August 1, 2008

How to Succeed in Business

Keep It Simple

By Rob McCann, ClearCable

It's no secret that many operators are eyeing the small to medium business (SMB) sector as an alluring opportunity for growth in a non-traditional segment, but many potential new entrants are just learning about the splintered and disorganized nature of this market. The challenge for operators is to find a compelling strategy to address it and then be able to execute effectively.

Cable systems are successful, and increasingly more efficient, at offering and delivering high volume consistent product sets that have concise boundaries and can be adequately described to front-line sales and support staff. They lead with products that have broad appeal for a mass market and, more importantly, products that technicians can be outfitted to deploy and support with minimal training and equipment. In short, cable systems are well-positioned to do lots of things that are the same.

Unfortunately, SMBs are starkly unique. Each owner has different challenges and different needs depending on the individual line of business, product maturity, and current basic economic forces. Worse, their needs have historically been met by an array of service providers, vendors and integrators who cobbled together highly customized and largely undocumented communications solutions that are products more of who implemented them and when than a cohesive market strategy.

To succeed in the SMB environment, cable operators must address the incongruence between cable's strength and the market's condition. That means carefully selecting target verticals, focusing on localized markets, replacing like services with like services, offering flexibility, and providing impressive service.

Target verticals

Each vertical market will present specific challenges, but some verticals are ripe to adopt new technology and offer a wide market exposure that is essential for compounding growth. Good examples of successful verticals include churches, doctors and car dealerships. All three have sufficiently organized peer groups with consistent industry requirements, and collectively they provide broad consumer impact because they touch a large population in a variety of demographics. Moreover, successful verticals have predictable and stable usage demands that are relatively easy to service.

On the other hand, high-volume, low-margin transactional retail outlets such a pizza shops and traffic-intense applications such as call centers are challenging verticals because they require both careful and concise capacity engineering and consistently managed maintenance activities. New entrants must take care to recognize that success in one vertical does not necessarily translate into success in another. In fact, some verticals are sufficiently challenging that they are best left for later in the product life cycle.

Local focus

Personalized service is a trademark of many cable operations, and it is common to see trucks both in the community and in the subscribers' driveways. That local presence provides the continuous opportunity for community exposure and affords an operator the ability to be responsive to local market conditions and resulting support requirements.

On the small business side, local account representatives and support teams naturally build an understanding of the intricate community relationships, and they benefit greatly from keen insight into the legacy technical solution mixes deployed in that region by incumbent providers and value-added resellers. Together, intimate knowledge and local exposure chart an expanding course starting with the core residential base, moving to truly small businesses with single owner/operators like doctors, small legal and accounting firms, and local retailers, then upward to medium-sized corporations and local government or school districts. Developing the localized market accelerates the adoption of new services.

Service replacement

An easy sell to any business owner is to provide exactly what they have today at a better price. That approach provides an opportunity for new entrants to prove themselves without engaging in more complex sales, technical engineering, and challenging implementation efforts. That means avoiding the urge to provide a "new" or "better" or "more comprehensive" solution to an old problem and leading with simple analog line and trunk replacement products instead of emerging Internet protocol (IP) multimedia solutions such as session initiation protocol (SIP) trunking and hosted IP private branch exchange (PBX) (Centrex) where the specifications are less stable.

Analog line replacement services (see Figure 1) involve the substitution of single phone lines that are connected to separate and individual telephone sets. In an analog replacement service, each port of the embedded multimedia terminal adapter (EMTA) (or ATA for Metro Ethernet Forum-based services) is connected to a telephone set. Each set receives a distinct telephone number, and each line may carry standard features and voicemail.

FIGURE 1: Analog line replacement

Trunk replacement (see Figure 2) instead involves the connection of each port of the EMTA specifically to a subscriber key system unit (KSU) or PBX using any of analog lines, basic rate interface (BRI) integrated services digital network (ISDN), or primary rate interface (PRI) ISDN. The individual lines of the trunk may be assigned separate telephone numbers or might simply share the primary number, with incoming calls hunting in sequential or predefined order among available lines. Outbound calls may take advantage of one, some or all of the available lines depending on the subscriber's equipment configuration.

FIGURE 2: Trunk replacement

After employing this basic strategy, demonstrating competency, and gaining trust, new entrants will find that demand for the emerging and hosted solutions begins to outstrip expectations. Hosted IP-PBX for instance, attracts great interest from potential subscribers because many PBXs were replaced for Y2K and are now approaching maturity.

Demand for both SIP trunks and hosted IP-PBX is widely expected to accelerate, but deployment of such technology in a cable environment is largely dependent on the capabilities of PacketCable Multimedia (PCMM) to support quality of service (QoS) to off-board devices. Operators can be well-positioned to lead the charge by first capturing the market with simple and effective solutions that on the surface look no different than the current service.

Flexible offering

Bundling is frequently cited as a successful cable strategy. The notion of being able to fulfill all communications requirements for voice, video and data from one source for one conceivably discounted price is compelling, especially for small businesses.

Because every small business is different, however, the consistency of the bundled offering really must stop at the pricing. The disorganized nature of the market - where individual hardware vendors, integrators and service providers have historically differentiated themselves on terminal equipment, features and endpoint configuration - has bred an environment where each new customer is likely to introduce a requirement for minor variations from the overall package. Being sympathetic and responsive to the configuration nuances will simplify the subscriber experience and ease adoption of the new-entrant.

Superior service

A strong differentiator, especially when providing flexible localized service, is the mere willingness to dispatch service technicians with prompt on-site support.

Small businesses depend on communications to drive their own success, but market experience demonstrates that the combination of good pricing and responsive service affords a higher tolerance level during instances where there are problems. Frequent communication with the subscriber base, especially on "Day 2" (the day after installation) is essential for establishing credibility while also minimizing support calls related to customer education. Providing impressive service is rewarded with a level of customer satisfaction that translates well to the rest of the target vertical and supports growth of the overall market served.

Conclusion

By focusing on these five strategies - selecting target vertical, focusing on localized markets, replacing like services, offering flexibility and providing impressive service - cable operators can successfully address the SMB market. Doing so will position cable operators well to provide advanced, more complicated and larger scale service offerings.

Rob McCann is president, ClearCable. Reach him at robm@clearcable.ca.

Sidebar: Case Study: Cold Call Success of 46 Percent

Mountain Cablevision in Hamilton, Ontario, Canada, has leveraged tremendous success in the residential market, topping 60 percent penetration to a base of about 45,000 homes passed in the cable serviced territory of Greater Hamilton. The company has aggressively targeted health and automotive verticals with straightforward analog line and trunk replacement services, but offered sufficient flexibility to accommodate a wide variety of customer premises equipment and even replaced some with IP-enabled products on fiber-based offerings. Mountain participates actively in the community and strives to provide same-day on-site service to businesses. The result is a cold-call success rate near 46 percent and sales reaching 150 percent of plan. Client referral and company reputation are the single largest drivers of sales, and the newest additions to the subscriber base include local government and schools. By selecting target verticals, focusing on localized markets, replacing like services with like services, offering flexibility, and providing impressive service, cable operators have the opportunity to seize the SMB market and be rewarded impressive growth in non-traditional sectors.