How do you intend to win with the VoIP business?
The question how do you intend to win with this business comes from the book WINNING by Jack Welch. There could not be a more adequate question to ask yourself before going into a business, especially the VoIP business. From my perspective looking at the industry there are many facets and models but the one that will make you WIN is up to you. When building your VoIP business model following simple principles will make the largest difference in whether you succeed or not. I get contacted by 80 entrepreneurs a day starting VoIP businesses to consult on the best business model. It all comes down to the following:
1. Always look for ways to make it easier to do business with you
2. Communicate daily with your customers, ship and respond fast…and continue a constant flow of communications. (Relationship in this industry will be the deciding factor of how much patience and faith a client has in your technology over another)
3. Feel free to question the status quo, as long as the direction you are taking doesn’t conflict with the first rule.
I am going to assume that you are new to the business and want to go into VoIP. You may or may not have a VoIP Business Plan, but you are definitely in the research mode. Let me save you some time, and ask you to read between the lines. The following questions are going to ask you the details of your business and needs, at the end of these questions I want you to review the first rule and decide the best model for you.
Once you have completed these questions, I would encourage you to email them to me at Gibson@vocalscape.com and I can give you a definitive industry timeline and budget as to what you are looking to build. From my understanding of all of the competitive hardwares and offerings in the industry, I can even comment on who, how much, and what your options are for getting into this business. 8 years of building proposals in this industry and professional partnerships has given me a breadth of knowledge in WHO is easy to do business with and why.
1. Business Model For VoIP Services (Company Like Vonage, SunRocket, Packet 8, etc) The business model for selling ATA’s (Analogue Telephone Adapters), Softphones, and or devices can take many forms. There is the Vonage model, which is monthly unlimited within a zone (one flat rate) with really only One Model.
Vonage Unlimited Model: It’s basically post paid. You get to eat as much minutes as you want within a zone and get invoiced for Long Distance. This is relatively easy to configure within a billing database in a single/base currency. It’s necessary when expanding this business model to other regions to be very cautious as to what liabilities/risks are being taken on by the difference in currencies. This all you can eat method is a way to get them in the door, but you have to have a post paid long distance model and a limit of minutes based on natural usage. There is a reason for this, and it’s all about making it easy for clients to do business with you.
SunRocket Prepaid Monthly Unlimited: The second model is similar to the first model, accept instead of going month to month on a contract basis, you prepay for 3 months, 6 months, or 12 months plus of service. This is the Sun Rocket model. This is a great way to collect all of the funds upfront and create good cashflow. This is still post paid long distance.
Peoplefone.com Leading Prepaid Model: The third model is a prepaid model that I will call the Peoplefone.com model. There is a monthly fee for Voicemail and a telephone number but all calling is prepaid. Thus you have a small monthly fee and ongoing prepaid revenues coming in for usage. The upfront costs of buying their service are clearly cheaper and you only pay for what you use. This is ideal for the mobile traveler, and individuals who intend on possibly keeping their main home line and using VoIP for long distance. This model could have unlimited inbound traffic making it even more attractive for the end user to dispose of their fixed lines. The third model has the least liability and still makes the firm competitive to the telecommunications firms and gives monthly income. My question to you is which model do you want to run, and why?
Mixed Models: We have had several requests for a Vonage like model with prepaid long distance. The question revolving around what is prepaid, what is post paid and where do the funds come from always make these mixed models very difficult to explain to clients and often even difficult to explain to the database designers. The way the database works in this type of model is that the long distance gets treated as a different batch of funds like a calling card that you fill-up and one batch for local minutes…but once you start doing this you might as well make it all prepaid. The only way you could actually do this model…and remain prepaid to some degree is constant contact with the client (rule 2), this means you need to afford the resources to contact the client when the funds are low…physically if need be and possibly roll-over minutes or cash value in monthly circumstances. Roll-over though means as a business you do not benefit from unused minutes… When you mix the business models you will make it more difficult to do business with you.
If you find yourself asking after monthly minutes run-out then what happens? What pool of funds does this come out of, what happens if that pool of funds is empty, do they lose local service or keep it? At what cost etc. These questions come out of fuzzy descriptions of business models and a lack of understanding of how billing systems actually work. Anything can be built, but build it so that it’s easy to do business rather than trying to reinvent the way BILLING is historically done. Once we know this from the beginning the rest falls into place.
