Magazine Article | June 13, 2007

Selling VoIP To SMBs

An IP (Internet Protocol) communications vendor offers insight on what motivates SMBs to adopt VoIP (voice over IP).

Business Solutions, July 2007

Whether you're presently selling VoIP to the SMB market or not, it's almost inevitable that you're going to be in the near future. According to a 2002 U.S. Census NAICS (North American Industry Classification System) data study, more than 97% of all United States businesses are composed of fewer than 100 employees. Yet, the reality is that this market has traditionally been one of the most underserved and difficult to penetrate with technology solutions. In fact, a June 2006 report titled The State Of SMB Network And Telecom Adoption: Business Technologies North America states that only 15% of all small businesses with 5 to 99 employees use VoIP services.

So, where is the disconnect? Part of the problem has a lot to do with SMBs' perceptions about VoIP. Many SMBs know a little bit about VoIP, but they're under the impression that:
1. It's a hassle to switch to VoIP.
2. VoIP call quality is lacking.
3. VoIP is complex to manage.
4. Once you install VoIP, it's nearly impossible to switch back to a traditional phone system.
5. 911 calling doesn't work with VoIP.
A savvy VAR can overcome all of the above misperceptions. However, before you even get an audience with an SMB, you have to understand their biggest motivator for investing in new technology, which is price/cost savings. According to an October 2005 Telecom Report: Hot Issues Facing The Industry — Harris Interactive VoIP Study, the number one VoIP adoption motivator for SMBs was they wanted to see a demonstrated cost savings of at least 25%. In other words, if your prospect is currently paying $80 per employee per month in local and long-distance fees, you're going to have to show them how you can get their local and long-distance costs at or below $60 per month.

Not only do SMBs generally have fewer financial resources than their enterprise counterparts, they also may lack IT knowledge and/or resources. This is a major reason why bundled, managed (both on-premise and hosted) solutions are appealing to them. VARs should offer voice and data managed services and have customers sign a two- to three-year service contract covering services such as MACs (moves, adds, changes), Microsoft Exchange server updates/patches, IP phone configuration, and remote monitoring. And, don't forget about wireless services. About 53% of SMBs that have deployed VoIP want to buy wireless from their VoIP provider, according to Forrester's U.S. IT Spending Summary: Q2 2006. VARs can partner with ITSPs (Internet telephony service providers) such as BandTel,, or Cbeyond to more easily offer bundled solutions and single voice, data, and wireless payment plans.

Eight Questions To Ask SMBs
The following list of questions is based on Allworx' research as well as feedback from our most successful VARs. You can use these questions to determine how ready an SMB prospect is to buy VoIP.
1. Are they spending more than $500 per month on local and long-distance charges?
2. Do they have multiple sites with different phone numbers?
3. Are they experiencing call-flow issues (e.g. they are unable to transfer a call to a remote facility)?
4. Do they want one access point for customers (e.g. they want clients to call into their main number and dial '1' for customer service, dial '2' for technical support)?
5. Do they desire improved productivity with e-mail and voice mail (e.g. field workers missing critical e-mail messages while out of the office)?
6. Are they having any network problems, or do they need to upgrade their network? (Ideally, they already should have a T1 data line.)
7. Are they frustrated with their current carrier? (Do they feel like their telco is overcharging them or providing poor service?)
8. When will their current contract expire? (SMBs are more likely to buy VoIP if they have less than one year remaining on their current voice/data contracts.)
There is a lot of potential for VARs to sell VoIP hardware, software, and professional and managed services to SMBs. By understanding the key reasons SMBs buy VoIP solutions and SMBs' buying triggers, VARs can sell bundled VoIP solutions and earn long-term recurring revenue streams.