ISPs light up multi-tenant office buildings (MTU) with fiber or wireless usually for a single tenant. The next customer in that same building is gravy. The one after that is even sweeter. Most ISPs do not have a strategic sales plan for their sales reps, especially to tackle lit buildings.

Cogent didn’t  have a plan in its early days to target other customers in an MTU after it installed fiber. Now the sales reps hammer tenants of every building Cogent has fiber in.

I wrote a book on a detailed strategy for selling into Lit Buildings. It was written in 2007. A new magazine format version of the book is available now on LULU. It also comes in an eBook format. Buy either format from Lulu.com, email me the receipt and I will send you the link to the audio book for free.

 

I like the hope and promise of this article on UCaaS:  that there will be consolidation in UCaaS and CX will lead the pack.  It is the same message coming out of Skyswitch Vectors this week in Nashville.

On Consolidation: Are there too many providers: absolutely. Will there be consolidation? A little bit but most providers are losing money for 18+ months on every subscriber, so how do you sell that? And who will buy it?

I thought that the Broadworks players would have mainly merged together but that has not even come close to happening. Momentum has picked off a couple but most are still standing.

Dialpad just hit $200M in annual revenue. They are a little ahead of Weave which is at $142M  with a loss of $40M. Dialpad is about to add 12 AI tools in 12 months. I’d say they are spending a ton of dollars on development, so they probably aren’t profitable either.

Most providers in the US offer Hosted PBX/UC from a white label solution and have less than 5000 seats. These won’t be consolidated either.

The dream that PBX will disappear is unrealistic. For many SMB that is a cost effective solution as it is sold to them. In other words, they are just looking to replace a dial-tone and phone system – and the sales reps they talk to do not dissuade them from that replacement transaction.

UCaaS providers are growing but a lot slower: under 20% YoY. They are facing price compression, profit decline and an increase in the cost of customer acquisition and retention!

Several Broadsoft shops have moved on to other solutions including reselling another vendor solution.

Metaswitch shops are now looking for a new platform, since Microsoft is finally doing away with Max UC. The Microsoft vision for every SP is a big pipe to Azure to get your vSBC, your NFV version of Metaswitch, DaaS and your end point, MS Teams.

Why have a couple of UCaaS providers cut commissions to channel partners? Why are they shifting resources to direct? Control. Hoping to control the pipeline. Hoping to control the cost of sales. Although not many know what the real cost of sale is.

As we move from UC to UC+CC, add in AI and other bullshit, it will be specialists selling the solution. Those specialists will either be partners or direct reps, but wait until RNG trains up a sales team and half of them leave. They will stop training them – and the cycle of dysfunction will continue.

Selling PBX replacement is something most salespeople and partners can do. Solution Selling CX is harder and many salespeople and partners lack the necessary sales talent and soft skills to do it.

Also, large deployments have years of integration and development work ingrained into the functionality of the platform. What person is going to godfather the project to migrate that duct taped system to the cloud? Not many people. Who wants the headache?

On another note: Read Jeb Blount’s Sales EQ book and you will see the problem that all sales departments are facing. A changing Buyer persona; a disrupted sales process; a different Buyer Journey; transparent pricing and info; and other factors that cripple selling.

As the CF article stated, several UCaaS providers are shedding people. That will have an effect on sales as well.

Sales are taking longer, especially bigger sales, according to partners and vendors on financial calls.

Everyone is betting on AI, but I don’t know what the bet is. Can AI really help my salespeople close deals? Unlikely. You can’t leverage AI for soft skills; maybe product knowledge but not EQ. AI can’t build trust. AI can help will time management possibly – and that can help sales people, but it isn’t the end all be all.

Add all the AI you want. You still have to feed it info (like product knowledge, buyer persona, and more — info that not every company has.)

Can AI dig through CRM to profile best and worst customers? I have no idea but if it could that would be helpful.

I only hear about AI being a chatbot or a writer. We are in some interesting times.

 

 

 

“Dialpad is reducing their commission rates on all new services by 2%. 