2. Building the Rates and Packages: Once you know the business model you are going to run, you need to decide the rates. Once again there are different methods for this. There are ZONEs that can be all you can eat such as Vonage. You can have Zones for example France, Switzerland, Guadaloupe, and Puerto Rico which are all the same rate in the prepaid model, and A-Z for the rest of the Countries. All of these thoughts depend on the following:
1. Who is your target market
2. What pricing makes you most competitive
3. What is the easiest way to explain this to clients
4. Who is supplying you your minutes in those Countries (your telco, internet telephony service provider)
5. Who’s supplying you your telephone numbers (DIDs) within those Countries and how do they give them to you (in blocks of 100 etc)
6. What services are included in the packages
From this we can derive the monthly fees, the per minute fees, etc. Having one main rate table makes it easier for the clients to do business with you. If you try to compile too many rate tables…you are trying too hard. Make a product you can sell once. Don’t build 5 different models that makes your offering to clients confusing. TRUST ME, the more simplified and competitive the better you will do. People will understand what you are trying to sell. KISS…Keep It Simple Stupid.
3. End User Devices: Once this is in place it’s a question of the devices you would like to be running through your system. For example:
1. ATA Manufacturer (Sipura, Linksys, Motorola, etc.)
2. Softphone Application (Vocalscape Eyefon)
The ATA model and softphone application modules can be installed and automated. In order to complete this, become a licensed provider and the necessary data to lock devices to your network automatically and provision the clients will be given to you. Too many companies out there are start-ups doing this manually, I advise against it as it increases the chance of human error. Once a device is out there, it’s hard to get it back without lost time cost and credibility. You need to decide whether you want to invest in a server to automate this process or not. How it is automated will depend on the following questions because automation depends on the channel you are using:
1. Is it an online product site they order from
2. Is it from a retail outlet in which activation codes are needed before the system works (Does the retail enter the activation code possibly attached to a bar code or is it up to the person who bought the box.)
3. Is it from a reseller entering information in a form dedicated to them?
There are two types of client sign-up processes happening in this case which slightly changes the way the database operates and completes the order. It’s important to know which is a priority to your business if not both when looking at the time frame to launch your business and the principle “making it easy to do business with you.” Once again, doing all three of these models are easy to build from a technology point of view as long as it’s one simple product. If you try to build 5-6+ product models, the management system, logistics, and support need to be accounted for this would be so complex you would likely eat a major portion of your profits just in administration. Winning at this business is not making more administration costs it’s getting more clients.
4. Configuration Questions For Emergencies and Non-US models Quick questions, assuming some people reading this are not in the US and Canada:
1. What is the emergency numbers needed, what are the requirements of emergency numbers such as 911, and who will provide this to you? Is it the same people who supply you with your telephone numbers (DIDs) or is it someone completely different. Is there a specific format that needs to be transferred to them, please get this information from them to decide the complexity of information transfer and what is required of your database and initial implementation? I guarantee, 80% of the emergency providers have a few different requirements that make complying a custom job. Knowing this from the beginning will speed up your launch time.
2. What languages do you plan on launching in? One such as English, 3,4, 5, etc.
3. Are all of your users broadband? If you have dial-up clients, what do you expect to offer them since the majority of the applications will not work for them? (Calling cards, h323 softphone, etc) Is it an affordable/profitable option to go after the dial-up clients or do you want to ignore this market segment.
4. What is the backbone internet connection in your country, DSL, ISDN, etc. that most of the conversations will be occurring across
5. Are voice packets being filtered or given less priority by the ISPs within your Country? There’s definitely a solution for you. Top secret though, please contact me for those details. We have implemented working networks through filtered providers in Countries such as the British Virgin Islands and China. It’s a specialty.
6. Are there any Government Regulations making it difficult for you to do business in your Country? (Is VoIP illegal?)
Once again, these are questions that make it easier and sometimes “makes it possible” for you to do business. Treating these questions lightly may cause you not to be able to do business in your Country of choice.
