Jola Cloud Solutions' Blog

I first encountered the concept of corporate stories when I went to school, and then worked, in the USA. Here are two examples.

Nordstrom – these guys love to encourage tales of heroic customer service and this one is my favourite. A man goes to one of their stores and complains his relatively new tyres have worn too quickly. He has lost his receipt but regardless the store agrees to refund him the cost of the tyres. Weeks later he finds the receipt and returns to the store. “I’m so sorry” he says, “I’ve just realised I didn’t originally buy the tyres from Nordstrom”. “I know” says the store assistant, “we don’t sell tyres”.

Dominoes– a store in San Francisco ran a promotion. They would refund your money if for any reason you were dissatisfied with the pizza they delivered. A customer ordered a pizza every few days, ate it, and then claimed a refund. This continued for several weeks until the local Dominoes invited him to come in and prepare his own pizza, exactly the way he wanted it. This he did, ate it, and then asked for his money back. They refunded him, no questions asked (and then quietly withdrew the promotion a week later).

I told the Nordstrom story to my Customer Service Manager at Griffin and challenged him to implement a sustainable process (arguments rage as to whether the Nordstrom example is good or bad in the long run) that would create a positive story . He actually did two things;

What’s the opportunity?

Launched last year, Teams has become one of Microsoft’s fastest selling products. An upgrade to the Office 365 Enterprise license, it offers collaboration, screen sharing, voice, video, IM and a whole bunch of other cool features. If you upgrade to E5 you also get Phone System, Advanced Security and Analytics, for £30.80 per user per month. If you have E1 or E3 and only want Phone System, you can just pay an additional £6 per month. Microsoft do not currently offer Phone System as an upgrade on their most popular Business Premium licence, but this is a logical next step.

What’s the issue?

If you want to connect Microsoft Phone System to the PSTN (you will, if Teams is to replace your PBX or hosted telephony system), the Microsoft Calling Plan product is a little clunky. It’s also quite expensive, compared to SIP bundles available in the market.

What’s the solution?

Instead of using their Calling Plan, Microsoft will allow customers to connect Teams Phone System to an alternative network provider using Direct Routing. However, setting this up is complicated and expensive and there are only a handful of companies in the UK offering Direct Routing as a service.

5G offers solid, high-speed, connections, delivered same-day, with minimal provisioning and support overhead.

With every major carrier and a portfolio of channel-centric products, Jola enables resellers to retain control and differentiate. 30-day contracts and online usage management tools minimise the credit risk. When the MNOs launch a 5G wholesale product, Jola will be one of the first to offer it to the channel, through Mobile Manager.

Unlimited offerings

Mobile data costs have not reduced, so any unlimited product relies on assumptions about wastage, and traffic shaping. As a well-known company found out when they offered unlimited broadband, there is a danger that it only attracts very heavy users. If this happens, usage economics go out the window, the product becomes unusable, and either the price is increased or the product is withdrawn.

We advise our partners to sell bespoke solutions. End-users ordering unlimited retail offerings, may be paying too much for their mobile data. Resellers with access to mobile usage data can offer bespoke solutions to meet exact requirements and save the end-user money.

Resist selling consumer and business retail products

One thing is for certain, resellers do not want to start selling consumer retail products. These products are not designed for business use and end-users run the risk of traffic shaping and being cut-off by the carrier.

Business versions are available, but are not easy to re-sell, manage and on-ward bill. Also, some unlimited SIMs are locked to the router supplied.

In the IT/communications industry most of the products we buy from the networks are essentially commodities, in vanilla form. This is because product development in the large Telcos lags technical innovation by 2-3 years. With such rapid technical innovation and cost/unit (£/MB, £/MBs) decline, more bespoke products are often out of date before the network has a chance to launch them.

This is one reason why good aggregators thrive in the channel and why good resellers and dealers are able to beat the direct selling divisions of the networks – particularly in the SME market. For aggregators, tailoring these vanilla products for specific markets is critical to continuous growth. For resellers it often comes down to their process for evaluating, selecting and on-boarding new suppliers (usually aggregators) and then how quickly they can produce collateral, update provisioning systems and train staff.

