Smith On VoIP

One of the benefits being a relatively seasoned industry veteran working at one of the largest VoIP VAR’s in the world is that I have had the opportunity to use, play around with or demo just about every IP based phone system there is. In the last four years, my list of phone systems includes, 3CX, AllWorx, Asterisk, Asterisk Business Edition, AsteriskNow, CallButler, Cisco Call Manager, Cisco UC 500, Fonality PBXtra, Intuitive Voice, PbxNSIP, Shoretel, Sphere, SwitchVox (both Editions), trixbox CE, trixbox pro, VoiceBox, Vonexus, Zultys and a dozen other open source based solutions whose names escape me.

The interesting thing is though, that besides their granular differences in feature sets they are all essentially the same, yet some of these IP based phone system vendors are enjoying incredible success, while others are struggling (especially the systems whose names escape me).

Why Some Are Prospering, While Others Struggle

If it is true that in general a “phone system is a phone system” (an idea that I strongly subscribe to) then the reason that one IP based phone system vendor has more to do with the sales and marketing of their offering then the actual technology. It is with this idea that I will start with my insights.

1. Know Your Customer - Most customers do not care about the advanced features and functionality that a IP based phone system offers. This is because most customers (especially small medium businesses) are not technophiles. Unfortunately, most IP PBX vendors were started by engineers and technophiles who are so enthralled with all of the cool things that their solution can do (because that is what they would want), that they forget that customers really only want (and need) the basic features and functionality that any phone system offers. Most small to medium sized businesses that I have talked to (or sold a phone system to) really only care about cost savings, ease of administration, scalability and of course overall quality (include service and support). It is the intangibles that count the most. Stop talking features and functionality - start talking to your prospective customers about what matters most to them. it is not a cure, but it is a start.
2. What is Your (Channel) Strategy - Direct sales are great. Your margins are higher and you have more control over the customer experience. But direct sales do not scale very well. It is the whole reason there is the value added reseller channel. The reseller channel, though, seems to be something that many IP PBX vendors do not understand very well. I believe this stems from some of the issues that were talked about above - vendors are concentrating on all of the great features and functionality that their solution offers, rather then talking about how ease their solution is to sell, the educational resources/training they offer and the lead generation opportunities. Resellers will naturally gravitate to whatever solution is the easiest to sell and makes them the most money - not the best technology. Even if you do have a reseller channel, many vendors are currently trying to do direct sales and support channel sales. For some it works (for a while), but there is a saying that, “one should not sh*t where they eat” advice that phone system vendors should take to heart. If you are going to have a channel, go all channel. The last thing a reseller wants to deal with is a vendor that is competing with them.
3. Is It Easy and Profitable (for the Reseller)? - I thought I would highlight again that the IP PBX that is the easiest to sell (support as well) and most profitable for the reseller is the one that is going to be the most attractive to a reseller. You would not believe how hard some vendors really make it on the reseller and most resellers do not ask for much. Complicated agreements, pricing tiers and support options are not what resellers want to be spending their time on - they want to be selling. Resellers also want to make money. It is tough to grow or even sustain a business on margins of less than 20%, so make sure you are offering resellers at least 20% margins on the IP PBX of the bat and add in performance incentives that sweeten the deal if the reseller is successful. Don’t assume that the reseller is going to make their money on installation and ongoing service and support. If your solution is low cost, customers are not going to pay very much for it to be installed and if it is easy to use (which it should be), there are not that many opportunities to make money off on-going support.
4. Partner - Your IP PBX might be the greatest in the world, but it does not work by itself. You still need phones, switches, ATA’s and voice service. Do yourself a favor and partner with equipment vendors and service providers. Perform interoperability testing and even integrate their solutions into your offering (think plug-n-play). In addition, strike deals with your partners so that you can extend them to your reseller channel so that they have the ability to sell an expanded catalog of offerings. There is a ton of value for everyone involved and a real differentiator.

Of course there are more intricacies involved with making your IP PBX solution the most attractive on the market for resellers and consumers, but this is only one post and I am only one man. The fact of the matter remains is that many vendors do not do these basics very well, so getting more in-depth is really of no use, unless of course your are already doing all of this and if that is the case, why the heck are you reading this post?

If you are a IP PBX phone system vendor or a VAR and you think I am off base or have something to add to this, please feel free to comment below. Tomorrow I will take a look at the value added reseller and what they can do to help sell more phone systems.

Like This Post? Subscribe Via RSS Feed and Never Miss Another Post!