By: Nick Nielsen on May 29th, 2017
From the Desk of Nick: How Subscription Voice is Changing the Industry
As of today, I’m a full 5 weeks late on the delivery of this blog assignment. That’s just about the time that Jackie, our always upbeat Marketing Director, cranks up the intensity of her follow up into a persistency that can’t be ignored.
She asked me to pen a review of my trip to the Coredial Partner event in Philadelphia in April. When searching for ideas, she also suggested that I write about ‘changes in the industry’; at which I laughed and asked, “changes from April, or changes from May?”
In April, I attended the Coredial PartnerConnex event and it can’t go without mention that Coredial was a great host and put on a tremendous event for those in attendance. Everything including the amenities, speakers, breakout sessions, social events, food and drink, awards event and overall hospitality was well-planned and executed.
Instead of trying to capture all the industry changes in 1500 words or less; I asked a few good friends in the Coredial partner community to help summarize how the growth of subscription voice services has changed the industry and their businesses. While their companies have many differences, they both have been exceptionally successful businessmen and leaders in their industry and community. Their willingness to jump at this extra ‘work’ is just a perfect example of how willing they are to help a colleague meet a passing deadline.
Special thanks to Craig Marowitz and Matt Kanaskie for their contributions.
Meet Your Panelists
Product Manager, Marco Technologies
President, Expert Technology Associates
Q: How do you perceive the change in the industry as it grows increasingly towards subscription voice services?
A: (Matt Kanaksie (MK)) The market has shifted, in 2017 we will finally see Cloud voice service acceptance above 50% of all voice transactions. Cloud voice services have been around for over 10 years, but market adoption is growing rapidly due to the availability of strong internet connections and the advancements in VoIP call quality, making the total solution much more affordable. Another fundamental change is the ownership of technology, customers first bought hardware then ran it until it broke (avg. 10 years). Then they began leasing and ran it until the lease ended and refreshed (avg. 5 years). Now they want to rent or use the technology and upgrade more frequently without actually owning the asset (avg. 3 years).
A: (Craig Marowitz (CM)) I see this as a positive advance for the Voice & Data industry and customers alike. In a subscriber model, end customers should benefit from a higher refresh rate of their technology compared to the “purchase model”. My years in the industry have proven that the bulk of companies only invested in their technology when something forced them to do so, rather than proactively to bring new benefits to their organizations. When left to the budget process, technology improvements were often sidelined for the perceived needs a business could envision. Many businesses lacked a technology strategy or vision so they didn’t invest in it and fell behind. I just bought a new car after 12 years in my previous car. I didn’t know what I was missing. After only 1 month in my new car I would never buy another without the safety and technological advancements I am already benefitting from. That is the case with voice and data technology, many just don’t know what they are missing. In a subscriber model, providers are constantly unveiling new functionality and better capabilities. As the subscriber it’s all there for the taking. Today, customers just needs help adopting a strategic mindset around technololgy, and we are expected to help them identify what they should be taking advantage of. The budget is no longer in the way.
Q: How does selling these services change the experience for your customers? Your sales reps? Your bottom line?
A: (MK) Customers seemingly no longer want to own depreciating, antiquated assets that are worth 10% of what they were new; they just want to use or consume the service. For our sales reps, it is easier to sell, easier to manage a funnel, easier to plan technology lifecycles, and easier to budget. For us, this allows margin opportunity by bundling, allows standard pricing, and allows value creation to differentiate from competitive offerings.
Q. You’ve navigated change well and stayed ahead of the game. What advice would you share with your peers?
A: (CM) To my peers, make sure you don’t have all of your eggs in one basket. The experience you and your customers have with Subscription Service Suppliers (SSS) may sour over time. M&A can change the focus of an SSS, impacting their emphasis on you as a Channel Partner or Wholesale (White Label) Partner. Commission structures may change, and as history has shown, many times drastically and for the worse. Make sure to have two or three “go to” providers. Forge your relationships and get really good at marketing their services. It takes more effort, but your business will be protected in the long run should any one of your providers take a sharp turn that doesn’t benefit your business or your customers’ experiences.
A: (MK) Change is uncomfortable, yet inevitable – especially when your industry is technology. Get comfortable, being uncomfortable. Be prepared to make decisions which seem cannibalistic to your core business, but always look down the road for market opportunities. If you do not change, someone will eventually consume your client base. Chasing margin and revenue can sometimes distract from a receding industry and market. Always focus on profits but keep an eye on industries with large CAGR projections of 3-5 years out.
Q: If I were to do anything differently, relative to how I’ve built my subscription voice solution, what would that be?
A: (MK) Bundle in more hardware solutions (infrastructure) to make the customer stickier, have a better experience and ultimately allow my team the visibility needed to solve issues immediately.
Q: Day in and out, where do you sense most of your competition comes from? How is this changing?
A: (MK) The biggest competition is coming from telecom carriers. Everyone in the IT space (MSP, CSP, VAR, Carrier, ITSP, Agent) has a common goal: add more value and increase the MRC to gain wallet share. We are all racing for 100% wallet share of a client’s IT budget. We used to compete within silos and hand off work between them. Now we are all converged service providers that span multiple products. The goal is for a one stop shop for the client.
Q: What is the biggest recent change in customer expectations from their communications provider?
A: (MK) All inclusive, bundled offering where most of the decisions are made for them. Basically pre-engineer based on 90% of the market and allow the customer 2 or 3 options and include everything else. Make it easy to buy! They barely understand what they are buying anyways, just make it simple and guarantee it will work.
A: (CM) Things keep getting cheaper. Cablecos, broadband connectivity and SD-WAN services are creeping into the minds and plans of even larger businesses and that is part of the experience, lowering their costs. You need to have a wide array of services in your portfolio so that your competitors don’t lure them away with services that will lower costs while you are hanging your hat on the “tried & true” way of doing things while watching your take rate and revenues diminish. The changes in technology are making Account Management more important than ever. Customers are looking for ongoing guidance in this more short term, subscription-based world and you better have your people there to drive those conversations or suffer from your competition stepping in and having those conversations before you have the chance.
Nick Nielsen began his work in the telecommunications industry in 2001. Prior to that, Nick attended Coe College, where he earned his Bachelor of Arts in Communication, was a student-athlete, served as a coach post-graduation, and also met his wife, Wendy. He then went on to earn his Master’s from the University of Iowa’s Tippie MBA program. Today, Nick serves as Vice President of Sales for GreatAmerica Financial. Prior to joining GreatAmerica in 2008, he served in various leadership positions with U.S. Cellular.