You may have built or acquired a base of telecoms or connectivity customers. This may not be a core part of your business and the cost of supporting and billing these customers may be on the increase. What do you do? You could invest in this part of your business or sell it.

Why sell?

• You may simply want to raise some cash, either to expand the business in other areas or for personal reasons
• You may not have reached critical mass. A lot of data resellers get into telecoms by accident and then realise the cost of billing and support is depressing margins. Companies with bigger bases can buy better and you risk losing customers when their contracts come up for renewal.
• The trend in the cost of communications is down. For example, at the end of a three-year leased line contract you may be able to renew with the customer at the same percentage margin but your cash margin could be halved, whilst your cost to support this customer has remained the same, or increased.

What are the challenges if you do decide to sell?

• You may be too small for a broker, who traditionally looks to sell larger businesses.
• You may not know who else to approach.
• You may have been approached by a competitor and are reluctant to put your core business at risk by selling to them

In the last year or so, several suppliers have been either overtly or covertly shutting down their wholesale partner divisions. Overtly by disbanding their wholesale sales teams or covertly by refusing to take on new partners and encouraging direct sales staff to compete with their channel partners.

Why are some companies dipping in and out of the channel?

New ownership

When a company is taken over or receives significant new investment, new management find it hard to see passed the headline numbers. The comment, “If I can make three times the margin direct, why would I sell wholesale?” is common and a knee-jerk reaction is to pull out of channel. Often when sales don’t increase and their true cost-of-sale is calculated, the company will try to re-engage with resellers.

Wrong approach

Selling through partners requires a particular set of skills and the proper alignment of the organisation. Suppliers that are not channel-only have to work particularly hard to build trust and differentiate themselves. A common error is to view the reseller as the customer, forgetting they have to sell and support the products and services with hundreds or thousands of end user businesses. Resellers need reliable infrastructure and a consistent and timely flow of information. Suppliers need to make themselves easy-to-do-business-with by developing self-service ordering, provisioning and management portals.

Negotiation 101 – back to basics

I thought it might be useful to distil all the thousands of pages on negotiation available on the web, down to three important principles. Overarching all of these, is preparation. People who think they can walk into a negotiation and wing-it, relying on their wits and the benevolence of their opposite number, leave money on the table or undermine the chance of agreement altogether. 

Interest vs Position

The easiest way to explain this is by example. Reseller A goes into a negotiation with Supplier B. Reseller A’s position is that they want to buy product C for £10, which is below the £16 price they have been given by supplier B - £16 is the supplier’s position. The rookie negotiator immediately starts haggling over price whereas the veteran will always start with interests. The interest of the reseller is that they know what they need to sell for to win business at a reasonable margin. For this they need to buy at £10. The interest of the supplier is that they load extra features into product C that most of their competitors don’t offer – they can’t afford to sell much below £16. Do reseller A’s customers need supplier B’s extra features? If so, what could reseller A charge for them. If not, can supplier B offer reseller A, a stripped-down version of the product? Initial questions like “why is your target price £10?” and “what is included in your £16 price” are more productive than just throwing numbers around. Ask questions and avoid confrontation.

What is the balance of power?

This is important when you consider what happens if you cannot come to an agreement. Who suffers the most? What is your next best alternative and what is theirs. Take the example above, who has the power? You might think it is reseller A because they have many suppliers to choose from. What you won’t know, unless you ask questions and think through the answers, is that reseller A already buys most of their products from supplier B. The MD has been told by the CTO that the billing system cannot handle multiple CDRs and would need upgrading if they don’t buy product C from supplier B. Also at a certain level of spend reseller A gets a discount on everything they buy from supplier B. Supplier B would like reseller A’s business but the person they are negotiating with is a middle manager with no equity stake in supplier B and no sales target. To them it’s just a job and if they walk away from the deal there are no consequences. However, if they approve a deal below minimum margin they will be required to get permission and account for their decision. You must understand the balance of power before you start negotiating, so do your research and ask questions. Don’t be afraid to insist on negotiating with the decision maker.