Peter Radizeski is Founder and President of RAD-INFO INC. He is an accomplished blogalyst, speaker, author and consultant. He has helped many service providers with sales training, marketing, channel development and business strategy. He is a trusted source of knowledge about the telecom sector. His honest and direct approach make him a refreshing speaker.

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Why I am Tired of RingCentral

Every conversation about Hosted PBX (HPBX) includes the mention of RingCentral. This company has done a fantastic job of marketing itself. So well in fact that it has been able to IPO and then go back for a second offering. If it is doing so well, why did it need a second offering?

Yes, RingCentral is top of mind – they spend a fortune on marketing to be top of mind. They are in a space that spends NO MONEY on advertising. So they look even bigger buy spending millions.

In truth, a majority of their 300K customers are 1 user (as determined by the ARPU – average revenue per customer). Much of their revenue and customers come from a virtual phone service (auto attendant in the cloud). It was strongly marketed via affiliates, which in the pre-Panda days meant a lot of Google juice.

RC has a great website that they have sunk at least a million into and continue to update and keep it fresh. The portal is what they make every customer log into to do just about everything. (You don’t really need a phone from them.)

All said and done, every HPBX provider is envious of the brand recognition. Easy to fix – just spend some money for 10 years. Learn how to play the pay-per-click (PPC) system like Hendrix did his guitar or Bonham his drums.

Most of the HPBX players look at them with envy, but need to recognize what part of RC that they want to emulate, since the customer size and ARPU are NOT what most are after.

HPBX players should be looking at these players (too):

  • Panterra due to the eye opening move with Smartbox.
  • M5 before ShoreTel bought them (when they had $2000 ARPU.)
  • Evolve IP’s Land & Expand cloud strategy.
  • InContact’s go to market strategy with Unify and with the channel.
  • 8×8’s transformation from tech company to sales & marketing machine 6 years ago.

Sure learn what you can from RC, but there are things you can learn from other service providers in the space (even the ones who have not executed well). And if you are chasing businesses with more than 50 seats, RC shouldn’t be the model (right now anyway; maybe after they buy a BSFT player to get some enterprise traction.)

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