VoIP Vendors Failing To Re-think SMB Retail Products

The economic crisis has frequently been held up as an opportunity for the VoIP industry to introduce businesses to the benefits and efficiencies offered by "non-traditional" telecom services.

He tells voip.biz-news how telecom vendors can effectively capitalise on potential opportunities in the US Small and Medium Business (SMB) market.

Of the approximately 23 million businesses in the United States, more than 90 per cent have fewer than 50 employees (as reported in a recent AMI Inc Market Study). In total, 15 million have fewer than five employees.

This is strong evidence that the business of America is truly Small Business.

The question remains though: how is the current economic climate affecting these small businesses? In particular, how is it affecting their purchase of VoIP services?

Kent Hellebust, CMO Telanetix

The smaller the business, the less likely they are to have "redundant staff".

With fewer than 10 employees, everyone does everything. There are no specialists; no dedicated IT staff, no full time HR person. If the business needs phone service, there’s a very good chance that it’s the owner of the business who does the buying.

Since all small business employees are generalists, you can count on the fact that purchasing "infrastructure" like phones, phone service, computers, fax machines, etc. is considered an extra burden, not a job.

The purchaser does not have the time or inclination to become expert and they do not know the industry "standard sources".

In many respects, they are very close in their purchasing process to that of a consumer.

These executives are likely to do some quick research online to find what they are looking for, and they are guided by a combination of a need for cost savings, a need for understandability (remember, they are not specialists; they wouldn’t know what "NPA-NXX, PBX, LNP, or RespOrg" meant if you held them at gunpoint), a need for simplicity, and finally, a need to save time and get on with their "real" job of driving revenue for their small business.

In the current economic environment, the need for savings becomes paramount. You may have noticed that it’s the big companies that are getting offers of federal assistance, not the small ones.

These small businesses have to reduce any expense they can in today’s market, and phone service is a prime target for them.
Because of the economic pressures they currently face, they seem to be increasingly willing to try new brands and new services that they may previously not have been willing to try.

Here at Telanetix, and our VoIP wing of AccessLine Communications, we have been specializing in small business telecommunications services and solutions for over 10 years, and we have never seen the SMB market more willing to consider VoIP as a solution to their infrastructure cost reduction challenge.

However, this is not to say that selling any type of telecommunications service, VoIP or otherwise, to SMBs is getting easier.

The SMB purchaser balances a complex set of factors in making their purchase decision. While they are looking for savings, they do not want to be pitched with complex "ROI" savings calculations.

They do not have the cash flow to invest more upfront in order to achieve greater savings down the road and if the equipment and services they are purchasing have a significant upfront cost component, they are likely to look elsewhere.

Beyond the savings, they are guided by brands they know and trust. Given that the purchaser is not going to be steeped in telecom industry knowledge, only the very largest telecom brands will have spent enough on brand advertising to be known by them.

Once you get much below names like AT&T and Verizon, the chance of the customer knowing a non-traditional telecom brand is small.

However,since the purchaser is a generalist, they are open to non-telecom brands that are affiliated with new telecom services as a sign of vendors they can trust.

A number of new VoIP providers have taken advantage of this non-traditional business telecom buying process to affiliate with major business retail chains, ranging from Staples to Office Depot.

Finally, there is the question of simplicity.

Telecommunications, as an industry, has done its level best over the decades to be as complex as possible in the eyes of the customer.

Hidden fees and processes, ranging from wiring fees to installation and maintenance fees, have made the acquisition and installation of business phone systems and service an arcane art that only the IT department specialists at midsize and large enterprises are comfortable in navigating.

Many telecom vendors have failed to re-think their product, making it unsuitable for the fast moving pace of the business retail channel.

At the same time some of the biggest names in the telecom and IT business have experimented with retail distribution, only to be puzzled and frustrated by their lack of success.

Only those that have focused on simplifying their message, the offer structure, and the installation of their products and services for the generalist small business purchaser are able to profitably harness this channel.

At Telanetix, we have taken all these lessons to heart.

We have created an integrated solution specifically for the SMB market. The product includes a state of the art PBX phone system, sold in conjunction with fully integrated VoIP phone service, serving businesses with between two and 20 employees.

Business customers hear about the product through major retail channels. We have invested quite a bit of "magic" in the upfront setup and provisioning of the phones and phone system, so that when the customer receives it, it is literally plug and play.

All the key SMB buying criteria are met: savings, simplicity, and trusted support. There is no need for the business owner to hire a specialist to charge them USD $1,000 or more to install the system.

There is no need to hire a wiring specialist that charges USD $100 per desk phone to run custom wiring through their office or store.

We as a company are attempting to meet the SMB business owner on their own turf, talking in clear terms about value, savings, simplicity, and reliability.

Given that the SMB market drives America’s business, we think that even in the current economic environment, this is a recipe for success.