How to Sell: Convergence - Part 2 - Clear and simple

Voice and data convergence is already happening, only the message doesn't seem to have reached most SMEs.

It has been going on for years yet it's still not clear whether convergence will save firms money or help generate sales. The question is not whether convergence is taking off but how it can be better marketed.

No business ever buys a communication system just because it's 'convergent', but they will if it can slash their bills.

If a company's phone, fax, internet and mobile phone costs can be brought under tighter control, then most would jump at the chance. The real challenge is pitching the service to SME bosses.

"SMEs want an end-to-end solution to a business problem," said Paul Girvin, sales and marketing director at comms vendor 51 Degrees.

"SMEs buy on a mix of price and service. They buy on value, but the value needs to be relevant to their business. We offer the bandwidth, good prices and speed of delivery; the channel should offer the service."

The market is also less complex now, he argues. Don't bore SMEs with details of whizzy features, as they will never use them all anyway. Just talk about price.

More bandwidth for less money
51 Degrees is a subsidiary of London Electricity and uses its parent company's network to build an Ethernet network that offers customers more bandwidth for less money.

That bandwidth can handle voice and data calls on one connection, which saves customers money. This is the hook it wants its partners to use to catch new customers. The resellers can sell the bandwidth as a commodity and then offer the application integration and management as a value-added service.

"Customers can get a great price on Ethernet bandwidth, but the transactional relationship would be through a partner," explained Girvin.

"The cheapness of the circuit gives partners the opportunity to deliver an overall solution at a great price rather than have the overall price inflated by high price and inflexible bandwidth.

"Many of our partners focus on this opportunity to get competitively priced solutions into the market, even though we still have not engaged the SME market en masse."

It sounds easy, but most SMEs - companies with fewer than 250 employees - have never been easy to sell to. It takes ages to set up a sale and they don't buy enough product to make the margins worth the effort.

Girvin agrees but maintains that the difference is that the convergence market is now mature. The proposition is easy to explain and the technology is reliable. As more people get higher bandwidth for home use, they'll begin to grasp the idea of putting all their calls over one connection.

The real challenge is finding SMEs ready to embrace converged services. How do you spot them? Some vendors hold lists of SMEs whose PBXs are coming to the end of their useful lives, or which have expressed an interest in convergence.

Market intelligence companies such as Katapult-IT will sell you their list or, if you are lucky, vendors such as Ascom may pass you the odd lead from their databases.

However, you shouldn't limit your ambitions to selling SMEs what they think they want, as that might not be what they actually need.

Besides, if they have a specific shopping list of products, they'll ultimately buy from the cheapest supplier. You would have to give away your profits to win the business.

The right support
SMEs are not necessarily difficult for the channel to do business with, argues Chris Lee, national sales manager at comms manufacturer Inter-Tel. You just have to make sure that the vendor you work with is giving you the right support.

"Sometimes it is easier if you're an SME selling to an SME; you know which buttons to push," he said.

You don't have to give away your profits to win the business. "If you account for the length of time a sale will take, then you won't set yourself up for a financial fall," explained Lee.

"Part of the sales process should be about helping customers make up their minds. Manufacturers should be stepping in at this point to assist the reseller and help users make decisions."

Don't work with a vendor that does not offer a test of a working system or a visit to a reference site that was in a similar position.

Choose a vendor that will give the existing infrastructure a health check to prepare for the change, help measure the benefit projections and manage expectations. Technical and user training and after-sales support are vital.

An entrepreneurial SME will be a good showcase for you. It can highlight the benefits of adopting your technology and help raise your market profile.

Larger companies will then recognise how they can conform to new working directives such as home working more easily.

The pressure points to hit are cost-efficiencies, customer retention, user efficiencies, skills retention, legislation and the long-term vision of the company.

Avoid offending clients by suggesting that end-users 'need to be educated', which suggests that they are ignorant for not buying your products. And don't blind them with science. Talk about the client's goals, not the product's features.

Strategic partnerships
When the convergence of voice and data was first recognised, there was a lot of talk about channel companies forming strategic partnerships.

Since few comms dealers had any knowledge of data, and understanding of how to handle voice calls was rare in the networking channel, it was often suggested that partnerships would be the way forward.

This always sounded a bit too idealistic to work. Voice dealers traditionally made big margins on hardware (like PBXs) and offered little in the way of services, while IT resellers were the opposite. Who would make the profit on a combined project?

Instead, voice dealers and data resellers are converging on the same market. It could get very crowded. 3Com recently appointed Rocom, a distributor known for its work with voice resellers, to develop its channel.

In its determination to extend its market (3Com recently signed up 66 new resellers), the company is widening its channel and throwing a lot of money behind training and accreditation.

The incentives seem to be working because Rocom recently hosted its top 30 comms dealers on a training day to get them up to speed on selling its switching products.

"This is a great time to be getting into the convergence market. Pretty soon, there won't be any other type of kit apart from one that integrates voice and data switching," said Clare Tibbitts, 3Com's marketing manager.

Rocom chairman Bob Old, a veteran of the telecoms market, points out that comms dealers have no choice but to compete with resellers.

"We've been saying that convergence is inevitable. Well, it's here now. All the major vendors offer equipment that straddles the analogue/digital divide. In five years, you won't find much that isn't converged," he said.

That's great news for 3Com, but a bit alarming for the channel. It sounds as if the competition for customers in this market is hotting up.

