April 18, 2008

14 Min Read
Conferencing: Commodity or Fat Minute?

By Cara Sievers

The old adage, “It works if you work it,” certainly applies to selling conferencing services. One conferencing sale here and there isn’t going to make an agent a fortune – but the profits from multiple sales and add-ons can add up quickly.

Conferencing itself – along with agents selling it – has had a firm foot planted in the telecom landscape for a long while, causing some to say that it’s lost its steam.

“It has become a commodity and offers no real value to carry as a mainstream offering,” said Gene Foster, president of master agent Communication Management Services. “Audio services you can get for 3 cents per minute (just two years ago, we were selling it at 20 cents). Web and video comes at about twice that and our larger users who had billings of $15,000 on up to $75,000 or more per month have all purchased their own bridges with the cost declining as much as it has.”

As a result, Foster said his company no longer offers it as a primary offering and has ceased all advertising of conferencing services.

James Flynn, director of sales at Copper Conferencing, agreed that margins aren’t what they were in 1999, but said that they are still very strong. “The amount of growth in the last nine years has been huge; so while the cost per minute is down a bit, the total minutes are way up,” he said, noting that many customers still buy at 1999 rates, so there is an opportunity to save the customer money and still generate a healthy commission.

Adam Edwards, president of master agency Telarus, said conferencing’s decrease in price is no different than the price reductions on other services that agents continue to sell. “Pricing on conference calling has dropped, but it still has twice the margin as a traditional voice sale,” he said. “I don’t understand the rationale behind dropping a service that can significantly increase a customer’s billing amount and do so at a nice margin.”

Edwards also said the price decreases have expanded the addressable market for conferencing services and solutions. He agreed, however, that the drop in overall solution prices might drive larger enterprises to buy and manage their own systems.

Digital Samba USA also recognized a trend toward purchasing the equipment, and so it offers both conferencing services and a premises-based enterprise conferencing server solution. “The way that customers buy conferencing will change,” explained Jonathan Maley, director of U.S. marketing operations at Digital Samba. “Through 2011, the share of conferencing purchased on a service basis will fall drastically, while the share of conferencing acquired on a server model will nearly double. In short, the market is and will continue to be healthy, but smart vendors and agents should ready themselves for a sea of change in how customers want to buy from them.”

Smart agents should be able to help customers understand what it means to take on a hardware solution. Copper Conferencing’s Flynn said agents should ask

 the company if they are prepared to manage another appliance, if the features will suit their needs, if the executives will need operator assistance or event management, and if the technology will outrace the ROI of the purchase.

He added that if the customer does decide to buy a bridge, they remain a good prospect for services because they have collaborative behavior and understand the value proposition. “Most big users have needs for service providers for peak hours of use, event calls and high-touch executive calls,” Flynn said.

Ted Schuman, president of master agency PlanetOne Communications, which sells Premiere Global Services conferencing, agreed. He said he has yet to lose a client because they decided to purchase their own in-house bridge.

Why Sell Conferencing?

According to sources in the conferencing industry and indirect channel, agents who aren’t currently selling conferencing should add it to their portfolios.

“Unfortunately, I think many agents are missing this opportunity for added revenue,” said Telarus’ Edwards. “Conferencing is a fantastic product that can be added to traditional voice and data products sold. It’s an easy sell and the margins add a significant increase to the amount of commission to be earned from the customer.”

Telarus sells audio and Web conferencing from AccuConference to clients with bills ranging from $100 to $1,000 per month.

PlanetOne’s Schuman said conferencing is the easiest add-on sale in the industry. He explained that accounts activate the same day, there’s a one-page sign-up form, and commissions range from 20 percent to 40 percent. “These products pay some of the highest commissions and are relatively maintenance-free,” he said. “Agents not selling conference calling are missing out on a tremendous opportunity.”

Schuman said that all agents who have a large base of long-distance customers should be offering to set up a complimentary conference calling account for those clients as a “thank you” for their business. “Agents who continue to sell long-distance for 1 cent per minute and a 15 percent commission amaze me,” he said, explaining that selling a 5-cent conferencing product and making 30 percent commission should never be deemed a waste of time.

Another benefit to selling conferencing is that it has a very low learning curve. Conferencing solutions and services are a tad easier to understand than some of the other goods telecom agents might already be selling, such as MPLS VPNs or wavelengths. And just like most other products in their portfolios, agents can take advantage of partner support programs at their chosen providers. “Conferencing and communications solutions are remarkably easy to understand, and the expertise that our team has built through years of successfully selling these services is at our partners’ disposal,” said Tiffany Jensen, agent channel director for Premiere Global Services. Premiere has a presence in 22 countries and delivers its products to an established client base of nearly 50,000 customers. “We have customized some very effective sales approaches for a multitude of industries and applications. We’re here to help our agents sell more by offering truly valuable solutions to address the business challenges of their clients,” she continued. “And most importantly, I’d be willing to bet that these agents have a great deal of opportunity in their existing customer base just waiting to be capitalized upon.”

