SPIFFs are back bigger than ever – 7x-10x for UCaaS sales. I predicted that things would slow down as at least 3 providers played with reducing commissions. There is more at play here than just that, but it was a factor.

• Return to Work.
• AI product enhancements without any concrete examples.
• Buyers maybe waiting for the next best thing to come out.
• Price compression.
• SPIFF decline.
• Macro Economics
• Longer sales cycles.
• UC+CC is harder to sell than PBX replacement. And AI just makes it all harder.

2Q was a disaster for 8×8. Revenue was down 2% year over year. RingCentral with all of its bluster, announcements, partnerships and international country count only had a 12% YoY ARR increase. Zoom had a bad quarter with just 3% growth (and it is laying off 15% of its workforce).

Net2Phone and Weave had good quarters, 22% and 17% respectively.

Partner sales make up 30-55% of sales for cloud comm providers. When you play with sales compensation for partners, they sell other stuff. There are 2000+ providers selling HPBX. If Zoom is hard to work with in the channel, and the customer must have Zoom – sell it from CallTower. Resellers are a partner’s friend.

The big news today was that Madison Dearborn is shopping Intermedia. They want 20X the EBIDTA of $50M ($1B). I don’t think they will get anything more than $650M due to the revenues containing a healthy component of email & hosting.

RingCentral launched a simpler CCaaS product, RingCX. Vlad is replaced as CEO by an HPE veteran as Vlad becomes Board Chair or something.

Cloud Comm Alliance started an audio get together today, see HERE.

Quite a few providers are beating the Microsoft Routing for Teams drum. Telecom is always circular. We are back to selling dial-tone and minutes.

Verizon acquired Bluejeans video in 2020 for between $400-450M. Bluejeans had raised $175M to get to the place that Zoom went – but never got close. After just 3 years, Verizon is shuttering Bluejeans. Verizon has annual revenue of $136 Billion. Any product that can’t hit $100 Million quickly loses head count and interest. $100M is a very successful business but not within the confines of a telecom giant that spends $15-18B in CAPEX mostly on upgrading and running its networks – 4G, 5G, FiOS, MPLS, Ethernet, etc.  VZ also sells Webex. Cisco is a big partner of theirs. It also sells MS Teams especially on mobile. It has the video segment covered. This is part of a long list of acquisitions by Verizon that have failed: Yahoo and AOL come to mind.

 

 

Sales comes down to 2 things: Fundamentals and Time Management.

We have 2 new webinars that every sales rep should take, but especially if you are selling cloud communications (HPBX, Webex, Skyswitch, NEC Blue, Intermedia Unite, etc.). Each webinar is 45-minute webinars with one on Time Management and the other on Discovery.

Sales Reps serious about their success will want to sign up for the 2 webinars plus 6 weeks of sales coaching. Each week for 1 hour there will be one topic of sales that will be worked on with the group. Learn from others as well as get coached up from RAD-INFO!

We have years of experience selling telecom at RAD-INFO. We have trained over one thousand sales reps. Improving 1% in any step of the sales process will net any sales rep 10% in sales growth. If you Prospect smarter, Target better, ask better questions, close faster, etc. Just one sales nugget applied will have lasting effects!

Join us for these two sales webinars and then for 6 weeks of coaching.

Time Management on Wed., Sept 6th at Noon Eastern and  Sales Discovery on Wed., Sept. 13th at Noon Eastern. Then for the next 6 weeks at Noon on Wed. will be sales coaching!

The 2 webinars and 6 weeks of coaching (a $1549 value!) for just $349!

 

Just the 2 webinars are $49:

 

With all of the money in residential broadband, most of the M&A in the ISP market will be to scale FTTH. There are many Fiber ISPs and Wireless ISPs (FISP & WISP) that have been invested in by private equity. These companies will want out in 2024-2026.

Frontier announced that they will be part of any ISP M&A. Apollo owns half of CenturyLink/Lumen that they acquired. Many other PE firms – GCDR, Oak Street and more – own FISPs. These will all merge into larger entities, especially as the BEAD grants come due. The ability to put fiber in the ground under a timetable and then sell enough of it will be hard for all of these companies. It will cause at least a few to cash out.

Also, over-building. More than a few ISPs including Charter, AT&T and FTR have mentioned on the record that they will  be building fiber outside their region. AT&T is doing it in a JV with a PE firm. This will be interesting to watch as well.

With all the focus on fiber, service providers with other assets will get less value.

