For resellers making the switch from a model based on capital income to one that relies on regular subscriptions, selling VoIP alongside cloud services makes perfect sense
For most B2B resellers, hosted VoIP is never going to be the main income generator. It can, however, make a significant contribution and should – like other subscription-based services – be included in the mix of offerings that will, ultimately, make a reseller business more stable and sustainable for the long-term.
Most resellers will be familiar with the rationale by now. IT consumption is changing. Businesses are adopting cloud-based services. The reasons for this have already been articulated many times. What this means for IT resellers, is they must switch from a business model that was dependent on driving capital sales of hardware and software, to one that is predicated on the sale of long-term subscriptions to cloud-based applications and resources.
This is a very big change and one that has been resisted to some degree by both resellers and SMBs. But the tide is unquestionably turning and the UK, it seems, is adopting cloud at a faster rate than most countries. According to figures from Eurostat, almost 42% of UK organisations have adopted some form of cloud service so far, compared to an average across the EU of just over a quarter.
Mind the gap
Resellers then, must also change, but making the switch is not easy. Under the old model, resellers would be collecting a handful of large one-off payments for products and services supplied. Under the new model, they will be collecting hundreds or even thousands of quite small payments for subscriptions to cloud services.
The businesses that can move from one to the other at a gradual pace should be able to balance the books and build up enough monthly subscription income to support their baseline costs. That will take time of course, but that is not necessarily a bad thing. If they were to suddenly switch to a subscription model overnight, they would find themselves with a monthly deficit that they have to finance – and it will take time to shift all customers over, so most can’t afford to drop capital sales immediately.
But the market is starting to move in that direction – and where customers go, resellers must follow and preferably, they will be well ahead of the game. This is a bit like walking a tightrope. Go to fast and you will fall. But if you don’t set out on the journey early enough, you’re likely to be left behind. Customers who want to move to the cloud will simply turn to another supplier.
This is why it makes sense for resellers who are offering cloud services to also sell hosted voice. A VoIP service is, after all, really just another cloud-based solution that meets an everyday business need. Adding it to the portfolio makes sense. The appeal of VoIP is essentially the same as that of the cloud. It takes the burden of managing hardware and infrastructure off the premises and out of the hands of the business, and provides it with much greater flexibility, scalability and control. Any sales person capable of selling a cloud service, should also be able to sell hosted voice for business.
Indeed, for many SMBs, hosted voice may be a better way to get their feet wet with cloud solutions. Every business is already used to paying for most of their telephony bill on a pay-per-use basis every quarter. If they can see the sense of doing that with voice, it should only be a short step to convince them that they should take the same approach to software, storage, backup and other IT resources.
An effective approach
This could be quite an effective approach to take to selling subscription services to SMBs, as many are still hesitant about making the commitment to cloud. The Eurostat figures also revealed that while 40% of enterprise organisations across the EU region have used public cloud services, only 17% of SMBs have made the commitment so far.
Perhaps more significantly for resellers, adding hosted VoIP to their portfolio of services makes that tightrope a little thicker and shorter. With every new user added, the monthly subscription revenue will grow and the chances of getting to the other side, and successfully building a monthly revenue stream that will support the business costs – and then start to generate a regular, predictable, sustainable profit, will be improved. And as every business uses voice, every single customer is a genuine prospect.
Hosted VoIP is a relatively easy sale and, as the migration of IT to the cloud gathers pace and as more customers become curious and then confident about making the switch, it makes sound business sense for resellers to sell VoIP alongside cloud services. It will help them to get to the point where they have a more stable and sustainable business model that little bit sooner.