Another example of such partner support is found in Copper Conferencing’s Conference Coach approach. The company offers training and helps users

 through their first conferences in a high-touch environment. The more comfortable users become with collaboration technologies, the more they will use them, meaning more profit for the agent as well.

Agents also should consider which businesses in their base are currently using conferencing solutions and where that revenue is going if not to them. Another agent or provider is picking up that traffic, and Copper Conferencing’s Flynn warned that this can put other revenue generators, such as local, long-distance and MPLS, at risk.

Where’s the Money?

Of course, the real concern here is profit. How much can I make and how soon can it be in my pocket? With easy account setup and faster provisioning times, conferencing allows agents to be paid in the commission cycle subsequent to setup.

“Conferencing remains one of the few services that represents high margins with very low barriers to entry,” said Greg Plum, channel manager for The Conference Group. “Conferencing is the ‘fattest’ minute in the industry, which translates into lucrative, residual commissions for the procuring agent.”

Agents considering conferencing should investigate different companies’ incentives and programs as well. For example, Premiere Global’s buy-rate program allows agents to determine their own commissions. “By empowering them with the ability to use their own knowledge and experience to set retail rates for their prospects and customers, we enable our partners to have a great deal of control over their own income,” said Jensen.

The Conference Group, which derives 40 percent of its sales via the channel, also offers a wholesale pricing model for its agents, allowing them to set their own margin on a client-by-client basis, with typical margins ranging from 40 percent to 80 percent. The provider also offers a new International e-commerce portal, which instantaneously issues live passcodes to a customer with a valid credit card 24 hours per day – and all usage is tracked back to the originating agent for commission purposes.

ConferencePlus Inc. is another provider that offers wholesale-type rates to agents, allowing them to set their own price point and control their own margins. The company reported margins ranging from

 25 percent to 100 percent, depending on the service, and said conferencing services can add from 5 percent to 25 percent additional revenue to a traditional telecom sale.

Once agents have added conferencing to their portfolios, there are strategic decisions to be made regarding positioning. Here are some tips from conferencing industry players on how to approach this unique sale.

Give Out Samples. Telarus’ Edwards and other agents advised tacking on a conferencing application to each new traditional voice or data sale. One of Telarus’ veteran agents does this often and explains there is no commitment and no minimum monthly fee, and they’d be foolish not to try it. As most users of conferencing services would agree, once you use the service one or two times, it develops into a dependency that can generate profit for the agent.

Use the Web.Frost & Sullivan has forecasted the Web conferencing market to reach $3.1 billion by 2011. In this growing market, good prospects for Web conferencing sales are those companies that already are using substitutions, such as document-sharing platforms.

Premiere Global’s Jensen said that Web conferencing is the fastest-growing conferencing solution and has extremely healthy margins and a particularly high adoption rate. “I often advise agents to lead with Web conferencing when approaching a new opportunity as it tends to open doors and contributes to a less price-focused and more consultative sales process,” she explained.

Bundle Conferencing. Agents can sell conferencing services in a bundle or standalone, and also tack it on the front or the back of a sale. “Offer it alongside anything else you sell,” said David Byrd, channel manager for AccuConference. “You will get new accounts without having to directly sell conference calling.”

Open Doors. Copper’s Flynn said conferencing is a great door-opener as well. “MPLS, data and VoIP [have all been] over-pitched on first calls in recent years,” he explained. “Prospects are far more receptive to a more unique initial call that has current relevance with the high cost of travel or the decentralized decision-making that has taken place with many users of conferencing.”

A recent white paper from research firm Frost & Sullivan said collaboration applications will continue to see substantial growth as business travel expenses rise, companies aim to be more responsible ecologically, and the number of remote and virtual employees increases.

Solution Sell. Premiere Global’s Jensen advised agents to understand truly the specific needs of the customer and to sell to those needs. “When we as salespeople offer true value to our customers rather than simply focusing on price, it leads to

 more closed deals, less competitive pressure and great customer loyalty,” she said.

Flynn said the conferencing market has never been better for agents because the fastest-growing segment of the conferencing industry is SMBs, which are the bread and butter of agent sales. These companies, which are largely ignored by carriers and service providers alike, are the perfect targets for agents to build relationships and make solution sales.