Effective April 13, 2023, Dialpad will be reducing their commission payout by two percent on all new customers sold.  Existing customers with add-on/upgrade or renewal services will remain at the current commission rate. Any current opportunities in the funnel that do not close prior to April 13^th will be compensated at the new reduced rate.”

Apparently, Dialpad heard RingCentral cut commissions 1% and said, “Hold my beer!”

UCaaS sales have declined since the pandemic. On-premise PBX sales have held steady. Not everyone wants to go cloud for everything.

There has been a SPIFF war raging since 2020. Now it is apparent that at least two UCaaS providers don’t value their channel partners. UCaaS sales were already slowing down, this won’t help these two. There are over two thousand cloud communications providers in the US. Partners will just switch to another one.

In the thick of this, NEC decides to pay commissions upfront if the partner elects. What does that say about Dialpad and RingCentral? In my 20+ years in the channel, carriers have changed compensation plans – and that sounds like what Dialpad did – and a couple stopped paying commissions when they killed their channel. Every agent that has been at this for 15+ years has a story of a vendor who took food out of their mouth. This to me is about more than just the commission cut. It speaks to where the channel is now and where it is going.

 

In my opinion, this is the first domino in the era of the Big TSB. Partners sign on with a TSB for one primary purpose: collect commissions. When the TSB fails at that, what does a partner really need a TSB for? All the fancy tools and words don’t amount to much when my revenue declines.

One thing with the TSB is that partners never get to see the vendor contract. We have no idea what it says or how solid it is. We have to take that in faith. Well, now we know.

This 1-2% commission hit is really a 4-6% revenue hit for both the partner and the TSB. (1-2% off of 20-25%).  In this era of PE-backed TSBs, they just lost top-line revenue, which makes it even harder to pay back the PE investors.  MDF’s are being distributed differently in 2023 and now commissions are being cut. This is a big red flag.

If the TSBs don’t push back on this, what is there to stop every vendor from cutting commissions?

And because the partner doesn’t have a direct agreement, the partner would have to sue the TSB not the vendor for any dispute.

Bigger was supposed to mean safer due to the larger bat to swing. Instead Bigger created little choice for the partners. It also created a few brokers who can be swayed by the vendors, since they owe so much and can’t rock the boat.

A few vendors have said that they like having just a few TSBs.

Well, in my own experience, the TSBs can’t get out of their own way to do their jobs.

They automate just like AT&T – and look how that works for customers?! Who is the customer of the TSB? The Partner!

They count on a portal to handle as much as possible. In one case, they change the portal constantly; links are dead; and the very idea of UX (user design) is as foreign to them as letting me see the vendor contract.

At a time when the channel is looking for new blood, cutting commissions randomly (with no pushback) won’t be a recruiting tool.

UCaaS was already a money loser – for the vendor and for the partner. Unless the partner charged for assessment, professional services, install, etc., the 20% commission on a $20 seat just isn’t worth the headache. Far easier to sell network, regular voice and other things.

With UCaaS providers mixing CCaaS with UC and CPaaS, it becomes a Solution Sale. Now the sales cycle lengthens. Now the seat price may breach $50 but the knowledge and sales skills have increased as well. I think that CX will end up being sold by specialist agencies for the most part.

My buddy, Jeff Ponts of Datatel, makes a good point that much of the UCaaS being sold is sold via a white label platform. Skyswitch is a perfect example. 750 MSPs who bill their own branded VoIP service to 700K seats. There are new white label providers popping up every week. Intermedia is embracing this approach via their CORE program. NEC also has a similar program for partners. This serves the SMB space very well – and that isn’t a space that the UC Players want to be in anyways. They have dreams of being Avaya.

There are partners who say these are great times to be a Partner. I think those partners don’t worry about the many changes happening to the Channel – the PE money, the M&A, the commission cuts. They plug along and help their customers and don’t pay attention to the system that provides them with the revenue. That’s okay until it isn’t.

 

On a call yesterday, a channel exec said that there are just Partners and how they consume services, not MSP or VAR or Agent. This is precisely the type of thinking that has caused so many problems for vendors.

There needs to be alignment between the partner and the vendor. Do they sell to the same target customer? Oh, I forgot, the target is EVERYONE. (Which really means the vendor is just screaming at the wind and is talking to no one in particular.)