Service Providers that mostly resell will likely not get acquired. The low margins in resale coupled with the lack of assets make it a good business to be in if you run it right, but not a great business to acquire. NITEL might have found a great buyer but that was the exception not the rule.

ISPs with their own voice switches (like BSFT) won’t see much value in that asset. It likely will be seen as a liability in a pure play ISP roll up. No one has found a way to make rolling up BSFT seats into a profitable business. A few have tried.

Data centers are hot but only as stand alone assets that can be put into a REIT.

MSPs are another hot sector – but again as stand alone assets. Buyers don’t want non-pure play. They want scale. They want to add contracted subscribers to their current platform (ConnectWise, Kaseya, et al). The largest expense is labor in an MSP. It takes scale to leverage that labor for profit.

Most of the M&A that will occur in the next 3 years will be about hard assets. The MRC M&A has been ongoing for five years and is almost played out. We still see MSP M&A weekly, but that will slow up as well now that money is expensive and none of the roll ups have taken the industry by storm.

Even the cyber-security market has seen incredible layoffs in the last two years, despite an increase in cyber attacks and ransomware. Businesses are buying cyber insurance in lieu of a heavy investment in cyber-security.

What is Sales Quota?

Quota is  the sum of Average sales size multiplied by average sales per month.

Sales cycles are lengthening; Average sales size is shrinking.

Quotas are meant to challenge sales reps and motivate them to sell more. A common rule of thumb is that 80% of your sales team should be able to meet their quota most of the time. Adjust quota accordingly.

If the quota is $4K, and the average sales size is $800 it takes  5 sales per month to meet quota. What is the sales cycle length? Can a rep close more than one deal a week?

How many sales reps hit Quota?

Only 60-75% of reps will hit quota.

“Salesforce estimates that 57% of reps are expected to miss their quota this year.”

“Only 28% of sales professionals expect to meet or exceed quota in the upcoming year.” SF 2023 State of Sales Report.

Look at the Quota attainment ratings HERE.

What is Sales Ramp Up Time?

Sales Ramp Up Time = Average Length of Sales Cycle + 90 Days

HubSpot reports that it takes new reps an average of 3.2 months to fully ramp.

Hiring and keeping sales professionals has never been more difficult. In fact, 52% of sales and enablement leaders say that finding strong sales talent is one of their top challenges. And turnover is estimated to reach 25% across sales organizations in the next year. – Selling Power magazine.

A strong onboarding program is a key retention strategy. Not if it’s rushed, though. Here’s how long it takes to onboard a new rep, on average:

Ready to interact with buyers: three months

Competent to perform: nine months

Top performer: 15 months

While this might seem like a considerable investment of time and resources, the alternative is far worse. The cost of turnover typically ranges between 100% and 500% of the seller’s compensation. In one example analysis of seller turnover during the onboarding program, in which four sellers left, the turnover cost was over $600,000.

 

60%-87% of B2B Buyers prefer self-service, according to this article.  That is misleading because what it really means is that the Buyer Journey is self-serve, getting info, recommendations, online reviews. They interact with a sales rep toward the end of teh journey.

This indicates that Marketing – your website, blog, social media, reviews – are now more important than ever. For B2B service providers that neglect Marketing, it makes it harder for sales reps. They have nothing to lean on: no slicks, articles, testimonials, reviews, use cases, etc.

In most cases, the sales rep is the sales development person, the inside sales person, the outside salesperson, and account rep. This is a lot of skills to expect in one human.

Looking for help TRAINING  your sales team? For on-boarding help? For a performance review program?  Call RAD-INFO INC @ (813) 963-5884

You have seen the lists of UCaaS, CCaaS, SD-WAN, CPaaS, and so many other lists. You have seen analyst reports for the market leaders and market TAM. Most of it is wild opinion and bullshit.

Next time you see a press release for a market size and leader report not how the list often includes companies that no longer exist like Jive or Shoretel.

I saw one list for UCaaS that mentioned MITEL. Mitel exited the UCaaS game. They may sell unified communications but not in the cloud. They can’t now. All they can do is act as a sales agent for RingCentral.

CF had a list of UCaaS providers also. Nothing like click click clicking through 20 slides to see the list.

I need to ask Jon Arnold how AWS is a major UCaaS player. Is it because of Chime? I get AWS is a CPaaS and CCaaS provider, but I have never been invited to a Chime call. I don’t even think Nextiva bundles Chime any more. So how?

Another analyst, Raul Castanon from 451, put Alianza on the UCaaS list. Alianza is a white label softswitch, chasing to replace Broadsoft. So if they get on this list, I can see how BCM One/Skyswitch  and 2600Hz got on the list. Why was Reinvent Telecom not listed? How did Jon forget about Ribbon?