The flip side is that vendors are desperately trying to compete for resellers, so you can get good deals from suppliers.

Channel commitment
The proposition is simple, according to Trevor Evans, marketing manager at Alcatel. It is a question of getting commitment from the channel.

"It's all about cost savings. Multi-site SMEs are telling us that putting their internal voice traffic on to a single IP network is attractive as it reduces, even eradicates, telephony charges," he explained.

Alcatel has a Channel Readiness programme that covers sales, marketing and technical training specifically designed to help resellers understand Alcatel's kit and business needs. If resellers go on to achieve sales targets, Alcatel offers them a rebate on the cost of the course.

As well as talking about the technology, the course centres on helping resellers understand the business benefits of the technology. It is this element that SMEs are interested in, claims Evans.

His company, like all major vendors including 3Com, Cisco and Avaya, also has a co-op marketing scheme, where it pumps a percentage of revenue into a marketing fund that resellers can use to help develop their business with the vendor. The money goes on seminars, lead generation and marketing campaigns.

With vendors throwing their money around and schmoozing resellers, it is not hard to get the products. But how do you generate interest? SMEs are famously difficult to sell to. And these days people want a cast-iron guarantee of a return on investment (ROI).

The good thing about the convergence market is that it is fairly straightforward, so ROI can be calculated easily, according to Evans.

"With the help of Alcatel and ACT, tie manufacturer Michelsons installed an IP network to link its two sites in Sittingbourne and London," he said.

"Before that it had a dedicated phone connection that cost £350,000 a year but, as the link could handle only one call at a time, other internal calls had to be routed over the public network, costing an extra £360,000 a year.

"With the new IP network, internal voice travels over the wide area network - eradicating costs - and external calls are routed locally rather than nationally, which drives down costs."

Geoff Eagland, senior manager at Aspect Communications, favours the fear-factor style of marketing.

"In theory, SMEs are falling behind enterprises in customer relationship management [CRM] and customer service generally, partly because they can't afford the high entry level of the main components of CRM, like Siebel software," he explained.

"So, from a customer service perspective, SMEs must improve service if they are to compete with larger companies in the long term.

"From a technical perspective, the move to IP telephony will have an effect on the SME sector because it will drive down the cost of entry-level systems."

However, you could argue that customers have grown weary of the 'if you don't buy this you're a dinosaur' type of argument.

Importance of specialisation
Eagland points out that, with so many suppliers catering for this market, resellers will have to specialise and offer differentiation from network-delivered telco offerings. "Sector specialisation and application specialisation will be the next big trend," he said.

At the recent Voice on the Net Conference and Expo at Olympia, most interest came from resellers and service providers. Quintum is one of the new manufacturers to enter this market.

It offers an opportunity to differentiate from the rest of the crowd selling kit made by the major vendors. Quintum's distributor in the UK is Techland.

"The bulk of our sales in VoIP [voice-over-IP] and convergence are coming from SMEs," claimed Allan Shriver, Techland's marketing manager.

The arguments for going with Techland/Quintum are that it is an interesting alternative to Cisco, Avaya and so on. And being a small manufacturer dedicated to this niche, it has adapted to market conditions, Shriver argues.

Quintum and other new vendors will offer faster, easier deployment. Customers will be able to try the product in a small pilot and won't need to reconfigure their networks or PBXs. Migration issues and the problem of swapping out legacy equipment are also barriers to sales that firms like Quintum have had to solve.

"To their eternal credit, we find that SMEs, some with less than two-dozen employees, are the most receptive to real VoIP projects," said Shriver.

"In our experience, SMEs are not 'crying out' for convergence but, like most companies, they do like the idea of deploying a specific product for a specific benefit and don't like to hear about grandiose all-singing systems with three-year ROI figures, expensive consultancy and vague features they don't really need."

Integrators that sell to SMEs maintain that the difficulty is that there's "no easy financial proof", said Eric Thickett, chief executive of MiTech Group.

"There won't always be a financial justification. However, the technology justifies itself. Eventually, we will all be converged, but if you can't afford to throw out those systems now, then hang on until they wear out," he stated.

Why SMEs might feel the urge to converge
Thickett summed up the four main reasons why SMEs might go for a converged solution:

If they are start-ups. These are the most obvious targets. "Sadly, such organisations are as rare as rocking horse s**t," he joked.

If they are undergoing corporate change and merging, resizing or moving. IP telephony systems can bring about savings through better organisation.

If their telephone system is past its 'use by' date and needs replacing. Such firms will typically make their first call to the original supplier. But if they have to spend money to replace it, then they can be persuaded to move to the next generation of telephony that is IP and converged.

If they haven't got their customer intelligence systems, such as CRM, quite right. These organisations always will be tough to sell to, since the current systems are not terribly old and still have value on the books.

How to Sell: Convergence - Part 1 - Answering the call

How To Sell: Convergence - Part 3 - Mix and match

How to Sell: Convergence - Part 4 - Cutting the cord

How to Sell: Convergence - Part 5 - Unified messaging

CONTACTS:

3Com (01442) 438 200
www.3com.com

51 Degree (020) 7331 3326
www.51deg.com

Alcatel (0870) 903 3600
www.alcatel.co.uk

Ascom (01276) 418 000
www.ascom.co.uk

Aspect Communications (020) 8589 1000
www.aspect.com

Katapult-IT (01932) 227 982
www.katapult-it.com

Mitech (01494) 472 600
www.mitech.co.uk