My most recent research focuses on cloud providers and how they go to market with UC and related services. Their main focus is SMB – both small scale and mid-market – so it’s not truly representative of the enterprise space, but the takeaways say a lot about how challenging it’s to sell cloud services. These days, both buyers and sellers can’t seem to run fast enough to the cloud, and it’s easy to lose sight of the real business value.
The cloud is easier for buyers to use and for providers to sell. Buyers just consume the service, and providers and channels generate an ongoing revenue stream.
Convenience and instant access seem to dictate value for anything that can be bought and sold this way. Consumers care less about audio quality when streaming music or when buying products online. How we cook is also being influenced by this quick and convenient model. Now, with services like Blue Apron, you can order the ingredients online, receive them, throw them in a pan, and voila – dinner.
At the risk of digressing further, these examples are relevant to how cloud providers are finding success. Digital natives buy in different ways than older generations, and as these patterns normalize, they’ll carry over into the business world.
In some ways, less critical thinking is needed to make a buying decision, especially with cloud services. No doubt, software complexities differ from hardware complexities, but as UC technologies become ubiquitous, the distinguishers are becoming ease of doing business and user experience.
Most UCaaS offerings “can do the job,” and with many providers out there still using BroadSoft, how can a buyer make an informed choice based on meaningful differentiation? In reality, some platforms are better than others with various integrations, scalability, reliability, etc. However, since the cloud enables so many players to enter the market, it’s getting harder to differentiate.
Below, I outlined two scenarios on how cloud providers are bringing to market their products and driving success. In the first scenario, cloud is sold indirectly through channels. In this case, the cloud provider might have a great UC offering, but they need more than good technology to help channel partners drive sales. The second is direct selling, where the cloud provider chooses to drive sales on their own.
Market Scenario 1 – Indirect, Selling Through Channels
The key finding here is that success with channels has more to do with marketing than technology. There are many types of channel partners to sell through, but in general, the cloud providers view them as being “technology guys.” Historically, that has been the forte of channel partners, but as the market has become more competitive, their limitations on the sales and marketing end have impeded their growth.
Savvy cloud providers have taken this to heart and recognized that the best way to support channels is to shore up those weaknesses. From my research, Voyant, SkySwitch, and Intermedia are good examples of this. They spoke about developing tools, resources, and programs designed to make it easier for channels to sell and provided customized branding to distinguish them for competitors with similar offerings. Cloud providers support new partners end-to-end, starting with onboarding and training, and as sales volumes grow, partners are then provided with better resources and marketing materials.
Ultimately, this is about providing lead-generation programs and tools to help partners close more deals and close them faster. Perhaps more importantly, this support is provided to enable channels to own the business relationship with end customers instead of simply being a passive agent for other types of providers.
In this regard, technology plays a secondary role, and the focus is about creating a path to the channel for end buyers – making the buying process as smooth as possible. Of course, the underlying technology is important, but the real value-add from cloud providers is providing new and sustainable revenue streams for channels.
Market Scenario 2 – Direct Selling to End Customers
This scenario is less common but speaks to the variety of buying options in the UCaaS marketplace. While this is good news for end buyers – giving them more choice – it’s also bad news for cloud providers since the barrier to entry is so low. UCaaS isn’t quite a commodity, but with so many providers chasing a finite number of businesses as they move to the cloud, competition is relentless. Having the best technology is no guarantee of success since many SMBs are only looking for the basics.
When selling direct, cloud providers have to generate their own leads, and my research indicated that providers are experimenting with new things all the time. Since these providers are selling a similar service, buyers need a lot of education, and marketing resources are limited. Also, these cloud providers aren’t sophisticated marketers, and they seem to be learning on the fly, especially as they focus more on digital media. With the Internet now being the first resort for engaging buyers, there’s much less spending on traditional media.
This milieu isn’t really news – all businesses struggle to find the right mix of digital media. Marketers are drawn to this because it’s a cost-effective way to reach a broad audience, as well as being a way to generate fast results. In principle, this sounds like a good strategy, but finding success with programs like Ad Words is a moving target.
Smaller cloud providers can’t match the marketing dollars of leading OTTs, so they have to be creative with their limited budgets. This means doing a lot of SEO marketing. Rules of the SEO game are set by Google, of course, and there are hundreds of cloud providers fighting for ranking.
For smaller cloud providers, this is a frustrating game to play, as Google keeps changing their algorithms to ensure you can’t lock on to a few choice search terms and live happily ever after. In essence, the game is rigged, so you have to keep guessing and trying new combinations to hit on the best search terms for lead generation. To get a good ROI, you have to spend more, and when marketing dollars are limited, you either lower your expectations with SEO or try other marketing modes to get more dependable results.
What Does This Means for UCaaS?
As the title of this post suggests, it’s never been easier nor harder going to market with cloud services like UCaaS. So far, the market is supporting a variety of players. I haven’t even mentioned how it goes beyond the conventional channels, the OTTs, the MSPs, and even incumbent telcos. WISPs are having success, especially with customers who are not well-served by terrestrial infrastructure, and even more so with 5G coming.
Another route to market would be fax and office supply dealers. They’re well-positioned at the lower end of the SMB market by virtue of long-standing business relationships and can leverage their trusted partner goodwill to help customers pivot away from legacy equipment to cloud services.
Despite the crowded space, all the cloud providers I interviewed seem to be doing well, talking about having steady double-digit growth. Clearly, they must be doing something right, at least during this take-up stage for cloud services. The natural order of things dictates things will get harder as UCaaS becomes more mainstream, at which point consolidation and rollups will be inevitable.
If there’s a singular takeaway, I’ll circle back to the opening of this article. Having good technology certainly is table stakes, but the most successful players focus on the buying triggers – convenience and ease of use.
In many ways, selling UCaaS is no different than selling a music streaming service – make it easy to buy and easy to consume. Don’t get deep in the weeds about the geeky stuff in your messaging – better to build messaging around outcomes and experiences. This may sound trite, but if that’s what the market is buying, then that’s what you’d better be selling.
Jon Arnold is writing on behalf of BCStrategies, an industry resource for enterprises, vendors, system integrators, and anyone interested in the growing business communications arena. A supplier of objective information on business communications, BCStrategies is supported by an alliance of leading communication industry advisors, analysts, and consultants who have worked in the various segments of the dynamic business communications market.
