Increasing cloud adaption is bringing VARs and MSPs at the crossroads of their careers. Similarly, partners may stand to lose valuable affiliates who have helped grow their businesses. SaaS (Software-as-a-Service) and cloud are more than just buzzwords. They are redefining the way people do business and the way that they live in the name of cost-effectiveness, ease of use, and flexibility.
VARs and MSPs are poised to rethink and transition their marketing and sales options to a recurring revenue model—especially because their reluctance seems to be holding back partner sales of cloud solutions.
VARs and MSPs have long basked in their comfort zones of annuity-based or bundled solutions revenue models. However, as businesses give more focus to cost savings, the cloud is fast becoming an attractive alternative. Recurring revenue is something new to VARs and MSPs, and it may take time for them to leave the model they are accustomed to.
What can make VARs and MSPs change their mind? One thing is quite clear: VARs and MSPs are needed. End users trust them as advisors and want to be served by them.
A game plan that sells
Cloud providers or partners need to craft a compelling game plan that sells and a revenue scheme that is attractive to VARs and MSPs. The game plan may look like this:
Restructure the cloud sales team. The skills of people selling cloud services are totally different from those of people selling on-premise solutions. Companies need to revisit the cloud sales team setup and infuse new skills and competencies where needed.
Create a new sales team. A new sales team with an entirely new profile and a higher level of skills can be a good new start. Hiring parties need to make sure that the new hires possess the necessary business acumen, technical skills, and experience for an impactful kickoff.
Set the right incentive system. Most cloud sales are subscription-based deals with recurring revenues. However, in an integrated sales team model, one-time sales, especially of major products or services, do happen. Companies should devise a balanced sales incentive scheme so that sellers are not solely motivated to sell the one-time deals that are hard to predict and that do not ensure regular revenue. Another strategy is to bundle a number of value-added services around cloud offerings, which means added revenue for the company and increased commissions for the resellers.
Oblige sales team members to generate new customers. Growing sales is not as easy as sustaining sales. Companies need to get their sellers to agree on reasonable sales goals through the generation of new customers.
Instill in VARs and MSPs the benefits that they will get for their businesses. From a strategic standpoint, VARs and MSPs stand to get additional business through cross-selling opportunities. After winning their first sale, this could be an entry point into organizations for other cloud solutions like backup, security, or consultation as well as their traditional IT needs.
The multiple forces of change—new mobile technologies, social media, changing end user expectations—are impacting VAR and MSP options. Now that the door to the cloud is open, it is up to them whether they want to have the edge or lag behind.
As companies upgrade their internal databases, networks, and other communications, they usually find that they have excess capacity beyond their current needs. Given the rise in virtualized and Cloud-based services, it’s inevitable that many see this as an opportunity for further monetization. If a company is only using half of the hardware’s capacity, why not find a business that will pay to use the other half?
This has now extended to SIP trunking, with more Cloud-oriented organizations looking to resell or bundle their own internal communications. When they’re buying bandwidth “raw” from the ISP, with no overhead besides the pure data charges, they’re in a prime position to leverage that bandwidth in their service offerings.
Benefits of SIP Trunking
In short, SIP trunking is a newer revision of Voice-over-IP (VoIP) technologies, with a well-established protocol that allows for easy transmission of voice, video, or other data to\from a wide variety of devices.
Its strength lies in its near universal compatibility with most modern end-user devices and relatively inexpensive hardware. At the low end, the equipment needed to establish on-site SIP trunking is only in the low four-figures, and leasing options are becoming popular as well.
Most Cloud services organizations can afford to buy into SIP trunking today.
Why Buy Voice Service From Non-Phone Companies?
For comparison sake, here’s an idea of how margins look with voice services.
In terms of raw dollars, the cheapest a company is likely to find local + unlimited long distance on a line is $75/month. On the other hand, SIP-based voice communications cost less than a cent per minute. A thousand minutes of voice would cost less than $10.
So a company selling 1,000 minutes of voice for $25 is making a substantial profit, while significantly undercutting the local telephone company.
In other situations, companies haven’t charged for the service, but simply include it in their “premium” bundles as an added incentive.
Major Stumbling Blocks in SIP Reselling
Businesses interested in the monetization possibilities with SIP trunking should also be aware of potential issues that can arise:
1. Unforeseen Infrastructure Needs
SIP reselling puts a strain on all of a network’s systems. Just having the hardware to handle the trunking may not be sufficient to carry heavy loads without other upgrades. Failure to upgrade would nearly guarantee the failure of the venture.
2. Becoming a Phone Company
A company providing phone service to its customers should expect to be treated as a phone company by customers. High levels of reliability would be expected, and there would be increased demands on service staff.
3. Outside Dependencies Beyond Direct Control
Company A cannot resell SIP services without Company B providing them in the first place. If Company B fails, Company A is left in a bad situation. If there are multiple levels of outsourcing involved, through Companies C and D, this can quickly become a tangledand risky web.
