Pick Up More SMB Business

According to a January 2005 survey conducted by Info-Tech Research Group, 23% of 1,500 midsize businesses said they were using VoIP. The analyst group predicted that number will rise to 50% by 2008, and by 2015 just about all midsize businesses (and everyone else) will be using VoIP. But, the reality is that a $75,000 on-premise VoIP solution is too great an up-front capital investment for many companies — especially those with 50 or fewer employees (the “S” part of SMB). Crestwood, IL-based networking VAR Single Path found its Cisco VoIP solution wasn’t financially feasible for many of the smaller companies it engaged. But, what could it do to win customers in the smaller end of the SMB market?

That’s the question Matt Briggs, one of the founding partners at Single Path, was asking himself two years ago. Unlike some of his colleagues who were doing little more than complaining about how small businesses couldn’t afford their solutions, Single Path chose to add a hosted VoIP solution option and change its prospecting strategy in order to win more SMB business. Offering hosted or on-premise solutions provides the VAR with a VoIP solution that fits companies with 5 to 500 employees. Within the first year of offering hosted VoIP solutions, the VAR’s revenue grew 300%. This year, the VAR expects to realize 143% sales revenue growth.

Hosted VoIP Fits Small Businesses’ Budgets
Approximately 85% of Single Path’s business comes from SMBs, which cover a range of verticals such as legal firms, banking and financial institutions, healthcare organizations, and professional services companies. “The only market we’re not seeing much VoIP adoption in right now is manufacturing,” says Briggs. “Companies with multiple branch offices that need a lot of interoffice communication are good candidates for VoIP.” Cost savings through reduced toll charges and productivity gains via running voice, data, and video over one network (i.e. convergence) are the two primary drivers of VoIP adoption. A hosted VoIP solution can fulfill these needs about 30% more cheaply than an on-premise solution and doesn’t require the end user to hire (or outsource) an IT person to manage the phone system.

It was the middle of 2003 when Single Path made the decision to begin reselling hosted VoIP. Due to the complex nature of VoIP, which affects a customer’s entire network infrastructure (e.g. routers, switches, hubs, controllers, access points, applications, storage devices, and network security solutions), Single Path looked for a hosted solution provider that would require as little disruption as possible to Single Path’s business. Since it was already a Cisco reseller, the VAR looked for a hosted solution provider that could interface with Cisco networking appliances. After checking into a few options, the VAR selected Cisco partner Covad Communications. “The Covad solution uses Cisco IP phones, switches, and routers, so we were already 90% trained on implementing it,” says Briggs.

Offer Hosted, On-Premise
VoIP To Win More SMB Customers
One of the first steps the VAR took was hiring additional sales reps and networking technicians to help sell and support the new solution. It found qualified salespeople via contacts it already had in the industry. To find qualified VoIP technicians, however, Single Path enlisted the help of IT headhunters and provided them with specific requirements. “We wanted technicians who were already Cisco certified and had one to two years experience configuring routers and IP phones,” says Briggs.

The VAR also developed a sales strategy to quickly determine whether a customer was a better fit for an on-premise VoIP solution or a hosted solution. For example, one of the criteria salespeople uncover is the number of employees at the customer’s facility who will be using the IP phones. “If the customer has more than 50 employees in one location and its own IT staff, it’s more likely to be a fit for an on-premise solution,” says Briggs. “Also, if the customer has three years remaining on a five-year T1 contract, this is an indicator it’s not a fit for a hosted solution, which requires starting a brand-new T1 service.”

Most of the time, however, Single Path’s customers do fit the criteria for a hosted VoIP solution: 50 or fewer employees, little or no IT support on staff, and no long-term T1 contract. After a salesperson confirms the customer is a fit for one of Single Path’s VoIP solutions, the salesperson engages the decision maker, who tends to be a C-level executive such as the CEO. The VAR doesn’t stop there, however. “For a VoIP installation to be successful, there has to be buy-in throughout the organization, including the customer’s sales team, IT staff, and human resources department,” says Briggs. Single Path’s salesperson and technician demonstrate how an IP phone works, and more importantly, why it’s a better choice than a traditional phone system. ROI statistics also play a key role in a successful VoIP sale — both during the presales stage and the postimplementation stage. For example, before and after Single Path sells a VoIP solution (normally a 30- to 90-day sales cycle for a company with 50 or fewer employees), it reviews the customer’s phone and data communications bills. “In addition to the savings realized by running voice over a data network, we often find billing mistakes that boost the customer’s savings by an additional 10% to 20%,” says Briggs. “We had one customer whose telephone bill showed charges for 12 POTS [plain old telephone service] lines that it hadn’t been using for several months.”

Find Unique Ways To Locate, Keep SMB Customers
Most of the tactics Single Path uses to win new business are typical, such as referrals from its vendor partners and existing customers. There are a couple of practices the VAR uses, however, that differentiate it from its competitors. Rather than making cold calls to new customers, Single Path salespeople contact moving companies and develop relationships with them. “The ideal time to find a new customer is when it is in the process of moving to a new facility,” says Briggs. “This is usually a sign its phone lease is up, networking and computer equipment is getting moved, and the customer is open to ideas about improving its network and phone system.”

Besides working with moving companies to get leads on businesses that are moving to new facilities, Single Path practices what it calls the three-feet rule, which translates to anyone within three feet of a Single Path employee is either a prospect or knows someone who is. The VAR encourages its salespeople to be active in the community and to look for VoIP sales opportunities. Single Path has stories about winning new business as a result of an employee’s involvement with a local chamber of commerce and a customer win that came through a contact a salesperson made while coaching a kids’ soccer team. The VAR estimates 75% of its business comes from these types of networking activities.

Train Customers On The Benefits Of VoIP
After winning a hosted or on-premise VoIP installation, Single Path assigns one or two project leaders and a trainer to the customer (generally, a single site hosted VoIP install takes 45 days and a premise-based install takes 60 days). The VAR is very particular about how its customers are trained. “We’ve found the best training sessions have no more than eight participants,” says Briggs. “Training sessions are conducted using a projector in a classroom setting, and we make sure each person understands all the features and functions of the new system.” The VAR believes the more familiar a customer is with the functions of an IP phone, the better the customer will be able to perform its job duties, and the better payback the customer will receive on its investment. Briggs describes his company’s training philosophy as making the VoIP products and services his company sells stickier. Whatever you want to call it, Single Path’s approach works.