5. Redundancy and Expansion Strategies: Quality of service and the expansion of your business are as important questions to answer now as the rest. The transition and service to your clients is a major deciding factor in whether it is easy for someone to do business with you.
1. How many concurrent calls in the system do you think you are going to need now, 30 days from now, 60 days from now, etc.?
2. Which Countries do you plan expanding into and when?
3. Do you plan on using one collocation facility or two facilities with duplicated systems in each?
4. Do you require firewall and security assistance?
These questions directly and indirectly decide how long the system would take to put in place. It helps if you know the goal / desired date to have this done as it will give me an understanding of the resources and skills needed to meet the expectations of your firm.
Once you have answered all of these questions and have a date/plan in place for launching, send me your notes and I can tell you the reality, cost, and ongoing costs within 24-48 hours. A brief telephone conversation with yourself may be needed to understand your model and positioning, but this is understandable as I have to make sure that all of the details of the business are understood. Contact Gibson@vocalscape.com or 604-696-6313 ext. 101 Please also explain your budget, timeframe, and allocated marketing funds etc., if you already have an idea of this. It will help me understand your direction, solution, and possibilities.
Calling Card Business Model (A Completely Separate Business)
1. The Calling Card Business
I suggest when looking to launch the calling card business you know the following:
1. What channels will you be distributing through?
2. How many calling cards do you think you will sell and the number of concurrent calls?
3. What type of activation fee will be required?
4. Will you create custom calling plans (sell preset number of minutes per region for one flat value)
5. Are the calling cards for just specific regions or A-Z? (A-Z means every Country in the world from Afghanistan to Zimbabwe etc)
6. Are you going to have local numbers, 800 numbers, etc for them to call?
7. What interval will you be billing in? Per minute, per 2 minutes, etc.
8. Will you prematurely disconnect calls, give notice of disconnection, not allow calls at a certain minimum value in the card?
9. Will you require special billing for phone-shops or phone booths?
10. Will you require certain taxes being added to the call?
11. Will you require expiration dates for minutes purchased? 3 months, 6 months, 12 months?
12. Will you require fraud triggers for refilling the account? (Demanding written signatures from clients to be faxed in before refilling to avoid fraud.)
Once again, rate plans need to be put together. The majority of calling cards are based on ethnic focuses, such as the Latin America Calling Card, Eastern Europe Calling Card, etc.
Methods of giving rebates and Customer Service Policies
When giving rebates, it must be decided as to how much you are willing to take credit for and what is up to the client. It is important to review some of the competitor policies when it comes to rebates and refunds to decide what rules you feel would be best for your business. In some Countries and States these policies have already been decided for the Calling Card industry for example by the governing body. Customer Service can be either a billed for service, limited to only online chat or email, or can be something done proactively by calling clients and evaluating their service. Deciding the points of contact and service centers necessary takes time, the most important thing is to deliver fast and follow-up to ensure the client is satisfied. Walking through the logistics such as:
1. Order comes from the internet, email sent with login and password
2. Customer service rep contact to inform the shipment is fulfilled or to inquire if they have activated the card yet via email or phone
3. Client makes call and shows activation
4. The customer service rep contacts the customer and asks how the call was, immediately after the first use with an email or phone call, etc Each time that you contact the client, add value, give them something such as instructions, a give-away, or upgrade at a discount from posted prices.
Once you have come up with all of the following information, price points, costs for long distance, packages, and strategy you are ready to build a spread sheet based on monthly margins, subscriber goals, and overall revenues for the year.
At that point, you are ready to discuss the costs of launching your business with me, the Return-On-Investment you should expect, and timeline for launching the business. There is no such thing as a price quote off-the-shelf in this business unless you have answered all of these questions in detail. Everything requires fine tuning and consulting.
Based on this entire blog, I want you to contact me so that I can help you WIN at this business. Otherwise, you are doing yourself an injustice looking for prices without the full scope and concept of the business. Please review this and contact me. Ryan Gibson, VP Gibson Gibson@vocalscape.com 1-866-456-VoIP or 1-604-696-6313 x 101. Please take a look at our new website www.vocalscape.com for a better understanding of our business.
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