If you’ve been following along with our series on hosted PBX over the past couple of months you might be thinking, “Hey, this seems like a good idea. We should start selling this to local businesses!”
If that’s you, then I’m here to stand in the road, waving my arms, yelling “STOP!”.
Maybe that’s a little harsh. Perhaps instead I should say “Slow Down!”
Hopefully it’s clear from previous articles that I think hosted PBX is a great addition to your business – in fact wireline carriers really have no choice but to invest in hosted business services. It’s either that, or just give up on voice as a meaningful part of their business.
However, hosted PBX also comes with a warning:
Hosted PBX requires a different set of skills and a different mindset throughout the whole company – from sales to marketing to finance to operations.
Therefore you need to be approaching this as a strategic business decision, with full buy-in and ownership from the executive team. It will take some time and some investment to get things up and running, and there may be some challenges along the way – but ultimately you’ll have a new stream of recurring revenue from your highest value customers.
Let’s talk through how this new product impacts each of the key departments of the business.
If your company has traditionally resold PBXs from a major vendor, you may not have needed to worry much about marketing, because the vendor would have datasheets and brochures for each product, and you could simply rely on their collateral to market their products.
However, if you start selling hosted PBX a few things change.
- Your target customer may shift slightly. While traditional PBXs were typically sold to enterprise clients, hosted PBX is particularly appealing to the SMB segment of the market – businesses with perhaps 5-20 phones. That isn’t to say that you can’t sell to larger businesses, it’s just that the economics and service-provider support of a hosted service make it particularly appealing to this segment – who weren’t so interested in the capital expense of a traditional PBX.
- For those business customers who are used to purchasing a traditional PBX, your marketing communications will need to explain the benefits of the hosted model (the lack of a big upfront cost, seamless access to new features, and no need to have a specialist IT tech on staff to manage the phone system, among other things).
- And finally, of course, you need to actually describe the particular features that you offer, and the benefits to your customers.
All these changes to the product also flow down the funnel into the sales conversations you’re having. Your sales team need to understand the product, understand how it works and what benefits your customers should expect to see – so that they can communicate this effectively in the sales process.
This is one reason why we recommend that you deploy hosted PBX internally – throughout your own business offices – before you start selling to customers. If your sales representatives can talk about the benefits they themselves have experienced by switching to hosted PBX then that’s a much more compelling story than simply reading off a marketing brochure.
But there’s another role that the expert sales representative must play here – to both guide and assess the customer in order to ensure a successful deployment. There are two parts to this:
- In terms of deployment design it’s important to have a clear set of building blocks that you sell, and guide the customer into using some combination of those. You don’t want to replicate your customer’s old phone system – it’s much better to sell your customers the “tried and true” best practice solution with today’s technology.
- One of the key benefits (and hidden risks) of hosted PBX is that a business can use the same IP connection for both voice and data. The challenge here is that if the business has too little bandwidth (or poorly managed prioritization) on their ISP uplink then their employees’ lunchtime Netflix-habit can hurt the quality of important voice calls. We therefore recommend that the sales process includes some kind of IP audit to confirm that the customer’s LAN and uplink can cope with the proposed deployment size.
There are a couple of items for the finance team to consider as you start selling hosted PBX.
- Obviously the first is that the revenue flow is very different. Whereas a traditional PBX sale consists of a chunk of cash up-front followed by a small monthly fee for the PRI (or SIP) trunk, with hosted PBX you have a much larger recurring revenue stream for as long as you keep the customer. This will change your financial forecasts and also the lifetime value (LTV) of each customer.
- You also need to decide how to handle physical phone handsets (assuming these are part of your product). Depending on the phone model, these may cost anywhere from $50 to several hundred dollars per seat – which begs the question of whether you ask the customer to pre-pay for the phone (which harms your “phone system as a service” story) or else it becomes part of the monthly fee – so you effectively finance it. And even then… are you simply financing the phone, but they’re responsible if it breaks, or are you “providing a working phone as part of the product” in which case you may be responsible for replacements? There are several viable options here – but you should think about this in advance. You don’t want to find that you have a huge success on your hands but you can’t afford to continue growing because you’re short on cash for all the new phones.
I won’t dwell on Operations, since we talk about the technical implementation side of things a lot, but suffice to say that your voice network operations folks should expect a few changes in their world.
- We recommend setting up a hosted PBX lab.
- There should be a well-defined process for provisioning new businesses – all the way from a customer questionnaire to switch provisioning to phone set up to testing, going live and finally customer training.
- The NOC will need to be equipped to deal with both functional issues (“how exactly do we configure the system to do X?”) as well as quality issues (“why do I sometimes get one-way audio on incoming calls?”) and there’s potential for a fair bit more IP troubleshooting than before, which should factor into the kind of skills and training your technicians need.
Where do we start?
Maybe you’re reading this, and you’re trying to figure out how to make a case internally. If you’re just one person – whether in Network Operations or Business Development or Product Management – it can be daunting to push for a significant new product.
If that’s your situation, then feel free to use the various materials in these articles to help demonstrate the need for a change. The graph below shows the expected growth of the Unified Communications (business communications) market over the coming years – and the material in this article and this article may also be useful.
And of course it’s not just me saying this. For a lengthy and heavily researched article, read The State of UC 2018.
If you’re starting to get some traction internally, and would like an external perspective on your situation, then we’d be happy to join you on a conference call for a free consultation.
Ultimately, in order to successfully launch a new hosted PBX product, it will take a team effort across the company. It’s not easy, but ultimately the investment will be worthwhile. Let us know how we can help.