Differentiating the Same Products?

Talking to hosted telephony suppliers it would seem that certain sectors of the market are way overcrowded and that prices are tumbling under competitive pressures. How then can resellers differentiate their offerings?

Busy and Competitive. Those are the two words being used in the channel today to describe the state of play in the hosted telephony market.

For partners looking to differentiate their user propositions it’s not always obvious how suppliers are separating themselves from each other so what can resellers do themselves to make that difference to their hosted offering?

What are the major concerns/ challenges for partners selling hosted?

Iain Sinnott, Sales Director at VanillaIP, notes that we are talking here about cloud services, and cloud voice throws up some confusion in the market place.

“What’s hosted, what’s SIP, what’s the proposition and how do channels maximise margin and avoid a race to bottom on price?

Today you have partners and competitors coming to the market from different starting points and with different models (CAPEX/OPEX) – there is a lot here that needs to be meshed together to get a precise proposition – and this represents a challenge.

Then you have the issue of having a broad enough portfolio. Resellers need to have not just the core product but also the ‘micro revenue streams’ in much the same manner that app services work on mobiles. You need the additional and overlay services that all go to making up a comprehensive portfolio and a more complete customer proposition.”

Sinnott warms that often suppliers and resellers fall in to the trap of putting all their features together in a block of all you can eat services, a one size fits all package.

“This misses the point about cloud and one of the dangers of this approach is that you have to put a higher price on the ‘entry level’ service which then rules out the opportunity of making a greater margin on the more desirable products and applications for a certain percentage of the market.

Using mobility as an example; if I had to dumb down the price of mobility functionality because everyone had to have it, even the 70% that don’t use it, then I can’t charge a premium to those that desire that feature. You lose the ability to charge for features that excite users.

Put it another way, if you go to a Rolling Stones concert then expect to put your hand in your pocket. If you go to a festival where everything is included then to get value you have to wander around for a couple of days consuming what you want.”

Antony Black, Director of Wholesale at Wavenet Wholesale, says that a lack of differentiation amongst smaller end resellers is leading to value degradation.

“If you are selling the same solution as a competitor then it becomes an unseemly ‘race to the bottom’ like the old days of CPS. A price sale can lead to questions about long term viability and development. A key benefit of a hosted system is that it can evolve with the end users business but if they have been sold a cheap plug and play solution this may not be the case, especially as we move into more app based online working environments.

Resellers need a robust GTM strategy and remuneration targets for sales people as they migrate from PBX to WLR without it the business and sales objectives become unaligned.

Worryingly one of the main concerns should be around security and reliability however it does not seem to have landed with the resale community, it should have done!

Steve Glaister, Sales Director at Invosys, says the biggest challenge of selling hosted in 2018 is that there are multiple vendors selling the same solution, often to the same customers.

“To those in the know, the commercials are similar and stick out like a sore thumb, with many suppliers even sending out the same collateral. We’ve seen customers put out a tender to receive 5 responses, 3 of which are exactly the same brochure – just with different logos and slightly different pricing.

With no real differentiation, what’s the customer to do? At this point, telecoms becomes merely a commodity and this can lead to other issues.

All too often we see resellers trying to ‘eat each other’s lunch’ – all chasing the perfect hosted customer – which leads to aggressive pricing and margin erosion. It’s apparent on LinkedIn when a post asks for assistance on a new switchboard, and the volume of comments easily hits the hundreds.

Lee Wilson, Commercial Director at Square 1 Products, says that taking ‘hosted’ as a generalist term, we’re finding that many ICT resellers are put off by the hassles of monthly variable billing, associated remuneration calculations and the contingent long term risk concerns of a fixed term hosted package.

“More specifically with telephony platforms, we’re seeing an increasing number of hosted packages that are predominately centred around cost, which creates concern about the quality of the actual service their clients can expect to receive.”

Justin Blaine, Channel Sales Manager at NTA, believes that from a vendor point of view, it is very obvious what the concerns and challenges are for the reseller channel.

“Firstly, we as a platform owner and vendor are seeing a mix of companies moving into this space, and all not from a telephony background.

I am not for one-minute saying installing and looking after customers Hosted Telephony solutions and requirements is easy however it is easier than when selling and maintaining an on-premise PBX, therefore the barrier to entry into the telecoms arena is not as high as it once was.”

Anita Wosket, Chess Wholesale and Acquisition Manager, acknowledges, the market is saturated, with most partners competing with the same offering.

