As the technology matures, so does IP communications marketing
By Micah Singer
The market for hosted PBX, unified communications and other services built around VoIP technology appears to be moving from “cutting edge” status to “commodity” status, suggests a 2014 survey of almost 400 VoIP and telecommunications professionals conducted by VoIP Logic. The evidence that supports this trajectory comes from a trend over time toward an increase in the value of sales, sales strategy and sales associated activities and perceptions and a decrease in the value of technology, technology expertise and competitive advantages associated with operational capabilities that lie “behind the scenes.” In short, there is less fear that concerns about technology and service delivery will derail sales opportunities and more emphasis on the fundamentals of customer-facing interactions, according to the findings presented in VoIP Logic’s most recent Market Research Report on VoIP Service Providers.
For VoIP service providers this means it is increasingly valuable to invest in sales channels, strong customer support organizations and other tools that increase customer acquisition and decrease churn. For manufacturers of VoIP technology it means that rather than racing to market with amazing new features, it makes more sense to focus on service provisioning, use-ability, user interface, ubiquity, stability and scale-ability. In other words, make it better and easier to use as top priority and “cooler” as second priority. (Of course, nothing is black and white, so it is still important to keep up with broader trends such as WebRTC compatibility).
The survey that produced these results was broadly grouped around three sets of questions: demographics to establish the surveyed population, sales-focused questions and technology-focused questions. The idea that a transformation has started – or according to the Geoffrey Moore model of market growth, the chasm has been crossed and hosted PBX/UC services are being purchased by the “pragmatists” or early majority of users – seems to be playing itself out in the opinions of market professionals.
For starters, the demographics of the survey respondents were generally stilted to smaller operators. More than 200 unique service providers are represented in the surveyed population with almost 40 percent of the companies polled launched within the last eight years and more than 70 percent with both revenue under $25 million annually and total employees of less than 100 people. Small operators are an interesting population to track, as they are often not included in significant numbers in market research. Because VoIP Logic serves many operators in this demographic they are of particular interest to us.
Secondly, there were a number of questions in the survey that engaged the respondents on which variables were most crucial to commercial success. Among these questions, one in particular asked for a ranking of eight different drivers of VoIP service sales based on overall importance. The results of this tabulation indicate consistently that those variables associated with a more mature market were more highly valued by service providers, while variables associated with a more advanced technological platform were deemed to be less important overall. Specifically, Existing Customer Relationship, Price and Customer Support are the value centers, while Better Underlying Carriers, Cutting Edge Features and Advanced Bundling were less relevant. The concept of Brand Recognition was downplayed, which has more to do with the demographics of the surveyed population – small operators can’t sell on brand.
As a market moves toward larger volume iterative sales, it makes sense for service providers to invest in a direct sales force to increase margins and to sell less – relative to overall sales – through alternate channels such as resellers and agents. In turn, the survey data shows that while most service providers use several means of reaching their target markets, direct sales are on the rise and different forms of branded and unbranded indirect sales – while crucial to the overall selling strategy – are less central. Investing in a direct sales force is expensive and risky, unless there is a comfort level with the stability and growth of the market. This leads us to speculate that service providers feel the market is steady and growing. It will be interesting to see if there is a further change in the next year in these variables that indicate market evolution.
Third, the last major topic of the survey was to better understand how technology is used by service providers as they deliver VoIP services. As with the sales variables, the results indicated that technology is important only insofar as where it directly touches the end user customers. According to service provider respondents, the most important variable is the expected uptime followed by the price (cost of the technology to buy) and how well regarded the technology is by prospective customers. Formerly key issues such as cutting edge features, the ability to upgrade – generally considered the path to more cutting edge features – and scalability were the least important of the six polled variables.
In a market where there is more doubt around technical viability, and customer churn is a direct result of dicey operations, the tables would be (and used to be) turned. The technology is still important but within the context of doing what is expected and allowing the sales team to execute without interruption of service.
As an interesting counterpoint toward insourcing sales by investing in direct sales teams, service providers also are more inclined to outsource operations. More than two-thirds (67.5 percent) of respondents indicated that they are willing to outsource some or all core operational technology. Outsourcing is going through another boom phase with the trend to cloud and as-a-service options prevalent in the market, so there are many options available. However, outsourcing for telecom operators is dangerous if there is any fear of interrupted service – a legitimate fear when considering a technology such as VoIP that has many moving parts, including the public network, private network and a slew of hardware/software components working together for service delivery. On the other hand, outsourcing is a way to control costs and preserve capital and operating expenses – which makes sense to do if you are investing in sales and marketing to meet the opportunity of a rapidly expanding market.
There is no question that these trends can be cyclical even in an overall move toward hosted communications services. With the appearance of new standardization such as WebRTC all of sudden, there can be a necessity to provide cutting edge features, but it appears from the feel in the market (i.e. what you see service providers displaying at trade events, on their Web sites and when they are in your office selling) and in the data from respondents that selling is becoming a more standardized process with the expectation of stable technology and tried-and-true, go-to-market strategies.
Micah Singer is CEO of VoIP Logic
Editor’s Note: The surveyed data presented here is a small fraction of what is available in the full report. Fortunately, the report is free of charge with the completion of the survey that will contribute to the 2015 report. In particular, if you are a Hosted PBX or unified communications service provider your opinion is key to this reporting having value. Please go to to complete the survey and receive the full 26 page report.