The $20 Bill That Never Gets Picked Up
Two friends are walking down the street when one spots a $20 bill on the ground. One says to the other, an economist, “Look, there’s a $20 bill on the ground!” The economist replies, “There can’t be. If there were a $20 bill on the ground, someone would have already picked it up.”
The Hosted PBX application is the $20 bill that never seems to get picked up. While Hosted PBX sales are picking up steam around the world, nearly nine years after we launched this service concept at BroadSoft, the potential remains greater than the reality.
In other application segments where the business customer has a choice between traditional software solutions (e.g., load CD on dedicated hardware and run locally), the hosted solutions are gaining ground fast. Hosted (also sometimes referred to as software-as-a-service or SaaS) is widely believed to be the future of how software applications will be delivered. Whether in customer relationship management (CRM), email, collaboration, or countless others, software delivery is moving from the CD and into the cloud.
Voice applications are a notable exception to the trend. Ironically, while telecom networks make SaaS work and accelerate the trends, the voice application called “private branch exchange” or PBX is largely still delivered by enterprise software vendors the old fashioned way – CDs on dedicated hardware.
Service providers certainly get the value of a hosted PBX application in their network: Delivering something that most of their customers already want (and buy), is complementary with their existing voice and data connectivity services, and leverages their experience in delivering voice with high quality and reliability. Further, the world’s service providers also understand that being a mere reseller of the major enterprise vendors like Cisco relegates them to a relatively low margin business: They provide the commodity and the Ciscos of the world offer the value-add.
While at BroadSoft, I was fortunate to spend time with many different service providers around the world and serve as a trusted advisor and resource on how to succeed with hosted PBX. And because BroadSoft is so dominant in the hosted PBX space, I also was privy to the best ideas of what worked (and what didn’t) in selling the application. Here are some ideas for best practices to succeed with hosted PBX:
It’s fundamentally about outsourcing. Many service providers are dominated by their engineering groups. And the engineering groups tend to get enamored with (surprise!) cool features. This trickles down to the marketing efforts where they overwhelm the end users with their very impressive list of features. But for most small businesses, they don’t care about all of the features or even understand them (how would you like shared call appearance?!). To win a hosted PBX deal, you have to convince the buyer that they really don’t want to own and manage the application but let someone else do it. As with CRM, the reason people pay to outsource with Salesforce.com is the same – stick to your core business and let us manage/upgrade/install the application. Also, don’t pay for the application upfront but pay as a monthly service.
Keep it simple. The old voice paradigm for service providers that was widely implemented for decades but didn’t work so well was a la carte pricing. $2.72/mo. for call waiting; $4.25/mo. for voice mail, etc. This not only makes things too confusing for the end user but ends up forcing them to take the basics and skip the advanced functions. Much like cable TV, if you bundle in all of the services in packages (who would buy the Oxygen channel a la carte?). Another big mistake is to offer too many user packages. I’ve seen as many as 20 – the end customer can’t understand them, let alone the sales team. How about four (office worker, utility line [e.g., fax/conference room/reception], receptionist, and MAYBE a call center rep)?
Hire former PBX salespeople. Traditional service provider sales reps largely sell on price. PBX sales reps “solution sell.” They cost more but they can sell hosted PBX because they’ve already sold the CPE competitor and know how to sell against it extremely well.
Use channels. You can’t scale your business by just hiring direct PBX sales people. PBX channels (e.g., VARs) are the ones who know what the local business owner has, when the system was bought, and when it is up for renewal. Don’t look for a silver bullet solution, either – the VARs who are good tend to be very small and the national ones very bad (no local knowledge) so take your time to build up a good VAR program and grow VAR by VAR.
Sell solutions – not features: Ask a room full of office workers how many of them want “find-me-follow-me” and not many hands will go up. Ask them how many would love to never ever miss a phone call again when they are traveling or away from their desk and you’ll get a totally different answer. Ask a typical exec if they want a telephony web browser toolbar and you’re likely to get a blank stare. Ask them if they want to just point and click from their address book to dial someone and many will kiss your feet (ok, maybe not, but they’ll be happy anyway).
Show a demo. Pictures are worth 1,000 words. Demos are worth 1,000 PowerPoint slides. And don’t just show how the phone works (they expect it will work with VoIP just the same). Show the cool stuff like click-to-dial and find-me-follow-me – the stuff they don’t get today from their stodgy telephony provider.
Promote, promote, promote. If a service provider offers hosted PBX in the woods but no one knows about it, does the offer exist? This point may be obvious, but think about it: When is the last time you heard an advertisement or a pitch for hosted PBX (have you ever heard a pitch for hosted PBX?). Contrast that with the last time you saw an ad from Cisco. If you don’t promote your offer, no one will buy it. And while you are at it, use testimonials from your key customers.
Have fun: Salesforce.com has a blast poking fun at the big, traditional software vendors’ expense. If you are going to compete with behemoths Cisco, Avaya, and Alcatel-Lucent, you might as well try taking them down a notch too.
Good luck with your hosted PBX selling and PLEASE pick up the $20! IP
Scott Wharton is the founder and CEO of Vidtel. He can be reached at
scott@vidtel.com.
