Jola Cloud Solutions' Blog

Voice and data companies can improve ARPU by supplying new products to loyal customers. Research shows that SMEs prefer to buy from existing suppliers, they trust. Until there is sufficient demand to justify investment in support, billing and marketing, the supplier will often partner with a specialist on an introduction and commission basis. Moving from a dealer to a reseller model provides better control and improved margins, however there are challenges along the way;

1. No Reseller Programme

If your supplier only has a dealer programme you will be forced to find a new supplier if you want to become a reseller. This introduces delay and risk and will ultimately put you in competition with your existing supplier. Before you take on a product as a dealer make sure potential partners offer reseller schemes too. Compare their reseller and dealer pricing.

2. Forecasts, targets and contract terms

Existing suppliers may offer reseller schemes but discourage dealers from becoming resellers through unrealistic targets or onerous contract terms. Read the reseller agreement as well as the dealer contract before you sign and ask to speak to one of their partners that has made the transition.

3. Billing

This can be especially problematic for IT companies that want to start reselling fixed, mobile and hosted telephony products. Alongside monthly service charges they will need to process monthly CDRs (Call Data Records), rating each call type and producing itemised bills and variable invoices. It is difficult and risky to try and adapt existing in-house billing systems and purchasing and managing specialist billing software is not always feasible.

There are some good third-party billing products available, however the set-up fees, monthly standing charge and billing percentages mean the reseller often has to take several orders before the margin covers the monthly cost of billing. Some of the more sophisticated suppliers offer white-label billing for their products and will even bill products and services the reseller buys from other suppliers. This can be a cheaper and less risky alternative.

For coaching to be effective, three things need to be true:

1. There must be a skills gap to coach
2. The coach must be willing and able to close that gap
3. The ‘coachee’ must accept there is a gap and be willing to accept you as a coach

If any one of these is absent the coaching will fail.

In the context of sales coaching:

1. You must be able to accurately define what is missing and the person you are coaching must agree it is missing. Moreover, it must be relevant to achieving the objectives of the job at the time. Role plays are not always popular with salespeople but managed properly they are the only way, besides field accompaniment, to coach sales skills. Keep them to 10 minutes with a tight brief that focusses on the behaviours you want to observe. Video them and review them objectively alongside the salesperson. Start with the positives and avoid judgemental comments that might make them defensive. Try and get them to spot what is happening rather than what is right, wrong, good or bad.

2. For many successful salespeople the next natural step is sales management. Whenever a salesperson approached me to join the management development programme my first question was always “why are you successful?”. If they were unable to dissect their own performance they were unlikely to be able to hold a mirror up to their staff and help them to be better salespeople. The usual answers were “I work hard” and “customers seem to like me”. I would even get “I don’t want to know, in case I jinx myself”. Selling is a learned skill, not an art and not what you might observe on ‘The Apprentice’. You must be able to identify exactly what is happening in any interaction and your main objective must be to make your salespeople better – not to show off your own expertise or close deals for them.

3. I don’t believe in constructive criticism. All criticism is judgemental and damaging to the coaching process. You must analyse what happened objectively and where necessary agree with the salesperson how they could have achieved a different outcome. You need to catch people doing things right because knowing your strengths is often more important than knowing your weaknesses. Unfortunately, some people are just not wired to work this way and your attempts to coach them will probably fail. You will not be able to develop a salesperson if they don’t respect you as a coach or if they are not able or willing to improve.

Last year Jola won the contract to supply our Broadsoft offering to a voice and data company, for them to resell to their customers. We were up against three other suppliers and the process took several months and many meetings. To sell the product he had hired two salespeople from a competitor.

I would guess they were earning around £25k basic plus £25k commission. The second one left last month, six months in, the first lasted only three. Total investment by our partner of around £50,000, plus agency fees.

He had spent months selecting the right supplier but only a couple of hours on the most expensive bit – the salespeople. So how can he prevent this from happening again? Here are a few ideas. 

1. Decide before you start recruiting what skills and experience you need. For example, if you will want them to sell a complex or evolving product then look for people who score high on ability to learn, or already sell the exact product. What behaviours are you testing for? Write them down and think of questions that would elicit positive or negative evidence of this behaviour. If you’re struggling, talk to your best salespeople and ask them what they do that makes them successful. Only the best salespeople will be able to articulate this. Most will say things like “I work hard” and “customers like me”. If they can more forensically describe their successful traits then think about involving them in the process. They might be your next sales manager.

2. You will find a lot of candidates just by mining your network, however if you do use an agency make sure you brief them thoroughly on the profile. Give them feedback on unsuitable candidates that get through and make sure they understand that if they keep doing it (I used to operate three strikes), you will stop using them. Recruiters can be cost effective if used properly, otherwise you might as well just trawl the online job sites yourself.

