Jola Cloud Solutions' Blog

Suppliers will convince themselves that having a member of staff touch every quote and transaction is better for customer service but that may not be how resellers, dealers and end customers see it. Manual processes introduce time and mistakes, plus the cost of them either depresses your margin or makes you uncompetitive.

Also, job satisfaction is low for staff doing repetitive tasks that could be automated. Human intervention is required to manage the exceptions, not standard processes.

The minimum requirement of a portal is to generate quotes and place orders automatically 24/7. The next stage for Jola is always to then get APIs (Application Programming Interfaces) from the networks so that information can be retrieved and orders placed by us automatically. 

From there the self-service portal needs to be developed in two ways; 

1. Software to help Partners differentiate their own proposition.

An example of this is the new breed of dealer portal. An IT or voice supplier can be sat with a customer and as they talk, build an online quote on their laptop or mobile that automatically checks the availability of internet connectivity, sets up new numbers and arranges porting. The system picks up key words and emails a customised, dealer-branded, proposal to the customer. The customer can then review, amend, click to accept the Ts and Cs and the order is placed. Often the first supplier to meet and quote a prospect wins the business and vertically integrated portals facilitate this.

1 – Lack of maintenance contract

Very few SMEs still have maintenance contracts on their on-site phone systems – often because they are so old they are no longer supported. This seems like good value while they work but when they break it is often terminal and the organisation can be without phones for days. 

2 - Cost

Telephone calls are 5% of what they cost 20 years ago and because your customer has not seen monthly charges going up too much they think they are doing well. The reality is they are paying three or four times the monthly charge of an up-to-date cloud voice system, which includes all of their calls.

3 - Professional call answering

Your customers have got used to the idea that their phone system can’t handle out-of-hours, public holidays, multiple calls and even busy lamp fields, showing who is on the phone before transferring. Often staff cannot pick up valuable sales and support calls even if they want to. Your customers would love to have an automatic call distribution system but consider such features outside of their budget; as well as the idea that the name of the person calling in might ‘pop’ onto their computer screen.

Until recently small businesses have avoided adding auto-attendants and queues to their telephone system, mainly because of the prohibitive cost but also because they felt it put callers off.

Now with changes in consumer behavior and the growth in cloud telephone systems this is no longer the case. Callers to a business now expect to be answered by an automated system and if the voice is succinct and professional their initial perception of that company is enhanced. As long as they are transferred at the next step to a human being they will often view the company as more organised, more professional and bigger than perhaps they actually are.

With cloud voice every individual gets their own direct phone number and for callers that don’t know who they want to talk to (like sales enquiries) they are handled professionally and directed immediately to someone that can help them. Even in very small companies where everyone mucks-in with incoming calls, employees can see on the screen what the call is about before they answer it.

On 1 February 2016 HM Revenue and Customs (“HMRC”) introduced emergency legislation to combat the threat of VAT fraud in the wholesale telecommunications sector.

These VAT changes only affect voice and related data services but do not affect service charges, access or line rental services. Voice call charges (including VOIP), data usage and text usage are all affected.

So if your monthly bill for usage charges from a supplier was £5000+VAT (£6000), it is now just £5000 and the £1000 of VAT you used to pay to your supplier, you now owe directly to HMRC.

I am still amazed by how many companies do not set an annual budget at the beginning of each financial year. Producing a budget starts with the sales forecast and if you are not great with spreadsheets there are plenty of .co.uk sites where you can download a free generic template. Group your main products into categories and decide how many you expect to sell each month, add the sale price and your buy price for each category and the template will calculate your gross margin. Decide how much of that gross margin you are going to spend on Overheads (salaries, travel costs, marketing etc.) and out of the bottom drops your monthly profit.

If your business requires capital expenditure, put this on a separate sheet and decide the period over which you want to write these assets off (depreciation). At this point you should probably give everything to a management accountant who will ask you questions like how long your customers take to pay you and when you have to pay your bills. If you cannot afford a management accountant yet there are management accounts templates on the web that will also turn your assumptions into a profit and loss, cash flow forecast and balance sheet for your business.

In any business, and especially those in start-up and early growth, cash flow is important. For companies that sell products and services requiring regular monthly payments, insisting your customers set-up a direct debit mandate with you seems like a good idea – and it is. 

