So You Want To Compete Against Vonage (And Other Death Wishes)

It's interesting how many individuals and companies express this (apparently suicidal) wish. Why would anyone want to compete with Vonage?  This is a company successfully sued to within an inch of its corporate life for patent infringement, a company that loses money on every sale and tries to make up for it with volume but can't because of a customer turnover (churn) rate that seemingly guarantees a permanently profitless future.

The appeal of the Vonage proposition to the consumer is undeniable: unlimited telephone service, e-mail, and fax for about $25 per month.  Even acknowledging some limitations (non-standard 911, no operator service or collect calls, variable voice quality, no service during power outages, etc.), it still seems like a bargain for the user.

It's a different story for the VoIP provider. Startup and market entry is inexpensive and the technology is readily available, making the service a commodity and resulting in significant competition and thin margins, at best.  The sole remaining possible differentiator (a factor that makes one company stand out against the crowd) is marketing.

Does Teleconvergence have that single magic marketing answer?  Of course not. There is no magic answer, at least no single answer that applies to multiple companies.  If there was, smart entrepreneurs everywhere would immediately seize upon it, eliminating its value as a differentiator, and the hunt for the magic bullet would begin anew.

However, the fact that there's no single answer available to everyone does not mean that you can't identify -- or create -- one that can work for you. 

The next article,The Four elements of VoIP Success, paints a realistic picture of  participating in the VoIP market.  It will identify how to avoid at least some self-inflicted wounds and how Teleconvergence may be able to help you achieve your objectives.  

The Four Elements of VoIP Success

 If you don't know where you're going, any road will take you there.

[Alice in Wonderland by Lewis Carroll].

To begin with, you should note that we're not guaranteeing success. We're just going to identify the factors necessary for a successful VoIP business.  By themselves, all they do is allow you to participate in the industry. Whether or not you make a success out of them is up to you.  Fair enough?

Here are the factors. We discuss them in detail below.

1. The Technology
2.  The Application
3.  The Market
4.  The Business

1. The Technology

It's hard to manage something if you don't understand it.  It's harder still to make money at it.  It's not that you have to be an engineer, but there's no excuse for not learning something about VoIP basics, about the SIP protocol, and so on. Nothing elaborate, just buy a basic book about VoIP or get one from the library.  You're going to have to make some business decisions and you can't make good ones if you don't understand the business because you can't understand the vocabulary.  Just common sense, right?

We realize that it must seem as if we’re asking you to do a lot of the work: read this, read that, learn that.  That’s because Teleconvergence views client relationships as partnerships, with each party sharing the load. Why is this important?  Because this is about your company, your risk, your decisions, your business.  It's up to you to make the decisions that you -- not us -- will have to live with.  And the best way for you to make knowledgeable decisions is to actually know something about the subject you're making decisions about.  Reality check: If you simply want a solution without having to work hard to make it your own, then don't pay a consultant, just trust a vendor and buy something.  On the other hand, if you might want to use our expertise to help you make your own decisions, then read on.

Next, and this is very important, there are some things you should know about your choices and there’s a great deal you needn't ever waste time learning about. If you’ve not yet read How Teleconvergence keeps Up with Developments, this would be an appropriate time.

You should know that the equipment necessary to run your new company may be located on your premises or it may be co-located at an ISP.  It may also be hosted remotely and it may very well only be available to you over the Internet as a service.  How do you choose?  We'll help you. When do you choose? The (real) answer is: much, much later.

There are advantages and disadvantages to each type of equipment and service, but in the final analysis, it all depends on the combination of the four factors coupled with your strengths and weaknesses. If your focus is on sales, without a compelling reason to do so, why divert your energies to system maintenance?  If you’re technical and analytical and have pretty good business sense but no affinity for sales, perhaps operating a system on the wholesale side of the business would be a more desirable route for you.

The hardware and software you select should reflect your business model, not drive it.  Technology is a tool. You should know what kind of house you’re going to build before you think about the tools you’ll need to build it.

 2.  The Application: 

Since VoIP is a technology and nothing more, there are almost limitless services you can create and benefits you can provide based on it.  Some of the basic applications are:

• Calling cards
• Call Centers (Inbound and outbound)
• Unified messaging
• Auto-Attendant and Call Screening
• Dial-Around
• Hosted Service (e.g. Vonage)
• Long distance and International calling
• Multilingual voice mail
• Internet Cafe

We can help you fine-tune what you have in mind, and perhaps even work with you to expand on it, if desirable. At times, you'll need a series of services; at others, it's a set of building blocks that have to be created.

The particular VoIP applications you offer simply constitute what you want to do, the business you wish to start in the market segment you wish to enter. VoIP is what lets you knock on the door. With our help and a good plan, you'll be able to open it and walk through it.  Never any guarantees, of course; but the quote at the beginning of the article is there for a reason.

 3.  The Market: 

At one level, your market consists of the customers to whom you wish to provide your VoIP services.  But in reality, it’s far more than that.  If it's residential, your market consists of a combination of types of people in certain places with certain incomes, affiliations, ethnicities, religions, etc.  If you're aiming at businesses, your markets consist of vertical or horizontally defined entities or even participants in certain supply chains bounded by customer size, location, geography, etc.

You should have and certainly will require a good sense of your market: what it is and where it is, and especially, why you think you have or can develop a unique relationship with that market that will make you stand out from others already trying to serve that market with VoIP.

Most markets may not be being served well, but they are indeed being served somehow, and you will find competition everywhere.  If you're not prepared for that, you're not prepared to enter the business, and you should save your money and do something else.

4. The Business

We are management consultants with expertise in marketing and telecommunications.  Because of that, we can help you size and estimate your market, prepare and flesh out your business plan, and most importantly, work with you to determine if you have or can create a Unique Business Proposition (UBP), something that will differentiate your company or service from your competition.

This is what the UBP is and why it is so important.  There are really five elements of differentiation, not four: the Technology, the Application, the Market, the Business, and – you.  It’s what you (perhaps with our help) bring in terms of experience, financial resources, contacts, and vision.  To be successful, you have to combine those elements to create a different story, a better story, and the better story better be real.

The problem is, if you can't create a truly UBP, then all you have left is price. Without a unique proposition, the only way to successfully sell on price is to have lower costs.  Without a proprietary marketing or technological edge, margins on most applications, are generally so slim that you will not be able to generate the volume necessary to bring the cost down enough to have a reasonable chance to make a success of your enterprise. It's plain talk, but that's what you get from us.

In other words, you have to be able to define your UBP in order to be able to defend your decision to enter the business. Before you ever open your doors, you should be able to state why you think you'll be different enough to make a difference, and to state why you think you’ll be successful.

You'll obviously be better off finding a viable solution rather than implementing a hunch.  Using Teleconvergence as a sounding board is a solid step toward developing it.  We may be able to assist you in a wide variety of areas: product development; channel and market selection; strategic planning; positioning and differentiation, business plan preparation, and so on.

If you feel that you already have a good handle on what you want to do and can possibly use our help to move you toward your goal, feel free to read the articles suggested earlier, and look over our FAQs or anything else that will make you feel comfortable speaking with us.  If you're already there and are prepared to move forward, then this site has fulfilled its purpose and the next step is up to you.

Please call or e-mail us to establish whether and/or how we can move forward together.

Thanks for visiting.