“We’re winging it. All of us. The world goes faster and faster, and so people are finding themselves unable to read the bill before they vote on it, … or keep up with the best in the field before they do their work.” – Seth Godin

At a UCaaS Workshop in Louisville put on by Microcorp this week partners and UCaaS providers gathered to talk about selling UCaaS.

One big take away is that providers are winging it. They have no idea what their competition is doing — they have zero competitive analysis. This is reflected heavily 2 ways: (1) they keeping adding functions and features willy nilly; and (2) they cannot in any meaningful way explain their differentiation. They deflect. They say nonsense.

I cannot for the life of me understand how they can NOT explain Why them over the others. It is the question I get most often.

The other glaring point is how much work there is to sell UCaaS. Deep discovery, intense pre-sales work as well as post-install tweaks are all just a part of the process with UCaaS. As Microcorp’s Solutions Architect asked, where did the Inter-connects go? Some of that work was done by the PBX Inter-connect as part of the install fee. M/A/Cs were either fee based or part of a maintenance contract.  Today, that falls on the partner.

“Someone is going to be in there selling UC services. If it’s not you, then it’s another provider,” Jonathan McCormick, COO of Intermedia.

I hear this often, but if that was actually true, then market penetration of UCaaS wouldn’t be less than 15% after 2000 providers have spent millions and 15 years pushing this rock up a hill.

On a 100 seat deal, after all of the work, at an average of $24 per seat , the commission is around $480 per month. In that time, I could have sold and installed many Internet pipes and made more money. In that time, I could have sold a Managed IT contract that is far stickier and easier.

These are the problems the industry faces.  Microsoft and Cisco – even Avaya – are going to own many big accounts for years to come; and as all the providers move up market to make their revenue needle move, it will get harder and harder to sell and maintain the client.

Without a better deployment and customer experience, churn will stay the same. Partners will get frustrated. But how do you throw bodies at the CX when the price per seat is going down?  Without Branding and Differentiation, the seat price is how it is decided.

Some of the partners in the room were MSPs and some were agents. The ones doing the most work for the sale were charging for the pre-sales and post-sales work. That is the only way this makes financial sense. (That and going back to upsell!)

The first note at the workshop was that if you are just replacing what the customer has, then they will be disappointed because they will be paying more for the same thing.

I have written before how UCaaS is a solution without a problem. It still holds true.

The providers keep bolting on functions like video conferencing, collaboration, contact center, analytics, chatbot, CRM, contact management, et al, on their way to becoming a Platform as a Service for a business. This would be a decent idea if the SPs were targeting companies with 150 employees and less, but they don’t.

Instead of spending $100M on a new Contact Center function, how about making the implementation better, smoother? Yeah, I didn’t think so.

I would if they think businesses – even those paying $60 per POTS line – is going to buy UC for anything other POTS replacement and flat rate dial-tone?

Partners pointed out that customers already have MS Teams, Slack, Salesforce, Dropbox and Zoom, so why would they want a whole platform from one provider? A couple of providers said that some companies are looking for one throat to choke. My thought runs to How do you change User behavior? They are used to Dropbox, Slack, Zoom. How do you make them switch?  User adoption is another problem that the industry faces.

It is hard to believe that it has been 15 years since I was first involved with Hosted PBX. The industry has not come a long way since then.

Two more points:

Stop saying We Suck Less. It isn’t funny anymore. Because it means that you don’t want to make improvements to get better. Heck, you don’t even know what the Suck Factor is since you know next to nothing about your competition!

As partners we don’t want a vendor who sucks less. Do you see MS saying we suck? Even though the Blue Screen of Death has been a joke for years!

Last point: There is already an AT&T. The ILECs have all been the default for voice, data, video, etc. for a long time covering 1-100,000. They aren’t that good at it. Stop trying to be AT&T!!  Pick a segment of the market and be the Slack for that segment! Be Lyft! Because it isn’t about going wide and shallow.  Besides AT&T, Cisco, Verizon, Comcast, MS have one thing that none of you have: a Brand. A Brand worth billions of dollars supported by billions in marketing — and anyone can say “You can’t get fireed buying from them!” They can’t say that about your company!

 

 

Who are you aiming for?

The Enterprise? The US has less than 19K businesses with more than 500 employees, which is the official definition of Enterprise.

Some providers use the term Enterprise to mean more than 250 employees. That’s fine but that market is small too – only 37K firms.

The under-served market is 10-100 employees, which, according to CompTIA, is 20% of the business market in the USA. That is about 1.2 million businesses.