“This makes it challenging for partners to compare them. We’re increasingly seeing more traditional telecoms resellers moving into Cloud offerings, but the understanding of the infrastructure that comes with this also has its challenges. A step up into the local area network requirements, networking, quality of service, and firewall detail outside of their standard remit, are all factors pushing them out of their technical comfort zones.”

“Perhaps the most significant challenge to partners is cultural,” says Mark Davies, Comstor Collaboration Architecture Lead.

“The cloud delivers considerable promises to customers, but it fundamentally changes how partners make their money, it’s a new way of selling where everything is as a service. Customer relationships are based less on technology expertise, more on technology enablement and service. There’s no kit to shift, cable and install. Instead, partners are now partners in a journey based on each customer’s individual business strategy. And it’s not black and white, as hybrid solutions will for most be part of that journey, and straightforward telephony is just one element of a communications transformation for most organisations.

If partners are to succeed in this service-first world, they need to be the conduit for not just managing and enabling this but ensuring the solution itself delivers for the business. After-sales increasingly becomes the new sales. Education, training and adoption are central to the new customer relationship. After all, new features may be a no-cost automatic upgrade, but their relevance and adoption in the business ideally needs to be led, planned for and managed before the changes happen. Only frequent customer visits to understand the needs of business owners can achieve this, and to become that often mentioned ‘trusted adviser’ partners need to be able to answer core questions such as: is the customer is ready for cloud migration? How does UC fit into their overall digital transformation plans? What are the relationships between office and field teams? Does Opex fit their business model, because, for example, for many charities it simply is unworkable?”

Instead of challenges, Robin Hayman, Director of Marketing & Product Management at SpliceCom, looks and making it easier for resellers.

“At SpliceCom we’re focussed on making life easy for our channel partners; our cloud voice offering, on-premise solutions and hybrid implementations are all based on a single platform – SpliceCom SelectVoice. This eliminates the confusion – for both the reseller and the prospect – that arises when two different solutions from two different service suppliers/vendors are discussed at the point of sale. The same is true of payment terms; hosted and on premise can both be purchased outright or on monthly terms.”

Making the sale totally independent of how (and where) the solution is deployed and how it will be paid for, allows resellers to laser in on the true nature of any sale; how to best address the issues the prospect is looking to solve with a new ‘telephone system’.

Are platform vendors and their Service Providers doing enough to differentiate?

Russell Lux, CEO at TelcoSwitch says that whilst platform vendors are leading innovation habits within the reseller community can make it difficult for true adoption to occur.

“A classic example of this is integration with other platforms. Platform vendors are able to provide APIs with other platforms such as CRMs, supplying a solution to businesses that links up their CRM and phone system would significantly improve the end users efficiency and provide invaluable business however there is slow uptake on these types of sale. Hosted telephony in itself is fairly simple to understand essentially it is a phone system that makes calls and has a number of features, I think there is a reluctance for sales people to move outside of this. For a PBX sales person a conversation about CRM or API integration is alien. So it’s up to us to help the sales teams of our Resellers to understand the new ‘hooks’ that are available on our solution. In the cold light of day it’s about making you different to the next person.”

Mark Elwood, director of marketing at TeleWare, says with confidence that his company has a cohort of brilliant, innovative partners that they work with to take our route, record and analyse communications suite to market.

“At TeleWare we made the decision in November 2016 to move our entire operations to the cloud, hosted on Microsoft Azure. Indeed, we delivered a Microsoft world first by being the first company globally to route and record real-time voice calls over Azure. So, for us, hosted solutions are behind us. Cloud offers our partners and their customers a more flexible, scalable, cost effective communications management platform.

After a decade in the market, Entanet decided to completely redevelop their offering from the ground up and following in depth partner feedback found the channel was crying out for a way to differentiate themselves in the increasingly crowded Broadsoft dominated market place.

Paul Heritage-Redpath, Head of Product at Entanet says “That’s why we chose to build our own independent VoIP platform using FreeSWITCH and OpenSIPS platforms and to house it all within our popular synergi interface, ensuring the service is easy to order, easy to use and easy to manage 24/7. This gives our channel partners a unique differentiator – allowing them to offer something completely different but with proven reliability and healthy margins.