Every organization in the chain has to be absolutely reliable, but that sort of reliability is hard to find and harder to guarantee.
Reselling SIP Services Is Growing
Despite these risks, the reselling of SIP trunking is growing steadily and likely to continue doing so for the foreseeable future. With proper planning and informed risk management, it offers new opportunities for services monetization.
Motivating a telecom sales team is a tough job. There are different egos to feed and individual levels of energy to tap. That said, motivation keeps telecom agents happy and focused, and it inspires them to take their selling passion to the next level, which is where they find self-motivation.
To encourage self-motivation in sales, the business may need to embrace one or all of the following strategies to motivate the team.
Money is one of the top motivators for sellers. Giving the right pay, commissions, bonuses, and other incentives helps one strategically manage the telecom sales forces. It also encourages sales talent to stay committed and be more productive for themselves and the organization.
The following are examples of cash incentives that help fire up the selling steam:
1. Basic commissions often consist of fixed payments to both internal and external sales reps for regular sales transactions. Alternatively, especially in highly competitive and discount-driven markets, policy makers can shift the fixed scheme to a more dynamic commission system. The commission rate will depend on the individual telecom agent’s performance compared with that of the other agents in the sales team or it will depend on the amount of discount offered in the transaction.
2. Variable bonuses are intended to the fulfillment of specific sales objectives like the launching of a new product or service, pushing slow-moving items, or generating new leads.
3. Revenue-sharing programs offer cash incentives in the form of certain percentages on the overall sales revenues of the team, depending on individual telecom agent performance. This means that better performers will get better incentives. These programs also foster a healthy competition among sales agents and help build a stronger team.
While commissions and other cash incentives are great motivators, there are non-cash motivators that can rev up the selling power as well. Not all telecom sales agents are motivated by the same thing. The key to creating a winning sales team is satisfying sales agent needs that no money can buy.
Here are some of those needs:
1. Recognizing performers – The 80/20 rule can be applied to almost anything—from the physical sciences to the social realm to the business world. In sales, it means that 80 percent of sales come from 20 percent of the sales force. While this may be debatable, it remains a fact that not all sales agents perform similarly. Some perform better than others. To motivate performers to do even better, managers need to recognize them in public or present them to the leadership. They can also be tapped to make presentations, share their winning selling experiences in company meetings, or train their peers.
2. Making the selling process fun - Gamification is a new tune in the selling arena where sellers are encouraged to compete within certain rules like in a game. For instance, point scoring and posting the scores publicly help enhance the competitive streak in sellers. Scoring also helps them monitor their performance and how much more sales they need to win the coveted award.
3. Ensuring management support for the sales force – Support can come in the form of technical, IT, training, or back-office backing. These are critical motivation enablers that keep sales forces running efficiently. They can be tools and processes like product catalogs, pricing configurations, comprehensive customer data, customer leads, ordering systems, accounting management, tracking and reporting systems—and others.
4. Assigning good managers – Bad managers create apathetic teams. Sales people need continuous guidance through structured coaching, efficient training, and competency building. Managers also need to lead by example and not compete with their team.
Ultimately, a successful motivating strategy for any telecom sales team is one with a holistic approach that combines diplomatic thinking, monitoring, attention to numbers, and sound judgment.
Like real estate agents, telecom agents work in a highly competitive industry. When making the decision to hire a telecom agent, businesses would do well to keep in mind that a telecom agent should be like a good realtor.
There are three basic benefits when hiring both a real estate agent for your house and a telecom agent for your business:
Each offers honesty and expert knowledge.
Each provides unbiased advice.
Each offers the opportunity for long-standing, beneficial relationships.
Honesty and Knowledge
A realtor understands all the little details and snags that come with buying a house. In the same vein, independent telecom agents have gained inside knowledge about the telecom industry as a whole. A telecom agent can supply advice on every type of product and service that any individual carrier provides.
More importantly, a telecom agent will provide only the truth. This aids a business in many ways. First, it allows an organization to compare each package and decide what works best for their goals. Secondly, it allows the organization to truly see what might be a potential drawback about a specific product or package.
Having intimate knowledge of all carriers ensures that a business working with a telecom agent will have a wide range of affordable options to choose from.
As independent entities, telecom agents have no specific loyalties towards carriers. Like realtors who can show a potential buyer a number of different houses, telecom agents are not focused on pushing a specific product or service in order to meet their own monthly goals.
Without this added pressure, telecom agents can provide a business with unbiased opinions, allowing the business to make an informed decision.
Building a Relationship
When hiring a real estate agent, buyers know that they will work with one person who will understand their needs and look for the perfect house that will match those needs. With a telecom agent, a business gets the same benefit: one person works towards the long-term satisfaction of a company.
Telecom agents are part of a company’s team; they not only know exactly what the business wants and needs, but they also have the knowledge and relationship skills to correctly handle problems and issues. The same person will always be available to answer questions and will not have to dedicate time to getting up to speed on what the business is about and what its long-term goals are.
