There is already a Microsoft, Zoom and RingCentral. So how are you going to get your next 1000 profitable customers?
Growth in the cloud comms space is at single digits. Even Zoom’s last quarter was 4.9% growth while churn creeped up to 3%! A lesson of: You can’t focus on everything all at once. So what do you focus on? Here are 3 ideas for strategy.
Number 1
99.9% of US businesses are SMB (under 500 employees). There are only 20,900 businesses with 501+ employees. There are 36.2 million businesses in the US.
The average company has 12 employees. Get really good at provisioning 12-20 seat deals. Efficiently. Smoothly.
Follow that with establishing a process to perform customer end user training to have more than 50% of the employees using 3 or more functions! Make it sticky! Help them leverage APIs and integrations because that makes them productive and you stickier!
Rinse and Repeat!
Number 2
If by now you have not shifted to focus on two to three verticals, what are you waiting for?
Give your customer list to your trusty LLM to tell you what your top 3 verticals are. Then figure out how to furnish integrations to top software for those verticals. Next have your customer success managers or farmers call every customer in those verticals to train them up on the new integrations and new productivity tips et al.
This is doing 2 things: (1) making you sticky to lower churn; (2) talking about productivity instead of a feature or function!
Sales are shifting to outcomes, not price!
The best example of verticals was Weave Communications, which was public but acquired by Francisco Partners for about $650M for $250M in ARR. The company was in the cloud comms space but in the small healthcare space providing SaaS. It did scheduling, appointment reminders, insurance verification and payments alongside voice, SMS and a phone system. They focused on outcomes, like lowering no-shows. Other UCaaS providers need to heed these lessons.
Number 3
To be either Zoom or Microsoft, you would need to try what Nextiva tried in 2021 after getting a $200 million investment from Goldman: create your own softswitch platform.
For history buffs, M5 did the same thing. After Broadsoft acquired Genband’s M6 communication applications server, formerly VocalData, in 2008, BSFT announced that it was a forklift upgrade from M6 to BroadWorks. M5 was using M6 and instead of using BroadWorks, Dan Hoffman hired 75 devs to make a switch and keep it running. Shoretel acquired M5 in 2012 for $145M.
Building a platform is very different from running a softswitch. The ILECs have never developed their own tech. Lucent, Bell Labs, Nortel do the R&D and the ILECs do the sales & marketing (and some of the operating). White-label providers tend to add some IP (intellectual property) to the switch, but often that is just integration with a billing and provisioning engine.
Do you want to hire software developers or do you want to do sales and marketing?
Either path, you need to realize what your Super Power is? What is your Competitive Advantage?
The Concrete Foundation
The CCA holds 2 events per year and yet no sessions walk the operators through important work like Brand Building, Value Proposition, Positioning or Laddering, Channel Sales Enablement, Reducing Churn.
In the 90s, business planning was a consulting focus. Spend a week with the executive team, flush out the 30 -page business plan, the executive summary and an action plan. That went the way of the floppy disk. It wasn’t that the plan was awesome, it was that the executive team spent time thinking through the aspects of the business. Many businesses do not do this anymore.
When mentoring start-ups, we always force the company to do a market fit exercise. Go to the mall and talk to 5 people about your app.
With my clients, we do a Branding exercise with customers, employees and partners for a 360 degree view of the company. From this exercise, we learn about the company’s strengths that can be leaned on to drive forward. For example, one MDU ISP found that more than half the employees were proud of two things (1) the incredible customer service they delivered locally (customers interviewed also agreed with this!); and (2) that the company was a technology leader in its space. They were able to hang their hat on these two traits.
Yesterday on The Disconnect podcast we recorded the episode titled: Talk to Your Customers! When you do speak with your customers, you will learn what they do with your product/service. You may be thinking they like feature A, but really they like feature C & D. You are guessing! Stop guessing and find out!
While writing this, I am listening to an AI IPO webinar with analysts discussing Anthropic’s IPO. The take-away? It isn’t about the hype or the short-term. It is about the long-term and what you can execute on efficiently.
Agentic AI on my UCaaS
In the wave of MeToo cloud comm development, it seems like everyone is offering Agentic AI. That’s great, but can you actually implement and deliver on that? Do you have a Data Scientist or someone who can extract data from applications in order for the business to really leverage the AI? Every AI Project is actually a Data Project.
CX requires a project manager as well as a technical lead to create IVRs, Auto Attendants and for other elements of the implementation of contact center. Adding scheduling and other customer self-service requires skills and attention to detail. In an AI scheduling project I was involved with, it was a disaster because there were too many moving parts – 3 different vendors – AI, CC, UC – and a lack of understanding in the overall architecture. No one wanted it to fail, but it did.
CX projects fail just like porting does. Understanding why they fail is significant.
AI adds complexity because of the access to data. Not all data is easy to access, extract, feed to AI. A good example of that is Call Recording. Most call recording is proprietary and third-party. WAV files are not AI friendly. Proprietary AI can transcribe it and provide sentiment analysis, but the data is still locked up in the silo. The customer is paying for the data storage and AI usage. The UCaaS platform Agentic AI is most likely not going to be able to access that data.
The same for CRM. Salesforce has all of the company’s customer data. To access that data, the company pays a monthly fee per user. On top of that, it pays SF for AI to analyze its data that it cannot access!
This is why pundits say SaaS days are numbered. Much of SaaS is just an SQL database with a proprietary UX window to access some of that data. When businesses realize that Stripe, CRM, Workday, Monday, etc. hold the data the company needs to train their AI Agents and provide first class customer service, things will shift.
In the meantime, CSPs need to pick a strategy in a space that is filled with Microsoft, Zoom, RingCentral, AI and noise.
Talk to your Customers. Analyze your data. Survey your employees. Discover where the next 1000 profitable customers will come from. The answers are hidden within your customers and employees — and your own data, if you can access it and analyze it.