3. Have a defined process and understand what you are testing for at each stage. I would do the CV interview on the phone (or via the agency), followed by a behavioural interview. If they got through that they would come back and do a role play for which they would be given a brief in advance. The role play should last no more than 10 minutes - make sure they are briefed just to ask questions (no product dumping). This is a vital stage and you will need an assistant (MD, Sales Director, top salesman) to be the buyer, while you observe. You are looking for problem/criteria seeking questions and good testing understanding and active listening behaviour. If all they do is ask fact seeking questions they have underdeveloped sales skills. If you still hire them you are taking a risk that they can learn and your company will need to commit to coach them. The last stage is for them to present their ‘first 100 days’. This has the double benefit of validating their presentation skills and making sure they hit the ground running when they start. Candidates that reach this stage are normally 90% of the way to being offered a job.

4. In the behavioural interview, stick to example-based questions and avoid the hypothetical i.e. ‘give me a recent work example of when you…”, rather than ‘what would you do if…? People that are used to getting through interviews will have pat answers for all your hypothetical questions but the real evidence comes out when they talk about what actually happened. Explain before you start what you are going to do and keep dragging them back to real events. Probe their answers, “what did you say next…?”, “what was the outcome?”, ‘what was your actual role in the sale?”.

5. Talk to someone they have worked for in the past - before you hire them. Ask them for a boss (probably the job before their current one) and a telephone number. These days written references tell you very little and often arrive after the person has already started in the position. You may be surprised how much people will tell you on the phone if you ask the right question. I always found “what areas of coaching do you think I should focus on?’, worked quite well.

Advice given to me by a venture capitalist during my first start-up. If you really do have to raise money from business angels, banks, venture capital companies or private equity then do it long before you start to run out of money. The fundraising process will normally take at least six months so make sure you are not about to go bust just before you close the deal. People who lend money or buy equity in your venture are businesses too and if they see you are desperate you might find the terms of the deal changing – or they might see this as poor management and pull out altogether. Another mistake entrepreneurs make is over-egging the forecast upon which investors are basing their valuations. If you are not making your numbers during the fundraising process you will make your potential investors nervous. Again, they may pull out or change their offer. 

If you can avoid external funding completely I would recommend it or at least until you have a proven business that can stand on its own two feet. Then you are raising money for growth not survival and this puts you in the driving seat with potential investors. If you believe in your business then back it with your own money because if you’re right, anyone buying your equity right at the start is getting a real bargain. In my first start up we funded the business initially by selling equity to friends and family and re-mortgaging our houses. 

A final note on venture capital funds and private equity. Generally I don’t believe in the concept of clever-money. This is where a potential investor professes an expertise in your type of business or industry and attaches a premium to this by way of a lower valuation or monthly charge. Most are not great at running businesses or at least not yours. They are there to provide you with money and help with further fund-raising if needed. They have a seat on your board to protect their investment, so be careful about letting them meddle in your business. Check all the drags, tags, rights and restrictions in the contract and think carefully before you agree to pay any management fees. 

Who are Openreach?

Openreach owns the pipes and cables that connect the majority of homes and businesses in the UK to the national broadband and phone networks. It is owned by BT.

What was the issue?

BT was accused of abusing the monopoly by underinvesting in the broadband infrastructure and charging over the odds for services. There were ongoing calls for the regulator Ofcom to force a split between Openreach and BT.

What happened?

Eventually Ofcom announced that BT would legally separate from its Openreach subsidiary, describing it as a “significant day” for consumers.

Openreach will soon become a distinct company with its own staff and management. Ofcom says the new Openreach will have “its own strategy and a legal purpose to serve all of its customers equally”.

When working on a deal, answering queries quickly can make a big difference to the outcome. Partners want information at their fingertips to ensure their customers have the detail they need to decide on a solution. How do you access this information?

Via Account Managers

In the channel, we tend to use Account Managers and portals. Each partner is given a dedicated Account Manager who can be contacted by phone or email during business hours. By picking up the phone or forwarding a query from a customer, they can usually get the answer they need quite quickly.

Via Portals

There are partners who prefer self-service. These partners use portals and look for answers to sales or support queries whilst on the phone to their customers.

Via Quoting Tools

Some portals go a step further and build branded sales proposals, inserting key product information as the quote builds. Partners can edit these proposals before sending to end users, who can also amend and accept terms and conditions to place the order.

Popular requests

The most popular documentation requests are for feature and benefit descriptions and comparison documents for both supplier services and their competitors. Partners want to be armed with all the USPs to meet customer requirements, solve problems and beat any competitive bids.

Finding voice and data suppliers with the right products and services at the right price, who you can trust to deliver and support services, is the dream. On paper multiple suppliers seem to be offering similar products at comparable pricing, so how do you effectively select the right supplier for your business?

Research

It helps to be clear on what you are looking for. Is this a one-off relationship to help a valued client? Are you planning to increase ARPU by introducing a new revenue stream? Are you actively targeting a new market?

Your objectives will help to define how much time and money you are prepared to invest, your required buy prices and how much margin you need to make it work. You may well have also decided whether you will be billing and supporting services yourselves or looking for a supplier to take on these functions.

Armed with this information you are able to start your research and draw up a short list of companies to talk to.

