Q&A: Can VARs Distinguish Their VoIP Offerings?

According to recent research conducted by Infonetics, almost half of small and 66% of large organizations in North America will be using VoIP (voice over Internet Protocol) products and services by 2010. Comparatively, 36% of large, 23% of medium, and 14% of small North American organizations interviewed were already using VoIP products and services in 2005. Because of the complex nature of VoIP, many organizations seek VAR assistance to deploy this technology, which is good news for traditional data VARs and traditional telephony (i.e. interconnect) VARs that have gotten into VoIP. But, like any good opportunity, it doesn’t sell itself — and there are competitors. So, what can you do to gain a VoIP sales advantage? I asked that question to five industry experts from five value-added distributors: Robert Messer, president, ABP Technology; John Black, president, Catalyst Telecom; John Horner, general manager of telephony and converged solutions, SYNNEX; Chuck Bartlett, VP, networking product marketing, Tech Data; and Anthony Daley, executive VP of Westcon, the Americas.

What is the most significant trend in VoIP that VARs should know about?

Bartlett: We see the SMB (which Tech Data defines as 1,000 employees and below) market’s increased rate of VoIP adoption as a significant trend. It signifies that VoIP is hitting a price point similar to what the PC experienced several years ago when it dropped below $1,000 and became a spontaneous buy for consumers. The reasons for the price drop with VoIP are: 1. the technology is becoming more mature, 2. there are more competitors offering VoIP solutions, and 3. the cost of maintaining a VoIP network is coming down. VARs should see the SMB market as a tremendous opportunity for new business.

Messer: We see the SMB market as a hot opportunity for VARs. Smaller VARs and VARs that are just beginning to sell VoIP should sell to smaller businesses with 6 to 50 users, because these customers are big enough to require VAR assistance (unlike a company with only two phones that can easily buy a VoIP system online). Selling to small businesses also protects VARs from many of the Avaya and Cisco VAR competitors, which mostly market to companies with 500 employees and above.

Horner: One of the most significant VoIP trends over the past year has been the inclusion of video over IP solutions, which is being driven by the improvement of video over IP products and integration alliances between video vendors and VoIP vendors (e.g. Polycom and Avaya). Video creates several upsell opportunities for VARs (e.g. video cameras and mounts, video conferencing applications, voice and video systems integration), but VARs need to fully understand their customers’ networks before adding video, because video is bandwidth intensive.

What special skill sets do VARs need to successfully sell VoIP?

Black: VARs need enhanced selling skills to be able to analyze their customers’ specific telephony needs and position themselves with a solution that addresses those needs. Also, they need to understand network security and WAN optimization and how to conduct network analyses and monitoring. None of these skills is a one-time service, because networks are always changing. Just because a network is safe and has the latest patches today doesn’t mean it’s going to be that way two weeks from now. Having an end-to-end communications portfolio and the skills to support it is a tremendous competitive advantage, because end users want to deal with fewer suppliers and are looking for trusted partners.

Daley: Data, voice, and security skills come into play to create a converged solution, which is one of the primary drivers behind VoIP adoption. For example, a customer calls into a contact center, and the customer service representative (CSR) answering the call sees the customer’s service history because the IP telephony application is integrated with a CRM (customer relationship management) application. VARs can take this a step further and integrate an ERP (enterprise resource planning) application, which shows the CSR the customer’s business transactions and payment history — all on a single screen (i.e. dashboard).

The VARs that are most successful selling convergence solutions are the ones that have a vertical market focus. VARs can gain this knowledge by working with their VADs and attending vertical market-specific workshops, seminars, and conferences. For example, at one of our ConvergencePoint conferences, we demonstrated convergence solutions for doctors’ offices and talked about the phone features and benefits doctors want.

What are some common pitfalls VARs run into when selling convergence solutions?

Black: VARs tend to underestimate the labor hours required to implement and troubleshoot their customers’ networks, which results in lower profit margins. In today’s economic model, implementations and service offerings such as network assessments and annuities [e.g. leasing contracts, payment programs] are where the higher profit margin opportunities lie, and VARs need to develop a service strategy and make sure to charge for these services.

Messer: VARs should avoid selling VoIP solutions that use proprietary protocols. Proprietary solutions are often more expensive than open solutions, because they require customers to replace all of their legacy phones and switches in order to accommodate the proprietary IP PBX (private branch exchange). A better approach is to sell SIP (session initiation protocol)-based solutions, which enable VARs to sell best-of-breed solutions and to enable their customers to migrate to VoIP at their own pace. For example, a customer may want to try VoIP with the sales department, and after a certain period, upgrade the HR department to VoIP. Even the market share leaders such as Avaya and Cisco are starting to offer SIP-based products, which should tell VARs that SIP is becoming the standard communications protocol for IP-based communications.

Bartlett: Some VARs are hesitant about getting the required certification training required to sell VoIP. Some training lasts 5 1/2 days and requires follow-up sessions and tests to maintain vendor certifications. VARs have to allot enough time and resources to training, which may require pulling field and systems engineers from the field and sending a few salespeople to a training session.

Daley: Not understanding how to sell convergence solutions is a major pitfall. This isn’t about selling an appliance like in the old days when PBX resellers asked customers, ‘How many phones and lines do you need?’ To be successful at selling convergence solutions VARs need to understand how the  client wants to be contacted by its customers, what types of applications are currently running on the network, and how much bandwidth is being used. For example, does the client want its customers to speak to a live person or does it make more sense to have them first communicate via an IVR (interactive voice response) menu?