“Clients are less likely to buy ‘one size fits all’ conferencing and [more likely to] base decisions on the features that are most important for their specific businesses,” said Camille Andersen, vice president sales, conferencing division – RollCall Business Conferencing Solutions, agreeing that a consultative sales approach is best. “Competitive conferencing rates are certainly a requirement, but value, reliability and service are becoming key differentiators when selecting a conferencing provider.”

Read more about the connection between the current economic slowdown and the increased need for conferencing in “Selling in a Slowdown: Conferencing Provides Travel Alternative for SMBs.

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Video: The Next Phase in Conferencing Sales

Whether video will kill the audio star in the long run remains to be seen, but in the meantime, video conferencing solutions promise to be lucrative sales for agents. Some providers said they’ve seen a reinvigorated interest in video solutions recently and they predict an increase in the future.

J.R. Vernick, president of agency RDS Solutions, agrees with Gene Foster, president of master agent Communication Management Services, that audio conferencing has become too much of a commodity to offer as a primary offering. But, he said, video conferencing is far from a commodity at this point. “With the introduction of HD and telepresence solutions, as well as the capabilities of IP-based services becoming more robust, the market is expected to increase 10-fold over the next few years,” he said.

Greg Plum, channel manager for The Conference Group, said “video” has become an industry buzzword, and customers want to know you can help them with it if they so choose. “When an agent can say ‘yes’ to their clients and or prospects when they ask for video conferencing, it positions them in a very favorable light going forward.” The Conference Group debuted its video solution, ReadyShow Video, a Flash-based video-over-IP solution, at the Spring 2008 Channel Partners Conference & Expo.

Some believe video can be a door-opener just like audio or Web conferencing. “Compensation for video conferencing solutions is on par with selling traditional voice and data services, [and it] can become extremely lucrative for agents by opening doors within companies that you previously have not had success with,” said RDS’ Vernick. RDS is an agent for Glowpoint, which offers IP-based video conferencing and is hoping to ramp up its agent program in the coming year to attract more

 traditional telco agents. “The key is to move away from the traditional thinking that video conferencing is a ‘conference room only’ solution and present video conferencing as an application that promotes cost savings and team building,” Vernick said.

“Most agents are selling MPLS networks right now and usually when a company upgrades to a secure network, video is always on their minds to add to that network,” added Andy Goethals, sales manager, wholesale partner services for InterCall, which sells audio, Web and video conferencing through the indirect channel. “Also, if a company is not upgrading their network, customers still need video and this provides our agents the opportunity to sell more bandwidth to that customer after their new video equipment is installed.”

Reed Ellis, director of channel partner sales for ConferencePlus Inc., which has been offering multipoint video conferencing since 1994, said video is the highest revenue per-minute conferencing service it offers, but it requires a great deal of human expertise to get done well. “Video is very unique and our most successful agents and resellers simply engage ConferencePlus to sell the services on their behalf,” he said. “With our model, the agent only needs to identify the opportunity; our expert staff will then work with them to determine the customer’s needs and provide a proposal and pricing.”

Another way to position video conferencing is to place it side-by-side with its predecessors and let the customer decide, explained Jonathan Maley, director of U.S. marketing operations for Digital Samba USA, which sells OnSync, a rich-media Web conferencing and video communication platform sold 75 percent through the channel. “Seeing is believing,” Maley said. “So much of our communication as humans is nonverbal. Once you’ve been in a conference with high-quality video, you realize the extent to which telephone or data conferencing falls short of enabling users to meaningfully connect with one another.”

James Flynn, director of sales at Copper Conferencing , which offers agents traditional and IP alternatives for video conferencing, warns agents to be aware that in some ways video conferencing strays from the typical agent model in that it is event-driven. “For example, usually a customer will have one or two large executive events a year, but it is not the constant residual type of revenue-driver that most agents generally seek or that can be found in audio and Web conferencing alternatives,” he said.

Camille Andersen, vice president of sales for the conferencing division of RollCall Business Conferencing Solutions, agreed that while video conferencing is a viable offering, it might not provide the revenue stream an agent could expect with audio and Web platforms. “Video conferencing often requires an upfront capital investment, which can be costly for our target demographic,” she said. “RollCall partners with video conferencing providers; however, we have found that Webcams and content-based Web conferencing applications are the most frequently requested services.”

However, Goethals disagreed that all video solutions come at a large expense. “I would advise agents to ask every customer about video as you can even buy desktop video solutions in the hundred-dollar range and high-end solutions in the thousands [of dollars] range.”

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