PBX vendors know that the partner type matters. The inter-connect has not embraced cloud. Many are still riding out hardware solutions into the sunset. So, yes, business models matter.

The idea that sales people can sell anything to anyone is a myth. Sales people are a type. Farmer, hunter, whale hunter, transactional. All of this matters. The Farmer will not do well in an SDR mode. The Hunter does not farm since he is motivated to hunt and close business.

Some types cannot and will not do follow up, so it better be a transaction.

Some types can’t sell to an org; they can only sell to a business owner. They will be most comfortable selling into SMB under 75 employees. Is that your target? Is that where you want to be?

More than 80% of MSPs have less than $2M in revenue and 10 employees. How many of those employees are in a sales role? Probably 1. How will they add your product to their portfolio? They mainly want to white label services. Does that fit your GTM strategy?

VARs have a keen eye on their status with their vendor – Cisco, Microsoft, HP, Dell, Juniper. Why? Discounts and support are attached to their partner level. They are going to put selling their main vendor first – all else will be sold only if the customer asks for it specifically. Is that how you want to go to market? Is that where you want to spend your effort and MDF?

ISVs are partners too, but they do systems integration work and other software development or migration work. They won’t be slinging circuits or UCaaS.

The Partner model and type do matter.

 

You wouldn’t (well, some of you would) hire a farmer for a hunter role or a whale hunter to sell POTS replacement. It won’t work out. Why? Motivation. Sales is the hardest job in any org. Internal motivation is key to success. It is the key to keep grinding it out. If the sales person is transactional, they are motivated by getting ink daily or weekly. Without that happening, they lose motivation, confidence, burn out.

A whale hunter likes the long game. Likes the pressure of a 15 minute meeting to pitching Boeing planes to JetBlue once every 3 years. Not everyone will do well in that role.

Partner types matter because they sell to different sectors of the marketplace. they go to market differently. They sell (or maybe they do not even sell) differently. They may or may not have the ability to align your product with their portfolio.

So in fact partner business models and types do in fact matter to success.

Despite the numbers of the 9000 to 21,000 partners that are thrown around, the actual number of active selling partners is a lot less. And the real number of selling partners who will actively sell your product is even less than that. Align accordingly. Have a good day. BTW, I wrote a whole book on this.

We use awful acronyms to describe products. IoT, UCaaS, CCaaS, SASE, SD-WAN. A few of those are Gartner’s fault. But we don’t effectively brand products. That ends up being the sales problem we have.

Our industry pushes product, mainly as replacement. That is what we are famous for: long distance minutes, integrated T1, broadband, SD-WAN, etc.  It isn’t about benefits or outcomes; it is about being similar (“good enough”) and cheaper. So when it isn’t cheaper, defining Value is really difficult. And the price has to drop to close the transaction. It isn’t a sale. It is a transaction.

I was wondering why the focus is on POTS replacement. Yes, there are 30M copper lines left in America, but there wasn’t an immediate need to swap them out. That was manufactured by a few providers who decided lying about it was the way to go. Two of these companies blocked me on twitter for replying to their tweets, calling them dishonest.

There is never talk about county or city codes for elevator or alarm pairs. No talk about compliance or SLA or Uptime. Or Liability! There isn’t much talk about anything but switching those POTS lines that are price deregulated with a non-Five-Nine product for a nice SPIFF!

POTS lines are powered from the Central Office, not an electric outlet. POTS lines don’t need line of sight to work. Sure 1FBs are at $100-120 per line, so the industry sees the Arbitrage – and jumps in. That has been the way of the alternate providers for 30 years. Arbitrage and Replacement products for less money – a cost savings! BOOM! A new product is pushed.

They didn’t give this one a fancy acronym (yet).

But it fits the T1 Slinger mentality that people see the telecom Agent as.

This is also the Problem.

True UCaaS, CCaaS, cyber-security, and so many other solutions that vendors want to sell via the channel require actual selling. It requires Discovery Questions, listening, pain points, business outcomes and more. This isn’t a transaction. That’s why sales have stalled.

Selling Value during a macro economic environment isn’t order taking or transactional.

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