How to Sell VoIP to Small Business Customers

A VoIP provider is announcing that it has developed a marketing program for its channel partners to help them sell VoIP to small business, getting past the "don't waste my damn time" objection.

by Alex Goldman ISP-Planet Managing Editor [April 17, 2007]

David Cork, CEO of Ottawa-based VoIP provider Natural Convergence, says everyone was ignoring the small business market when he founded his company on April 2, 2001. "ISPCON in Baltimore that year was April 3, 4, and 5. I must have interviewed close to 80 different people," Cork says.

"The only concept we had was that if everyone was putting broadband pipes in the ground, they would need software to deliver services."

At ISPCON, as it was then, there were plenty of services on offer to large enterprises, and ambitious plans for residential offerings. "But nobody was looking into the small business market," says Cork. "So on the second day of ISPCON, we said, 'let's build services for small business.'"

So was it tough to start a company in 2001? "I also had a startup in 1997. A startup needs two things: good people and plenty of money. In 1997, I had money but I couldn't hire anyone. If you were an engineer living in Ottawa, you were locked down. In 2001, it was the reverse. Big companies were laying people off: Nortel, even Cisco. I had my pick of highly qualified people, but raising funding was the trick. We were able to do it because we were, ironically, not a high tech company. We were four guys with a business model. We had end customers willing to buy (service providers). We had letters of intent, and we had not even written a line of code when we raised our first million. We found a market nobody else was paying attention to."

At first the company was not a VoIP provider. The company knew it wanted to deliver applications to small business customers, but had not yet picked the application. "We looked at online CRM, financials, salesforce automation, and decided to find out what small businesses were willing to pay for. For small businesses, we found that the costs are 1) employees, 2) facilities and inventory, and 3) communications."

A company that offered customer service had an opportunity at number 3. "Many small businesses are owner operated and most love to hate the Bell. We found that these services were a real emotional trigger. We decided to build a communications service that would rival the ILEC quality but do everything else well that the Bell does badly. The idea of a hosted service delivered over broadband service to an SMB is what we're all about."

We know ISPs
Cork says that by the end of this quarter, the company will have 20,000 customers worldwide. He sees service providers in four tiers. Tier 4, many ISP-Planet readers, are non facilities-based ISPs. Some will offer his service directly and others will prefer to be agents. Tier 3 are regional facilities-based ISPs. "That's where I started," says Cork. The company has about 14 tier 3 customers. Tier 2 are those that compete with the ILEC. Natural Convergence recently signed Rogers, which was number 3 in Canada at the end of 2005.

"Tier 1 are ILECs. I don't sell to them. If you want to take customers from the ILECs, I'm your man," says Cork.

Making it easy to sell
The company is announcing flashpoint 1.0, a system to make it easier for small ISPs and channel partners to sell VoIP. "How many companies have said that they were going after the SMB market and failed," asks Cork rhetorically.

He says that many companies failed because they thought that strategies that drive sales in large enterprises would work at the SMB level. Others thought that strategies that worked with legacy technology would also work with new technology.

"If the channel cannot make money, it won't sell your product," says Cork. "Take PBX sales. A PBX is a very feature rich, complex product and if you marry that to a skilled, well-trained VAR channel, good things happen. But a VAR channel with that level of skills and tech competence requires training programs and has a hard time with a low cost sale. It's effective economically in sales of 50 lines or more, but the margins are no good for smaller sales."

The answer, Cork believes, is resellers and channels. The answer is ISP-Planet readers.

The company has done its research. It interviewed small business owners about the sales process. The owners have signed permission to share their names with us, but Cork shared the first line of the video: "Don't waste my damn time!"

Cork explains that the sales cycle at a large company is slow, involving six or more visits. SMB owners are impatient with that process.

"We have a two call methodology," says Cork. "We teach you how to probe and qualify on the first visit, how to make sure you understand the problem that what you're offering will solve. On the second call, you walk in with a proposal. It's not just a quote. It's how to get installed and up and running. The number one unspoken objection to VoIP is the fear that installation will be highly disruptive, a huge burden for somebody. So we tell them, on day one we'll do this, on day two we'll do that, and on day three it's done. We'll show how the switch over happens at night and if you want us to, we'll take the old stuff away."

The key is to change how people sell. "A quick, repeatable sales mindset delivers the right economics for the SMB market," says Cork. "We're the catalyst. It's a half day training session."

flashpoint
The entire flashpoint 1.0 program consists of seven modules, the last of which is still in development:

1. Service Definition
2. Recruitment
3. Custom Sales Training
4. Lead Generation
5. Sales Support
6. Performance Metrics
7. Recognition & Incentives

It's about getting the basics right. Once this works, Cork plans to develop flashpoint 2.0 and 3.0 to add higher level business processes. All of this is just a quick overview of a very detailed program. "This is nine months of effort with six successful ISPs," says Cork.

Now flashpoint has its own group within Natural Convergence, headed by Andrew Skasel, whose job title is director of channel marketing. He's just completed the training course for Rogers, and is off to Europe to find a company to work with on training. Natural Convergence will outsource work to this company.

"We're just the catalyst," repeats Cork. The idea is that Natural Convergence will reach out to other businesses that work in the SMB market, creating an ecosystem to support its VoIP products, leaving Natural Convergence to work on its core competence.

— End