Usually at the start of the month you will send your customers a bill stating how much they owe you and at the end of the month you take that money directly from their bank, without them having to do anything. No more late payments or endless emails and phone calls chasing them. From your customer’s point of view they don’t have to worry about transferring money or writing cheques and they have plenty of time to query the bills before the money is taken. Even if they have a dispute after the money is taken The Direct Debit Guarantee entitles them to a full and immediate refund from their bank and they can cancel their mandate at any time. Seems like a perfect arrangement but there are a couple of things you as the supplier need to consider; 

The objective of management accounts is to provide timely and key financial information for managers to make short-term decisions.

They are usually produced monthly and cover cashflow, an income statement and a balance sheet. You should also keep an eye on your margins and measure your performance in all areas against a budget.

Gross margin

Companies are often obsessed by revenue and of course this is a key indicator of progress, however I like to focus on gross margin. The average gross margin you should expect from your business will depend on what industry you are in, the products you are selling and where you sit in the supply chain. A distributor may be happy to operate on a gross margin of 5% whereas a reseller may need 40% to cover the cost of serving their customers and to compensate them for the value they add. I am always thinking about how I can buy better, reduce the cost to serve without affecting quality and the optimum price for each product. Look at the margin analysis by product to see if your mix of products is right and think about what you can do to increase the volume of higher margin products.

How important is price?

Price to partners is important because this is a competitive market and resellers need to win the business at a decent margin. If you look for providers that have invested in automation you will generally find them cheaper because their operating costs are lower. They may also be easier to do business with and delivery may be quicker and more predictable. Most SMEs still just need the basics, which most platforms do, and some of the advanced features are still a bit niche. Of course it is possible to get ‘free’ seats if you’re prepared to use self-developed, freeware platforms but most resellers have ditched this idea because of reliability, security and product roadmap issues. Now that hosted voice has moved out of the early adopter phase, the trend is towards established brands, low upfront costs and fixed monthly rentals for everything, including calls, over longer term contracts.

Has the connectivity issue disappeared?

Not entirely. FTTC has really helped but still doesn’t reach around 40% of businesses. ADSL2+ is better than its predecessors but with limited upstream speeds you have to be careful with how many simultaneous calls you are trying to support.

The research

The Swan Independent Research survey of August 2014 randomly sampled 20,000 UK SMEs. In the sample 85% of SMEs had fewer than 50 employees and 62% fewer than 20. The survey showed that 54% of respondents used a local communications supplier and 48% said that they were influenced by a local supplier when it came to making purchasing decisions for communications products and services. 22% would get references from other SMEs and 55% said a primary source of information in any decision was the web. 78% of MDs were involved in the buying process – 47% from the start.

One could therefore conclude that where no in-house expertise exists, the MD will often lead a project themselves, guided by trusted suppliers, web research and peer recommendation.

Steps to take

So what steps can you take to appear on the radar of customers and prospects investigating a move to cloud applications? Getting a decent web site and good referrals is obvious, but how do you know if you are a trusted supplier? Maybe ask yourself;

‘Connectivity’ is an ugly word but the easiest term for the communications industry to describe the physical media we use to communicate with each other. So why not use terms like broadband, internet, Ethernet, leased line or ADSL and what about ISDN, GSM, GPRS and 4G? 

The need for more granular definitions depends on the audience. The SME generally doesn’t care if its Fibre Ethernet, EFM, EoFTTC, 4G, ADSL or white magic. They just want to send and receive information as quickly and as reliably as possible. On the other hand, the industry, and the channel in particular, is obsessed with learning and explaining the nuances between technologies even if their customer isn't interested. After all what’s the point of knowing all this stuff if you can’t use it to differentiate your proposition? Some suppliers even make up new names to describe their connectivity and further confuse their customers.

So the answer is that when you are talking to the channel you have to use generic terms like connectivity for fear of the pedants seeking you out and ridiculing your simplicity. “Internet access? What if my customer wants a P2P leased line or an MPLS network without breakout?” In communicating with end customers I think a different approach is needed. Find out what they can get before you contact them and certainly before you product-dump every technology and associated features. Ask them questions about what they think they need and uncover problems so that you can suggest things they didn’t know they needed.