XChange Solution Provider: How To Avoid The Pitfalls Of Hosted VoIP

Any IT solution provider not offering Voice over IP phone services to its customers is ceding business to its competitors. But those that want to get into the game must understand partnering with a VoIP vendor can be a perilous proposition.

That was the message Tim Conkle, founder of Cytracom, a hosted VoIP vendor out of Dallas, shared at a breakout session of XChange Solution Provider 2016 on Wednesday in Los Angeles. But a would-be VoIP reseller can do well if they sidestep three potential pitfalls, he said.

"These are the things you're going to run into if you do VoIP, and it shouldn't be an 'if' anymore," Conkle, also known as Texas Tim, told attendees. "You have to do VoIP."

[Related: XChange Solution Provider 2016 Coverage]

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What makes Cytracom unique as far as its insight into the channel, Conkle said, is the company was born out of his earlier venture, Roland Technology Group, a managed services provider. Cytracom was founded from the perspective of an MSP wanting to adopt the technology, he said.

What he learned from the MSP side of the equation is "it’s a dangerous, dangerous, dangerous place to be sometimes," Conkle told XChange attendees, and the damage inflicted by partnering with the wrong vendor can spread to a solution provider's legacy IT business.

Many moves that would seem logical to channel companies that are novices in the arena create the potential for major problems down the road, he said.

For instance, MSPs, especially the large ones, feel inclined to white-label the products they sell. That can be a serious mistake.

"You're putting your name on something you have no freaking control over," Conkle said. "You don’t want [customers] to fire you if it doesn't work."

By self-branding the service, partners are in effect tying it to their other offerings, Conkle said.

"Your VoIP should be something you recommend," Conkle said.

White-labeling also can be risky from a tax perspective.

"You become a telco company when you send out the bill. Your whole freaking IT company will be audited if they want to audit the bills," Conkle said.

But the VoIP market can be lucrative for solution providers that insist their vendor partners have three characteristics, he said.

First and foremost, vendors must exclusively sell through their channels.

A direct sales force will inevitably lead to direct conflict, Conkle said. And some vendor contracts even come with fine print that appropriates the customer and forces the partner out of the relationship.

The second rule: Don't partner with any vendor that carries a contract.

That's tricky, Conkle said, because just about every VoIP company will try to lock customers in, typically with a two-year contract.

One concern is that problems might arise unrelated to the VoIP product -- like shoddy connectivity from a new ISP -- that impair the service. There are any number of reasons customers might want to abandon a product before the term is up, and they will blame the solution provider if they find themselves stuck paying for a service that doesn't work.

To preserve relationships in those cases, partners typically end up swallowing the loss themselves.

"That contract literally is your baby, your liability. It's not the client's," Conkle said.

Finally, solution providers should look for vendors that offer managed hardware.

"You want to give them all the phones for free," Conkle said. "And the hardware is managed, never out of warranty."

That avoids potentially awkward situations, like a mailroom employee having a more modern phone than the CEO, he said.

Cytracom crafted its channel model based on those three principles.

The company offers its partners evergreen commissions, free VoIP training and certification, no contracts for partners that get those certifications, free hardware on a three-year refresh cycle, and a free demo account.

Melinda Angron, vice president at Ronco Communications, a solutions provider based in Raleigh, N.C., that focuses on unified communications, left the session thinking about how Cytracom's solution would integrate into her company's business.

"Certainly the free, free, free part, that’s undoubtedly appealing," she said. "How could that hurt? But I think, is it beneficial? Will it transform our business? I want to think about how it fits into our current ecosystem."

Ronco leads with Avaya products, but sells other vendors. Angron came to XChange Solution Provider looking for areas in which the 50-year-old business could grow and evolve.

"The whole conference for me has been about making innovative change in our business so we can continue for another 50 years," Angron told CRN.