Feature Story

Building the Channel for UC: Growing Spending Means New Sales Opportunities, But Value Selling Remains a Challenge

By Paula Bernier, Executive Editor, IP Communications Magazines  |  August 01, 2011

This article originally appeared in the Aug. 2011 issue of Unified Communications Magazine

Unified communications solutions integrating voice, data, video, and collaboration and social media tools are positioned to see high demand going forward “as many organizations appear to be spending huge sum of money on communications technology over the next two years,” according to CompTIA (News - Alert).

Forty nine percent of organizations the IT research firm recently surveyed say their UC investments will increase faster than their overall IT budgets in the months ahead. Firms with 500 or more workers are much more likely to increase their UC spends than smaller outfits, probably because these larger organizations are more in need of solutions that simplify their more complex and far-flung communications requirements, CompTIA says.

All this adds up to an important new sales potential for channel partners. IT firms with a unified communications practice expect a 31 percent increase in those businesses over the next 12 months, according to CompTIA, and 59 percent expect more modest growth.

But to move on this opportunity, these technology product and solution providers must overcome several hurdles with customers. Those challenges include customer price sensitivity, security concerns, questions about return on investment, and need for education on the benefits of UC, CompTIA says. Not surprisingly, cost comes out at the top hurdle, with 39 percent of channel partners telling CompTIA this is a challenge.

8x8 CEO Bryan Martin (News - Alert) says that he and his retooled sales staff are working to grow their channel organization and sales and, in the process, the entire sales effort is being repositioned to focus less on selling based on price and more on selling based on value.

The company earlier this year hired on two Polycom sales executives to lead that charge. Kim Niederman is now 8x8’s senior vice president in charge of worldwide sales. Martin says Niederman is making changes to inside sales that include some adjustments to personnel and bringing in some of his own people. Don Trimble, also a former Polycom guy, is heading up channel sales.

About 95 percent of 8x8’s sales are done direct today; however, it appears as if channel sales will play a growing role in the delivery of the company’s services in the future. Martin in mid June told Unified Communications (News - Alert) Magazine that 8x8’s channel program hadn’t yet been officially unveiled, but that it has been working on the effort and had 15 resellers signed on that had resulted in nine new customers for 8x8.

Among 8x8’s channel partners is master agent World Telecom Group, which with 2,000 agents is the service provider’s largest channel partner. (WTG was a partner of 8x8’s when its focus was on residential services as well.) Martin says 8x8 will announce more partners over the next couple of months. He adds that a big push for 8x8 is to forge more partnerships with businesses in the data hardware space. That would include companies that sell power over Ethernet switches and traffic shapers into LAN deployments, he says.

Martin adds that Niederman and Trimble also are retraining the sales force to stop selling on price and start talking more about the value 8x8 delivers. With savings of six to seven times in the first year of use compared to existing solutions, it’s not surprising that it’s price that usually closes deals for 8x8, says Martin. But focusing solely on price during the sales process has led 8x8 to commoditize its own product to some extent, he says. So the company wants to help potential customers understand the benefits of HD voice, unified communications and recording on demand.

“Unfortunately that [typically] happens post-sale,” says Martin. But, he adds, that may change with the introduction of business video.

Selling UC using a hosted or cloud-based model could help unified communications solution providers and their channel partners appeal to those customers for whom pricing is a significant barrier. This model allows customers to invest on a pay-as-you-go basis. It offers some intrinsic benefits for the channel.

“As any agent knows, the key to healthy commissions [is] a healthy re-occurring revenue stream,” says Louis Hayner, Alteva’s (News - Alert) chief sales officer. “Telephony channel agents have been selling carrier service for years, but haven’t been able to embrace PBX complexity, as it was outside their typical sales model (monthly reoccurring revenue commissions). Now with hosted UC, they are able to maintain those healthy monthly annuity checks, as well as get paid on hardware, and reinvent their company.

“One of the advantages of selling cloud-based services is allowing the master agent to rebrand themselves and future-proof their business, without making drastic business model changes,” he adds.

Alteva also helps its channel partners learn to position the UC product in a different way, Hayner says. 

“It’s not just a cost savings model; it also creates efficiency and productivity increases and a way for organizations to be more competitive,” he says. “It all starts out by having the channel sell from a different positioning and posturing.”

Alteva’s channel partners used to be solely from the telephony community, including telcom VARS, PBX resellers, master agents. But as Alteva transitioned from providing just hosted VoIP to hosted UC, it expanded its channel to include cloud and desktop VARs that are currently positioning and selling Microsoft products, but without an added telephony solution. 

“Through its UC Sales Certification training course, Alteva is helping both types of partners bridge the gap between their telephony and desktop sales expertise,” Hayner says.

“Marrying the desktop and telephony is really what UC is all about from a channel partner perspective,” he continues. “Added revenue equals added commissions, and the best part is that the end user saves money and gets a tighter, more integrated solution. Since channel partners and businesses are paid on what they sell, the more products that integrate and are able to be sold and bought by the end user will drive higher commission. For example, X percentage of $1 vs. that same percentage (X) of $3.”

Helping channel partners successfully sell cloud-based UC is also a focus for Evolve IP, says Tim Allen, chief sales officer.

“Evolve IP has always had channel distribution in our model from the very early stages of building the business plan,” he explains. “What we have realized is the channel is a bigger opportunity than originally expected due to the extensive, long-term relationships our partners have with their customers.”

Evolve IP hosted an event at the Franklin Institute in Philadelphia on July 13 called The Reinvention of the Channel. There the company talked about how it is taking the resources it has used to drive direct sales and packaging those resources to enable agents to more successfully sell the hosted or cloud-based model to their customers.

“This will enable them to generate more recurring commissions, thus creating more value for their business,” Allen says. “We focused on a version of this idea last year and had tremendous success. We then began doing this with additional partners in March of this year and have had such positive feedback from our agents that we are rolling the program out to our entire partner base and using it to attract new partners.”

Evolve IP now has a full-featured, multi-tiered program for all types of partners. 

“We have a full calendar of training events for our partners as well as a proprietary online computer-based Learning Management System named Evolve IQ,” he explains. “Evolve IQ educates our partners on Evolve IP’s internal information like products and services, processes and procedures, as well as other types of external content.”

The channel is also of key importance for cloud-based phone system provider RingCentral (News - Alert).

“Our VARs are an important extension of our go-to-market, as they provide additional guidance, support and a hands-on approach that certain businesses want when considering and purchasing a business phone system,” says Nisha Ahluwalia, senior director of marketing at RingCentral, which sells solutions to small and medium businesses with multiple locations and mobile employees.

 “Resellers get a turnkey solution from RingCentral that allows them flexibility in how they offer RingCentral services,” adds Ahluwalia. “Resellers can take advantage of our 24x7 free customer and technical support so they don't have to manage supporting customers or implementing the service. Or resellers can wrap their value-added or managed services around RingCentral to earn additional revenue.”

Edited by Stefania Viscusi