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September 4, 2012
By Joshua Simon
White labeling, or the practice of rebranding services in your own company’s name, is all the rage right now among the IT set. At face value, it seems like a win-win. White labeling provides a quick path for a company to be able to provide a service to its customers without making a costly upfront investment or carrying the burden of managing it on their own. However, many insiders wisely caution that the quickest path to offering a hosted VoIP solution usually does not turn out to be the best path. Why? Ultimately, it is you who carries the risk of marketing a white label service so it is wise to take a “buyer beware” approach.
One area that is a hotbed for white labeling right now is the quickly expanding hosted or cloud” VoIP market. VoIP provides an easy and cost-effective way of exchanging voice and/or video over a single IP network, allowing for enhanced service at a minimal cost. For this reason, companies are easily tempted to resell white label VoIP in order to stay competitive and retain customers. But while reselling VoIP holds appeal for many companies, there are other key and critical factors to consider before jumping onto the white label VoIP bandwagon:
Will I be sacrificing customer service to preserve revenue? By reselling a product or service to my customers, how effectively can I still tailor it to their unique needs? While my original intention was to utilize white label VoIP to retain the customer, am I at a greater risk of losing them due to lack of flexibility and potentially inadequate service?
Who will be in control? If issues arise, I want to provide my customers with immediate answers. Do they call the white label provider first? Who holds the power to correct changes and implement the necessary improvements? Who is ultimately accountable? Often, the lines of communication get muddied in white labeling relationships, resulting in the buck getting passed.
Will there be any noticeable inconsistencies? How fluid will the “hand-off” be? Will my customers notice an inconsistency in personalized service? How can I anticipate and be prepared to handle any inconsistencies the customer may experience? Involving a white label third party can complicate, rather than enhance, the customer’s experience so proceed with caution.
Do the financial gains make it worth my while? While VoIP hosted service, in general, comes cheap and easy, do not lose sight of “hidden” costs. This can be prevalent with white labeling. In many cases, sales hours get replaced by hours devoted to technical support and issues resolution. With this in mind, am I still experiencing increased margin?
Are there legal liabilities attached? Any partnership carries legal liabilities and white label partnerships are no exception. Am I at risk for violating my contractual obligations if the partner doesn’t hold up their end of the agreement? If you choose to market a white label service, it is absolutely essential to remember that it is ultimately you who carries the risk, both legally and financially.
While the quick path offered by white label partnerships can initially seem enticing, it’s important not to lose sight of the gray areas cited above. In reality, the only black and white when it comes to this trend is that ultimately it is your company’s reputation on the line.
Joshua Simon is the CEO of One Stop Voice, a Phoenix-based provider of VoIP solutions and low-cost cloud communications as a service (CCaaS) to small and medium sized businesses across the country. For more information, visit
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