Working for North America’s largest Wholesale VoIP Provider, I often get the chance to engage with customers who are excited about launching their new VoIP business. Many times they have bought a switch and are extremely focused on the technical operations of the business. However, when I ask who their target market is, I quite often hear, “We are hoping to signup everyone that needs phone service.” Unfortunately, hope is not a strategy.
In Part I, we featured the basics, and in Part II, we covered Equipment and Vendors. Now in our final installment of a business plan to start a VoIP company, we will discuss marketing and selling your services.
“Build it and they will come” is a common motto in technology businesses. But building a better mousetrap is not always enough. As competition increases and barriers to enter are reduced, entrepreneurs need a strategy that guarantees a steady stream of customers. So rather than focusing on the product itself, it is sometimes a better strategy to take a step back and focus on your target market. But how do you determine who your target market is? The most ideal situation is to already have an existing customer base that you can simply start providing a new product or service. But if you are beginning from scratch, here are some ideas to get you started.
First, determine if you have access to a niche market and what your method of marketing and sales will be. Your goal is to find a market that has not been bombarded with VoIP services or where you can market more cost effectively than your competitor. Your goal is to reduce your customer acquisition cost. Perhaps you belong to some kind of social group and you believe that you can sign up 10-20 new customers per week. You could test the market by starting with that one group, as signups increase, you can expand your marketing to other groups. There are hundreds of niche markets that you can target. The key is to get as specific as possible and make sure that target has a need for your service.
Once you determine what your niche market will be, determine what your sales and marketing delivery method will be. There are hundreds of marketing scenarios that include direct mail, radio, tv, online banners, Google AdWords, emails, advertising in niche trade journals, door to door, tradeshows, cold calling, partnerships with complementary businesses, Multi-Level Marketing (MLM), agent programs, etc. Whether you use one or a combination of any of these marketing techniques, it is important to choose the one that will result in the highest amount of signups for the lowest amount of money. This is why tracking your results is an important part of the process. This information will help you determine the most efficient and most cost effective marketing program.
The most important advice is to think outside the box when choosing your niche group. The most successful and highest growth companies have been those that have focused on a vertical market and provided features and benefits specifically for that vertical. Sometimes the best vertical is the one you have had experience with.
One such success story is a local ITSP in Phoenix, AZ, that decided to focus on delivering Hosted PBX to real estate agents. As a former real estate broker, the owner decided to add unique features that helped brokers keep track of agent phone times, incoming call tracking, time of use, etc. Since most agents are independent contractors, he focused on selling the brokers first, which then resulted in the other agents adopting the system. He also advertised in real estate trade journals geared toward brokers. The result has been steady growth in a niche industry.
The bottom line is that pricing is not the only factor when creating your product. Remember that value is benefits minus cost (Value=Benefits-Cost). Consumers make a decision on services based on Product, Price and Marketing. You don’t need to be the leader in all three in order to be successful in selling VoIP. When VoIP first was introduced, everyone competed on pricing. As the space has become more crowded, it is now all about Product (features and integration). As an entrepreneur, your focus is to find what pain points exist in the market and address them. Remember, the more people you can help, the more successful you will be.