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Marketing VoIP Services A Whole New Ball Game

By Rich Grange


Heres the good news: There has yet to emerge a clear brand leader in business IP telephony, in any vertical or geographic market. Unlike the traditional TDM world, you will not find the equivalent of the massive, entrenched Baby Bell with significant traction in the VoIP marketplace, and at least for right now its about as close as you can get to a level playing field.

And the bad news? There really isnt any, other than the fact that there is no proven blueprint for a service provider to follow in order to attract VoIP customers and maintain them.

But one thing is certain: The long sales cycle and high profit margins associated with traditional telephony services are rapidly becoming a thing of the past. New market data and the realities of todays business environment suggest a completely different sales proposition one that recognizes that VoIP is not traditional telephony.

Thats why it has been so difficult for small to mid-sized businesses (SMBs) to buy VoIP (define - news -alerts) from incumbents and for large vendors to gain any significant sales traction. Furthermore, the incumbents are making the most fundamental mistakes mistakes that speak to their ignorance of the market opportunity as well as their failure to understand the mindset of the SMB customer.

For them, offering VoIP is simply a strategic business move to protect their flank a logical way to prevent the erosion of their customer base to other providers. They do not embrace the freedom, cost savings, and self-reliance VoIP brings to their customers. They would much prefer to have everything related to VoIP vanish from the face of the earth and return to the days of higher fees and profit margins.

Interestingly, when marketing VoIP, incumbents and large, independent carriers use traditional sales pitches that focus on upfront equipment investment and long term ROI. They avoid consultative selling, thereby placing the onus on the customer to know exactly what kind of product they are looking for. Incredibly, their sales and product teams are still organized in silos no single sales person can shepherd the customer to the right product or bundled solution.

But just because the incumbents are dropping the ball today doesnt mean they wont eventually get their collective act together and become a real threat. Besides, their ineptness with VoIP certainly doesnt guarantee success for their smaller VoIP competitors. It does provide a real opportunity to capture progressive business customers, and that is why the service provider must be prepared to penetrate the VoIP market quickly and decisively. Facing lower profit margins on IP telephony services, these providers must understand end-customer concerns, buying triggers and anticipated service adoption rates. They must also develop a process for a short sales cycle and higher volume sales. And they must have dedicated sales reps with deep product knowledge, armed with the tools they need to educate their prospects and win new business.

The following are some of the sales and marketing steps that a service provider can take today in order to maximize their success when selling VoIP to the small and mid-sized business market.

Step One: Avoid focusing on ROI; focus instead on total cost of ownership (TCO)

Naturally, it is the potential for huge cost savings that initially attracts the SMB customer to VoIP. But what gets them to buy is not the notion of potential cost savings in two or three years; they want to understand today how VoIP reduces total system expenditures in a fair and credible fashion.

Recent research has found a wide variation in TCO across a range of incumbent providers a 120 percent difference. In order to improve the success of selling into the SMB market, service providers should incorporate a TCO tool (such as a spreadsheet that uses current cost inputs) to demonstrate cost savings and support marketing claims. A successful TCO tool can be adaptable to any business target, is simple and intuitive to use and provides fair, conservative assumptions.

Step Two: Promote feature and function parity with traditional phone/key systems

Research also shows that SMBs still think of their phones as having four primary functions: Calling, conferencing, voice mail, and intra-office call transferring. At the very least, prospects must know that these four functions will be as simple and routine as theyve always been, and in no way will they lose quality, functionality, or business responsiveness.

SMBs are also far more likely to make the switch to VoIP if the process doesnt involve investing in new phone equipment. Providing the option of keeping current phone equipment while still incorporating VoIP cost savings and administrative features greatly increases the odds. Offer a converged solution or trunk line replacement option, otherwise, the prospect might quickly turn cold on IP telephony.

Step Three: Highlight the fact that, in some cases, VoIP is actually easier to use.

On a day-to-day basis, all phone service is equally user-friendly. You rarely even have to think about it. But when it comes to organizing company moves, provisioning for new personnel and extensions, routing or forwarding calls, and changing preferences, hosted VoIP is far more intuitive and user friendly.

With VoIP, the user interface is easy-to-use point-click for simple, Web-based management. Instead of having to rely on a communications or IT specialist, end users can easily self-configure and manage their own services in real time.

Step Four: Take time to demo the most impressive and cool IP telephony features.

VoIPs features are designed to improve accessibility and business productivity. Unfortunately, most SMB managers dont know anything about all these cool, new VoIP features. To impress these decision makers and influencers, demonstrate the useful and time-saving features in order to capture their imagination, letting them envision the possibilities for their own company.

It is important not to completely overwhelm the prospect with ALL the bells and whistles IP telephony has to offer show them a few of the eye-popping features, especially the ones that are more useful and relevant to their particular business needs.

Step Five: Focus your sales efforts (and product features) according to market segment.

Many of todays fastest-growing brands succeed not because they try to appeal to all customers, but because they focus in on a particular market segment and demonstrate specialization. Do you work best with retail businesses? Or is your specialty working with companies that have mobile or remote workforces? Do your homework, define rational market segments in which you can be successful, then undertake aggressive demand generation with attractive value propositions and incentives.

Service provider customers are increasingly aware of and interested in VoIP for their businesses. Yet, they simply do not know where to turn for answers. Fortunately for the service provider, the incumbent carriers are either ignoring or confusing them. And therein lies the opportunity. But to be successful, service providers must act now and move quickly. We estimate there is a market window of less than one and one-half years to find and acquire these SMB customers before the incumbent carriers figure out how to do it themselves. IT

Rich Grange is president and CEO of New Global telecom (news -alerts). For more information, please visit the company online at

If you are interested in purchasing reprints of this article (in either print or PDF format), please visit Reprint Management Services online at or contact a representative via e-mail at [email protected] or by phone at 800-290-5460.


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