Enterprise consists of employees with certifications by Cisco and Microsoft. By default, they will purchase from those 2 vendors. Every other vendor has to work extra hard to get a slice of that.

Enterprise tend to lean on Gartner MQ or IHS or some other analyst report. Avaya, Cisco, Microsoft, Mitel and a few others are on those lists in the UC space. They are familiar brands.  West, Fuze, and a couple of others are not familiar brands, but they have a portfolio of clients that they can reference, whose logos you would recognize.

Enterprise has requirements like software integration, analytics, Contact Center, SD-WAN/MPLS and more. (See investor filings from the public UCaaS providers.) Professional services will be required for Enterprise. Someone will have to do some not minor software integration. A dumb API into your switch will not be enough.

The saying goes that it takes just as long to land a big account as a small one. Not so. Enterprise has budget cycles. Long sales cycles. It is called Whale Hunting for a reason.

And here’s the thing: while you sail the ocean looking to land Moby Dick, there’s no revenue coming in. Just sales expenses.

I’m not saying not to chase Enterprise but if that is your only target, ask yourself: How do I stack against the companies on the Gartner MQ report? Who are my reference customers? What is my Value Proposition?

Why would Enterprise buy your service?

 

The above graphic is from CB Insights. They identified a trend that consulting is dying because Strategy is no longer deemed important. It is all about tactics and short term results. Personally, I have seen that.

Tactics need a strategy. Tactics are the arrows in the quiver. Strategy is the technique, the goal, and more.  A company needs an over-arching Business Strategy for a number of reasons: Culture, sales and marketing.

Culture: Some of the best cultures produce the best services – Netflix, Rackspace, Amazon. Culture is everything. How you hire. Who you hire. Who you reward. What you sell. How you sell. How you deploy. How you service customers.

Sales: Selling doesn’t happen in a vacuum. Salespeople need the USP (Unique sales proposition). They need a service they believe in. They need a company that will stand behind that service. They want more than that (leads, comp, testimonials, more), but at a minimum they need these things.

Marketing: The Brand. The Message. The avenues to get the message out. There’s even more than that – like content, collateral, Buying Persona, Targets – but at a minimum you have to have a message and an avenue to get that message out.  The Tactics are getting the message out. The strategy is about what to say and to whom (at a minimum).

Some vendors enter the channel thinking that the Channel will create demand for them. That isn’t necessarily so.

In the two biggest channels – Microsoft and Cisco – the demand is created by the vendors. Juniper and ADTRAN get to ride off the tails of that demand if the partner is unhappy with Cisco or it is a price constraint.

Another element is Cisco and MS utilize VADs like Ingram and Tech Data to handle distribution because they don’t want to be bothered with logistics — or to deal with the small business market.

In telecom, Verizon, AT&T and Comcast create demand. The channel just fills it. And luckily working with either ISP is so painful that the customer wants help from the channel.

The big 3 VoIP folks – 8×8, Ring, Vonage – spend money on marketing and branding.

For CLECs and other UC providers, these vendors don’t create demand. The vendors do not have a recognizable name. They hope to be in the mix and win on price or some feature if the partner will just bring them to the show.

These vendors are borrowing on the reputation of the Partner. The partner is recommending the vendor. This is why it is so hard to get the attention of new partners and customers. They are taking a Risk!

It is that piece of the puzzle that most executives fail to understand.

Channel Partners do not create demand, they fulfill demand.

“Build it and they will come.” It is from the movie, Field of Dreams, but it is the stuff that tech CEOs believe. Tech firms have a crazy notion that some new feature or functionality will catapult them to big sales. When has that ever happened?

Did the best Operating System win? No. Marketing won.

Did the first car share service win? No. Uber’s marketing won.

Let me ask you: How would they even know you built it, this feature everyone will love?

On Github there are 96 million software projects!!! That is for perspective. Another view would be to go to the Android/Google Play app store and search for any app. Most – travel, dating, etc. – have many, many apps. Too many to know or recognize. UCaaS/UCC is the same way. Too many providers to choose from. It looks like the drug aisle.

People don’t even know what the acronyms mean (UCC, UC, UCaaS, CCaaS) and you think they’re going to be able to figure out some bell or whistle that you built into a product that has a thousand similar products.

The HPBX/UC industry is at 15 years and less than 15% penetration. It is a solution without a bleeding problem. The good news is that the major ILECs are getting rid of copper and forcing businesses to pick an IP solution. Just which one do they pick?

Your Brand and your marketing will determine that.