Useful questions to ask prospective suppliers

• How many partners do you currently support?
• What are your best-selling products?
• Which is your highest revenue stream?
• How long have you been providing channel services?
• What billing models are available?
• What automated systems are available for partners?
• Is training available?
• What are your target installation times?
• What is the average response time to a partner request?
• What is your staff turnover?
• What is your churn rate?
• How much does it cost to sign up as a partner?
• What is your partner on-boarding process?
• Do you assist with end user contracts and marketing collateral?
• Do you have a published price list and do you offer volume discounts?
• Are there any volume targets?
• Is your support 24/7?

Definition of success

The financial rewards that come from being successful in business are of course important to most entrepreneurs. Other factors may be more personal, the satisfaction of creating a business and running it the way you have always felt businesses should be run, or providing complete customer satisfaction and an environment your team never want to leave.

Measuring success

Working in the business it may feel as if all is well, but verifiable data is required to confirm this. One of the best measures of success is profitability against plan. Understanding the peaks and troughs in revenues and analysing margin by product can help to identify cash cows and problem children within the product portfolio.  Cash flow forecasting is a good measure to ensure the future financial success of the company.

Successful verticals

Successful IT and Telecommunications companies find their niche and develop strong relationships with their customers by delivering exceptional service. Often they will specialise in solving key problems in vertical markets, perhaps by building on an early win. They tend to be in-tune with their customers and the first to be contacted when services and hardware need to be upgraded. Most are agile and flexible and will seek out likeminded suppliers, to meet requirements for services they do not currently offer. 

What the experts say

Marketing bodies suggest between five and ten percent of annual revenue, if you are a company turning over less than £5 million annually.

The reality

It depends on a number of different factors, such as the type of industry you work in and the objectives and culture of the business. Some companies rely heavily on word of mouth and so don’t have a set marketing budget. Others have high growth targets and lots of competitors, so tend to have a much more detailed marketing strategy, which includes reforecasts and reporting on return.

It really depends on individual company objectives and often comes down to what the business can afford. Within a sales-orientated culture with a marketing team that is aligned and integrated, you are more likely to see marketing budgets and ROI targets. In project-orientated environments, marketing budget is often allocated on a project-by-project basis, for example a product launch or a re-branding exercise.

The importance of planning

However much you spend, it is helpful to outline objectives and set targets before you start to invest time and money. Don’t get disheartened if results do not materialise overnight, you may need multiple touches and time to hone your key messages.

It is essential to test market methods to see which combination provides the best return, before investing heavily. So many factors can alter business objectives, so it is important to be able to build in additional activity or scale back to meet budget restrictions as required. Negotiating shorter contract periods can help to facilitate this.

Budget by activity

According to recent research by Forrester, the average firm allocated 30% of their annual marketing budget to online activity and this is set to increase. This makes sense as a company’s online presence is essentially their shop window and online marketing is relatively inexpensive, yet is easy to track, monitor and edit.

A recent report by Program suggests a larger percentage is spent on email marketing with more traditional marketing activity such as tradeshows, events, direct mail, PR, print, outdoor and radio advertising, listed at less than 30%. These activities can often cost more but can be less frequent. It is important to try and calculate the potential lifetime value of any new business that could be won against the total marketing investment.

It is hard to achieve a good experience for all customers at all times.  Technology can fail, third parties can let you down and, despite your best efforts, end customers can feel like their issue is not being resolved fast enough.

Understanding how to best differentiate your proposition is a question many marketing, sales and product specialists are revisiting on a regular basis. It is hard to sell on the basis of customer service. Everyone will claim that their customers rate them very highly and prospects just expect this to be the case anyway. However, once you have satisfied customers you are less likely to lose them on price and more likely to win customers from your competitors, for whom customer service may be less of a priority.

What constitutes great customer service has changed over the years. It is no longer enough to answer the phones within 10 seconds and respond promptly to emails. Resellers, dealers and their end business customers expect more.

Putting the customer in the driving seat

Self-service portals are expected and if you don’t have the know-how or resource to develop systems in house you probably choose suppliers that do. Simply being able to order products online is no longer sufficient and the best customer experience occurs when every aspect of the ordering, provisioning and support journey is considered., Resellers and dealers need to be able to order multiple services in one journey, create branded click-to-order quotes and be able to extend online features to their own customers. The best companies are going one step further by creating management portals that anticipate and solve real business problems. Mobile data is a recent example. As coverage has improved and costs have come down, businesses that want to make more use of mobile data have been put off by unpredictable overage charges and their inability to manage large estates of mobile data SIMs. Mobile Manager has for the first time given resellers and their customers the tools to activate, swap, pause and cease SIMs through an intuitive, easy to use portal.

Two big initiatives

When it comes to enhancing the customer experience, customer journey mapping and personalisation are the two big initiatives. As marketers we can learn from the behaviour of our prospects and customers and customise our approaches and promotions accordingly.

The impact on growth and profit

Good customer experience is not just about a feel-good factor. Companies with higher customer satisfaction scores grow faster, are more profitable and worth more.