Product Segmentation Analysis and Implementation

Issue: Business owner was grappling with the question of whether to expand to include complete phone solutions and services.

Significance:

To the company, it would likely increase monthly recurring revenue (seven existing customers would benefit), and offer the opportunity to market and sell this service separately. A software vendor could drive sales to the company through a protected geography model. Phone services would eliminate some troubling sales agent relationships and increase the ‘stickiness factor’. The hosting, trunking, phone hardware already exist and would be obtainable at low cost, and the company would be ready for the next generation of telco services.

For customers, it would provide a low-cost solution that includes advanced features, such as one-click video and audio conferencing, chat, call center service, reporting, multi-site support, etc. at no additional charge. This would further unify technology management under one entity, and eliminate the need for managing separate phone vendors. Cost savings would include a replacement system for less than typically paid for phone lines. Customers would have no large upfront capital investment, only a monthly recurring fee. The company could suggest implementation of new phone system features.

Background:

Currently, the company offers “Virtual CIO” services to advanced plan customers to help with telco vendor solutions, bill reviews, technical work, etc. and would like to expand capabilities. Customers fall into two categories: those with on-premise systems and those with cloud hosted voice providers. For cloud hosted customers, the company vets providers, analyzes pricing, does a demo, etc. but real issues do not appear until an installation happens. Every cloud install incurs problems.

The company has repeatedly and unsuccessfully tried to align itself with a cloud voice provider that is rock solid as a go-to solution. The opportunity appears to solve all of the headaches with feature rich, solid software.

Actions Taken:

The company has evaluated other vendors, systems and services for ten years. Once this solution was identified, the company implemented a fully configured system and joined their partner program, completing all three levels of certification. The company implemented and tested a second system, developed a relationship with SIP trunking providers to streamline trunking sales, and designed and built cloud and on-premise solutions. Company still focused on “street pricing”.

Ideal Outcome:

To have this become a parallel business, with separate marketing, competing directly with local cloud based providers. To employ this as a lead to other company services. To leverage existing staff for the first 20 installations. To generate ongoing and recurring revenue, including 30% margins with 1 year contracts.

Roadblocks:

The company needs to be sure it makes sense to enter this part of the industry directly; currently the company acts as a sales agent using ‘partners’. Uncertainty includes whether the customer would buy it or still view it as a specialized service, and whether it would cause a company to exchange its phone system for something new.

The company may require additional staff for installs, time is of the essence since launch would delay or distract from current marketing efforts. There is hesitancy to repeat the past with a bad product.

Desired Results:

Improved perspective: Customer sees why it’s worth the trouble and cost to switch out a phone system and see telecom as part of Information Technology. In addition, that the customer sees the value of the additional features, rather than simply thinking “a phone is a phone” and going with traditional providers. Customers see that the venture is viable and a good use of time and resources.

Recommendations:

Form a separate entity, which serves as a lead generator. Keep in mind that customers get upset quickly with phone vendors, and avoid associating transactional business issues with the core business. Most customers shop on price, and an add-on makes the idea hypercompetitive; the business is all about sales, and most will not look for added value.

Think carefully before delving into this market and the potential impact. Try doing a focus group with current customers to determine interest. Have some customers on board before going forward by pre-selling one or two deals. Ask the new software company who is their shining star in sales, and align yourselves with them, especially if their company offers similar services.

This appears to be a revenue opportunity, and you can title it as a business communications tool that integrates with the technology platform.

Outcomes:

Based on the group’s input, the company decided to continue with the telecom solution, but to offer it in a unique way. The company chose to offer the solution in the same manner as IT services – identify the customer’s challenges and present this as a solution. The company can deliver the solution and its components directly while leveraging a third party for connectivity to minimize risk. Speaking with another provider as suggested resulted in a positive outcome to move forward.

The company built the solution and refined it. Initial marketing included the current customer base of which two asked for proposals. The company is pausing to get the two customers on board and work out process bugs and pricing. Company has also simultaneously built a number of telecom based marketing campaigns to be released when the time is right.

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