This list should have been better defined – are we talking platforms, white-label, retail, UCaaS or UC&C or something else? Truthfully, if the trade press and the analysts can’t define UCaaS for publication, how the hell would a buyer ever know what they are looking for?

How does Slack make a UCaaS list?

I know how lists and awards are done, but put some structure around it.

Do you realize Omdia/IHS/who-ever-else-makes-a-list has had the same 10 players since 2015? and 2017?  Zoom, Cisco Webex and Microsoft Teams replaced some names on the original 2015-2018 lists, because those companies had M&A transactions.

• West became Intrado, which then sold off UCaaS parts to Ooma and Fusion, so they aren’t in the game anymore.
• Star2Star became Sangoma.
• Windstream tanked itself into bankruptcy and didn’t really recover. Their Broadview platform couldn’t keep up, so reps just sold Mitel units.
• thinkingphones became fuze now 8×8.
• Avaya resells RNG for UCaaS as ASO.
• Shoretel is Mitel – and is a sales agent for RNG for UCaaS.
• Jive is GoTo.

There are over 2000 service providers offering UCaaS in North America. Here are some UCaaS providers that don’t get much press:

• net2phone – quietly growing UC+CC with no debt. Owned by IDT, an international LD carrier.
• broadvoice – also quietly growing a UC+CC business
• Weave – $130M+ publicly traded cloud comms provider for clinics, vets, dentists and healthcare.
• NEC – as one of the largest PBX vendors, their BRIDGE product that adds mobility, business continuity and other cloud functions to an on-premise PBX is a huge bonus for customers still glued to boxes. Also, NEC allows for upfront commissions and besides an Agency plan, offers something like white -label for maximum control and margin for partners.
• Panterra always had good features early – like a dropbox-esque function, end-to-end encryption, and browser-based, but no marketing to speak of.
• SimpleVoIP in Chicago which specializes in retail and restaurant.
• Evolve IP is over $250M in revenue; is PE owned; and hasn’t been the same since the founders left. Big Microsoft shop that also has a Broadsoft switch.
• BluIP which just chases hotels. This is the pivot that most providers need: to a vertical or three. Integration is the key to significance.
• Europe based Wildix has 1.2M users according to the new manager of North America.
• CallTower is a weird one offering Zoom, Microsoft and Webex.

There was a HippoUC paying 40 points in commission. At ITEXPO, there are always a few new UCaaS providers trying to make some headway in a crowded, uninteresting market.

Mobile UC will be the next phase of this game. Sure the noise is around UC+CC for pure play UCaaS providers, but they have to figure out how to sell UC+CC, since that is a consultative sell, not a transaction like PBX replacement, I don’t think it will work well for them. It will be about packaging and story telling. Nothing they are good at.

AT&T has a long standing deal with RingCentral that they brand as Office@Hand. No idea if that is native dialer or not, but AT&T just did a deal with Webex.  Cisco Webex Go is native dialer on the cell phone – and connected to AT&T Mobility via IMS, which is something Sprint did with Broadsoft providers 10 years ago. Sprint cell phones were an extension off the Broadsoft. This is a smart move by AT&T Mobility but late to that game as well. Sprint did it in 2014  and in 2016 VZW launched OneTalk.

OneTalk, a Broadsoft based, mobile first, native dialer UCaaS that VZW sells for $15 per seat. VZ also did a deal with Microsoft to make MS Teams the mobile softphone. This is Microsoft’s end game: every telco will have a big pipe to Azure Telecom in order to connect to the Metaswitch in NFV, the vSBC and connect to Teams.

Nothing from T-Mobile despite having a big investment in Dialpad.

Google has an investment in Dialpad as well. Google hasn’t really crushed it with its many components. They have Workspace which is their UCaaS product. Google also has an MVNO called Fi and its ISP, Google Fiber. It has yet to put all those pieces together. They even put too many hurdles around bundling them. I don’t really know what the adoption numbers look like for Google Workspace. They leverage UJET for CCaaS in Google Cloud.

Dialpad is at $200M in ARR. Google would be smart to buy it and scrap their myriad attempts at putting forth a competing product offering.

There are thousands of options for Cloud Voice.

Last Thought:

With the top telcos reselling the same thing – RNG – and most of the providers have the same HPBX features, what is the difference? I have no idea. SPIFFs, commissions, and how easy to work with before the sale. After the sale, you find out how bad service delivery and continuing customer service is.