More and more we are seeing hosted voice providers resorting to cutting margins in order to compete on price as their me-too Broadsoft based solutions don’t allow them any further differentiation but that’s a dangerous game. Instead, we encourage our partners to focus on the business benefits our unique feature-rich solutions can deliver and consider implementing hosted Voice or SIP as part of a wider connectivity solution to really add value and deliver a truly consultative service to their customers. That’s why in addition to our standalone Hosted Voice and SIP offerings we are enabling our partners to provide free hosted voice seats or SIP channels/DDIs with all our full fibre Ethernet and GPON solutions.”

Enzo Viscito, Managing Director at Inclarity, takes a slightly different perspective to focus on their view of platform vendors as a service provider?

“In the last two years we’ve seen the marketplace quickly evolve, with many vendors merging or acquiring each other to secure or ‘ring-fence’ certain technologies which can be used as differentiators. As a service provider, traditionally it has been one of Inclarity’s roles to investigate and select best of breed vendor partners in different specialist areas to present in a single portfolio to our reseller channel partners.

Now it seems vendors themselves are doing more to prepare a broader set of more deeply integrated technologies, taking some of the burden of work away from the service provider. Being taken on such a journey is great news in theory, as long as you can trust the right vendor aggregator to offer the right solutions at the right price to the right audience.

At Inclarity however we feel that we understand our audience much better than the vendors, and so we believe we will continue to have a role to play as a service provider in curating the right package of multi-vendor services to best suit our channel’s needs.

To offer a premium service such as this we partner with best of breed vendors like Broadsoft, Dubber and Akixi and have recently been awarded Gold Partner status with Polycom.”

Paul Taylor, Sales Director at Voiceflex comments, “All platforms are different, standard features will be the same. The platform is by far the most important aspect, which is also the mostly over looked. Where is the platform, what is it, who do you have interconnects with for voice and data connectivity, mean time between failure, how many outages in the last 5 years. What is the network topology, what was the road map in the last 12 month and the next 12 months, is the application single instance or multi-tenanted, where are you with WebRTC, once happy discuss commercials?”

What can resellers do themselves to create their own differentiation?

As the SME market transitions to hosted there is a need for channel partners to differentiate themselves from the pack by adding value to hosted deployments.

According to Dave Reynolds at Xelion this can mean devising a UC solution that fits the business needs of their customer and not a one-size-fits-all solution.

“Flexible deployment options are another key differentiator so that channel partners can offer managed multi-tenant, unmanaged multi-tenant and unmanaged single tenant. We have introduced Amazon Web Services (AWS) platform as an alternative option for partners that want to offer a managed hosted solution. This provides even greater flexibility for deployment within a very short period of time on any of the fifteen global AWS pops to suit the local customer requirements.”

Justin Blaine at NTA reminds us that telephony, when selling PBX’s, was not just about price.

“I feel this is where we are with Hosted Telephony – everyone quoting a race to the bottom and the difficulty of differentiation at the point of sale. To me it is simple and is a simple rule of sales and selling solutions regardless of product or vertical. Firstly, understand the customers’ business and the reasons for change.

Reiterate how you as a business can offer additional products and services if required e.g. Managed Services, Connectivity, Wi-Fi solutions and major on your support, response times and customer care.

Lastly In my opinion the sales process has not changed, we just need to reminded of this process from time to time.

Justin Hamilton Martin at Centile Telecom Applications says that focusing on vertical markets continues to be a trend and for good reason, because it helps partners to truly stand out.

“Plus, partners can create their own tailored solutions that lets them develop new bundles as they see fit, and build their own ecosystems of suppliers to add value to those bundles. The higher up the chain you go the more you can differentiate. Cloud services are blurring the lines of demarcation between resellers and carriers: with today’s technology, anyone can be a service provider.”

Bart Delgado, Managing Director at Akixi says that for a start, many offerings provide branding differentiation opportunities for the reseller.

“However, the days of the traditional sales ‘hunter’ are numbered. In a world of hosted services people today are consuming very differently; and it is the unique skills and deeper understanding of the ‘farmer’ that really adds value to the sale and ongoing customer relationship. That mentality needs to come from the top down within a business if customers and resellers alike are to benefit in the transition to everything ‘as-a-service’.”

Ed Says…

The overall message I got from suppliers was that the market is changing and that resellers must avoid a race to the bottom through differentiation. Change and price are not however conjoined twins – no matter how often you see or hear them mentioned. They are separate entities that each bring challenge and opportunity.

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David Dungay

Editor - Comms Business Magazine