I do my share of briefings with both vendors and service providers, and sometimes there’s a good storyline my followers may not be expecting to hear. My recent briefing with Verizon is one such case, as their VirtualCommunications Express– VCE – is showing how big carriers can compete in the SMB space when it comes to hosted VoIP.
Verizon is hardly alone among Tier 1 incumbents in feeling alienated by SMBs, as they historically have been low priority customers, often bound to their carrier by long-term contracts. This is not a recipe for success when real competition emerges, and many SMBs have happily jumped over to cablecos, CLECs and even OTTs. With the rise of VoIP, and more recently cloud-based variations, this giant market space has opened up big-time, putting all incumbents on the defensive.
While the SMB market is a huge Greenfield opportunity for competitors, this is very much now a protect-the-base scenario for incumbents. There’s a lot of business in play, and the likes of Verizon have to decide whether the SMB market is worth fighting for; and if so, they need a better game plan.
My briefing with Verizon- joined by Polycom folks as well – tells me that do have a better game plan now, and that’s what this post is about. As with any hosted VoIP offering, there are two pieces to consider – the product being sold, and the company behind the product – and I got a good sense of both in the lead-up to this post.
VCE is Verizon’s hosted offering, and it’s more of a rich VoIP service than a UC platform, but that’s fine for what most SMBs need. Their point of reference is generally still TDM replacement, so the value proposition needs to be pretty telephony-centric. It has all the features you’d expect when migrating to VoIP, and they do a good job articulating the business value. The benchmark is TDM, so the flexibility of VoIP plays well with SMBs, along with the enhanced features they may not be expecting.
Good examples include auto attendant, multi-party calling – six way (they don’t call it conferencing, but that’s another topic), soft phone support, inter-office extension dialing, self-configured on-hold messaging, simultaneous ring, mobile integration (Apple and Android), and visual voicemail. Any and all of these are a step up from TDM, and Verizon seems to be hitting the right notes with what’s important for SMBs.
Being hosted strikes another chord, and they do a good job stressing the value of business continuity. I don’t think any SMB would question Verizon’s ability to do this, and on this count, their scale does give them a leg up on smaller competitors. On that note, they can comfortably cite the scale of their network and ability to provide carrier-class quality as built-in advantages that come with being an incumbent. The same can also be said for their technical support resources, allowing SMBs to get the same caliber of service as enterprise customers that Verizon caters so well to.
Stepping back – and bringing Polycom into the picture – VCE is being marketed as a communications solution, bringing together the quality of Verizon’s network, the richness of hosted VoIP, and the state of the art suite of IP phones from Polycom. In addition to a variety of SMB-friendly models in their VVX series – all of which support HD – they also offer two models of their SoundStation conferencing phones. Taken together, then, this is not a one-size-fits-all point solution, giving SMBs – and channel partners – a nice set of options to choose from.
Overall, by being hosted, VCE is pitched as a simple solution that’s easy to deploy, scale and use. This really is table stakes, so there’s nothing new there for the SMB market. The twist that I think will really appeal to SMBs is that no contract is required. This may be the norm for OTT VoIP services, but not from a Tier 1 carrier that can truly provide end-to-end QoS.
SMBs are conditioned to expect incumbents to require long, locked-in commitments, but VCE is a welcome about-face. To get carrier-grade quality and great phones without lock-in should be a no-brainer for a lot of SMBs, especially when considering the TCO advantages of hosted VoIP. Long-term, TCO claims may be dubious for cloud services, but SMBs aren’t thinking five years out when it comes to VoIP.
The company – and a happy customer
For the most part, VoIP is VoIP, and all hosted providers can offer something comparable to VCE. So, what would make an SMB stick with Verizon, or switch from someone else? While CLECs face the fundamental challenge of getting SMBs to know about them and trust them, everybody knows who Verizon is. However, most people associate the company with enterprise customers or mobile services. Fair enough, but they are also the incumbent telco for many SMBs, and that’s the market they are trying to serve with VCE. In that regard, there’s a big branding challenge in play here, as they need SMBs to view Verizon as being the right partner when it comes to telephony and communications services.
I’m not saying that Verizon has been totally successful, but they clearly have learned how to support SMBs, and that’s a story worth telling. To do that, I got a first-hand account by interviewing a VCE customer, NYC-based 163rd Street Improvement Council. This is a social services agency in the South Bronx, and truly is a great example of big meeting small with great results all around.
I spoke with Executive Director Cassandra Perry, and in many ways, her Council was a typical SMB Verizon customer. They were locked into a long-term contract, not getting much support, and were overpaying for services they didn’t need. On a more practical level, their telephony system was totally centralized, so if HO had a problem, none of the satellite offices had service either.
Their situation was a bit different, as their operations were largely wiped out by a fire, so they had to start fresh. Fortunately, this happened at a time when Verizon has become more customer-centric, and the results have been excellent. The turnaround started with their Verizon rep really listening to their needs, and from there it was clear that VCE was the right solution. The cloud-based offering keeps their costs down, ensures business continuity, and allows those satellite offices to stay in service regardless of what happens at HO.
More importantly was the sense that Cassandra’s needs were being heard. This was a big change from the historical relationship, and really took down the barrier between a small customer trying to get attention, and the impersonal nature of a big operator. Once those needs were addressed, there was also the peace of mind that comes from the reliability of a Tier 1 network, along with Verizon’s ability to troubleshoot their network and ensure service uptime.
This is key, as Cassandra noted they don’t have an IT department, and it was great to know that Verizon was even able to detect network problems before they hit her LAN. They weren’t getting this level of responsiveness before, and it’s a big reason why they’re happy with Verizon today.
Hope for incumbents and hope for SMBs
You don’t often come across a level playing field like this, and it’s great to see how an incumbent can align so well with an SMB customer. If incumbents like Verizon want to protect that customer base, they have to do business differently, and Cassandra’s story is a textbook example. It starts with listening to customers and developing an offering that speaks to their needs. VCE certainly seems built along those lines, and the rest really comes down to the relationships and ease of doing business.
When those are looked after, Verizon will keep its share of customers. Otherwise, when you hold customers to long-term contracts, sell them more than they need, not be responsive to service requests, limit their options for features and endpoints, etc., that’s when you live up to the bad reputation of an incumbent. Of course, if you really don’t care about SMBs, that’s an easy hand to play, but incumbents now know that SMBs are good business, and to hold off the competition, they need to do more of what Verizon is doing with VCE.