0”), language (e.g., “To continue in English, press 1), or many other menu options. Although this feature isn’t as engaging as an IVR, it is useful for smaller businesses with basic phone trees or less call traffic.
Call transfers are another method of routing calls, which is useful for assisting customers in navigating multiple departments or managing high call volumes. Depending on your call management system, calls can be transferred to a voicemail messaging system, a phone agent, or another phone extension.
For example, if a client calls customer service but needs a different department, a customer service representative can use a call transfer to direct them to the right place. Therefore, transferring calls can improve the flow of communication and decrease wait times.
Call forwarding is one of many VoIP phone extension features that rely on automation to manage calls. Small business owners can use call forwarding to divert incoming calls to a phone extension, device, or phone number.
This feature works well for solopreneurs who operate specific hours or go on vacation because they can forward calls to an automated system. Larger teams can also use call forwarding to send calls to another team member or representative if someone is out of the office.
Instead of routing calls to specific departments, phone extensions can connect multiple lines into ring groups. A ring group is a group of numbers programmed to ring in a set order or simultaneously. After creating a ring group, you can assign multiple individuals to collaborative teams that answer incoming calls.
Sending calls to a ring group routes customers to an available representative, voice mailbox, or automated message. Therefore, ring groups are an essential phone extension feature for businesses with a large support team, or client-facing staff, such as help centers or sales.
Voice mailboxes allow callers to leave messages for a call recipient. Depending on the service, certain providers also offer additional services, such as voicemail transcription, which makes it easier to keep up to date with messages.
Phone extensions can also be programmed to direct callers to a voice mailbox, also known as message-only extensions. These extensions are useful for out-of-office messages, appointment scheduling, and handling business partnerships or vendor calls.
Companies Providing VoIP Phone Extensions
Many companies offer phone extensions with great features and efficient call management systems for business owners. Across providers, these features often focus on providing low-cost plans and automated services.
Grasshopper includes virtual phone extensions in each plan, simplifying the process of routing calls to individuals or information. Choose a local or toll-free phone number before customizing settings. Then, add extensions and effectively distribute calls with custom greetings, voicemail, and call-forwarding.
You can use local and toll-free numbers to set up phone extensions with Grasshopper. (Source: Grasshopper)
Nextiva offers a secure phone system with multiple phone extension features that appeal to small business owners. For example, call flips simplify call transfers within a company, while call parking can put calls on hold when you’re away from the desk. Each of these features contributes to your business’s professional profile by seamlessly managing calls with or without a support team.
Organize teams and manage calls with Nextiva’s VoIP phone extensions. (Source: Nextiva)
Frequently Asked Questions (FAQs)
The term phone extension refers to a short number sequence that can be added to a central number. Business owners often use phone extensions to route calls to a particular individual, office, or automated message. Therefore, phone extensions are essential to managing calls and fielding customer inquiries.
Phone extensions are often three- to five-digit numbers added after a central phone number. For example, ext. 111 and #1234 are both number sequences that could be programmed as a phone extension. Similarly, many service providers offer single-digit extension numbers, or menu options, to route calls to an automated message or a specific department (e.g., dial 1 for customer service).
How many phone extensions you can have is relative to the VoIP service provider and your call plan. While some providers offer unlimited phone extensions for customers across phone plans, others may limit the number of phone extensions you can add to your plan. So, it’s important to consider your current needs and long-term business growth when selecting a VoIP provider.
Bottom Line
Phone extensions help route calls to individuals or automated systems, providing easy and cost-effective call management. They also benefit small business owners by creating more organized and efficient communication flows. By using directories or phone tree templates, business owners can develop effective call-routing strategies and maximize the features of VoIP phone extensions.