Like finding the perfect house, finding the right telecom package for a business can take time. Telecom agents have a client-focused approach that can reduce this time and ensure that the end result is a telecom package that is both valuable and affordable.
Not only do telecom agents offer the truth, expert knowledge, and unbiased advice, but they also create long-term relationships with businesses. That relationship gives their partner business the benefit of knowing that the business has an invested, knowledgeable team member contributing to its success.
The priorities of a telecom agent are of the utmost importance to the businesses with which they work. While telecom carriers claim that agents are motivated mostly by their compensation packages, agents themselves cite service for the customer as their highest priority.
As the customer in question, businesses should know that customer service and compensation both motivate agents equally—and, in the end, businesses benefit from that dual motivation.
A Trusted Relationship
Telecom agents risk their relationships with their customers each time they make a proposal or offer a quote.
When agents think that a carrier is not able to provide competent service to a business, agents risk losing not only the trust of their customer but, also, their own reputation. Too, poor service or an attempt to make a change could result in the loss of a relationship. On the other hand, agents who feel that they are not getting fair compensation for sales will start looking for other businesses with which to build relationships.
A good support organization is an integral investment for any telecom carrier because proper support is what motivates an agent’s decision making. An agent’s success with any business depends on choosing the correct vendors; this extends above and beyond the motivation of compensation. This support begins with a vendor’s channel managers.
In order for an agent to ensure good customer service for their represented business, they should also have a good working relationship with a channel manager who knows the agent community. This manager also should have the ability to affect pricing, billing, and customer care.
An agent interacts mostly with a channel manager while dealing with the vendor, and a channel manager with an intimate knowledge of their company’s products, services, and target market can help ensure that great customer service is passed on to the business with which the agent is working.
After channel managers, service delivery is the most important aspect of a support organization. To ensure a positive experience for the customer, an agent must have complete visibility of all steps of the process.
If something does go wrong, agents must be ready and able to intervene in any aspect of the service; this could include provisioning, implementation, and turn-up. One way to handle this visibility is to provide an agent portal, but it’s still equally important for an agent to have a way to contact support if it proves necessary.
The final step in a support organization is the post-installation support of customer care and billing.
Inaccurate billing is a hassle for not only the agent but also for the business they work with, and any issues with the billing must be corrected as soon as possible. When a customer makes a request or the agent intervenes on their behalf, responsive customer care by the vendor will ensure that both the agent and the business are happy.
When agents have proper support from their vendors, they are able to secure new business and concentrate on providing excellent care to their own customers. There is no need for an agent to prioritize either compensation or support—which makes both the agent and the client happy.
Telecom master agents began exploring opportunities in the managed services sector before the turn of the twenty-first century. At that time, the growth of managed services began gaining speed and telecom agents saw the need to keep pace with the trend and to look for additional ways of increasing revenue.
Today, the transition to managed services is even more compelling because of rapid technology changes and the complexities that come with those changes. Telecom agents need to rethink their positions and adapt to the changing needs of their businesses in order not to be left behind.
CompTIA did its own research on the factors that drive Solution Providers to migrate to managed services. Interestingly, the CompTIA study cited the desire to protect their customer base as the main driver for the managed services transition for 61 percent of those surveyed. Increasing sales revenues came as a surprising second.
A 2013 joint study by Channel Partners and CompTIA also attested to the increasing partnership movement. The study concluded that the compelling reasons for the trend are the growing convergence between telecom and IT, the impact of new technologies like the cloud, and the need for complimentary skills by forging relationships—even among competitors.
Obstacles to the transition
Telecom agents and IT Solution Providers who are considering a transition to managed services both face the same challenges.
Loss of one-time, big-time revenue streams.IT resellers typically model their businesses on high-volume and low-margin product sales, but this is shored up by low-volume and high-margin packaged services and contracts. Telecom agents are paid by their carrier partners. Managed services aim to confront this challenge with recurring revenue streams.
Lack of sufficient resources and the needed systems.Does the managed services provider have a robust and flexible infrastructure that can work well with the telecom agent’s systems? A solution to this challenge is to partner with a managed services provider that has an existing infrastructure that matches the entrant’s business model.
Does the telecom agent have the needed skills in a managed services environment?Telecom agents have alliances with multiple telecom carriers and thus, can give expert advice on which telecom providers or services are a good match to customers’ needs. But can their staff readily transition to the managed services realm such as IP, networking, mobile, and other emerging technologies? The lack of skills can be compensated by managed service providers who provide complimentary skills or additional training.
What’s apparent is this: the confluence of carrier services, managed services, and the cloud is transforming business models through successful partnerships.
For the skeptics, passing up the managed services option is a step behind. For those ready to embrace it, the partnering options are varied. The best option is to partner with a provider that has a resilient infrastructure backed by technical expertise to enable partners to continue providing excellent service to their customers.