Preparing a Telco Sales Organisation to Sell Cloud Services
The fourth in a series of blog posts looking at the challenges facing telco operators attempting to break in to the SaaS market.
In the previous posts in this series, I have focused on the reasons why telcos enter the CSP market, their choice of SaaS applications to take to market, and technical readiness required to successfully provision and support cloud services – this is all immaterial, however, if the telco fails to adequately prepare and incentivise its sales functions for its venture into the cloud. Telco product and marketing managers, having put significant effort and investment into developing a cloud proposition, can often struggle to gain buy-in from their sales teams who are used to selling core telco services.
In this service provider’s experience, the fundamental issue for teclos when it comes to generating cloud sales is one of incentives. Telco salespeople are used to selling ubiquitous products, at high margin, in a sales process that is relatively transactional. How then, do we incentivise these same salespeople to build cloud services in to this sales process with its complex product offerings, low margin, and requirement for technical knowledge and a complex, consultative sales approach? To break this problem down further, we need to look at the key attributes of a typical telco sales force that need to change in order to successfully sell cloud services.
Short-term Revenue Focus vs Long-term Strategic Focus
Telco sales functions tend to be incentivised on their number of “connections” sold in a given month, or perhaps quarter, and many carry an associated revenue target. A connection in the B2B market will generate an average of €60/month revenue with a gross margin in the region of 50%. On the other hand, a Microsoft Office 365 Business Premium licence, for example, retails at €9.60/month with a gross margin closer to 20%. While the telco’s senior management will understand the strategic reasons for entering the cloud market and the fact that its revenue is rapidly decreasing year-on-year, a seasoned telco sales rep might be inclined to snort in derision while calculating how many cloud licences he would need to sell in order to hit his revenue target.
The solution here is an overhaul of the telco’s incentive model. Telcos might consider incentivising multi-product sales and customer retention, making accelerators and bonuses on core services dependant on hitting a minimum cloud services target, over the top incentives for top performers’ etc. all of which can be grouped into the “carrot” basket in the carrot and stick analogy of incentivisation. When it comes to the “stick”, the most important factor to put in place is executive sponsorship. Cloud services sales need to be on the agenda in the board room and in senior management meetings throughout the organisation – senior management need to take responsibility for the long-term strategy of the organisation and ensure that they incentivise their people to work towards it.
Transactional Selling vs Consultative Selling
The core mobile services sold by telcos have become commoditised and it isn’t incumbent upon the sales person to convince the customer of why they might need a smartphone and a tariff plan but rather, more often than not, it comes down to a discussion about price relative to a competitor who offers an almost identical service – a transactional sale by definition. On the contrary, in order to effectively sell cloud services, the sales person needs to become a problem solver. The customer often doesn’t know what they need, doesn’t see why they would need cloud services at all, or possibly wants something that won’t meet their requirements. The sales person needs to enter solution mode, identifying the pain points specific to that customer and tailoring a solution on that basis – the sale is based on value rather than price and this can be a significant shift in mind-set for a telco sales rep who will also require a considerable level of technical product knowledge in order complete the sale. Furthermore, the sales cycle will tend to be significantly longer and the sales person may be concerned that this will put their core product sale at risk.
Significant training both in the consultative sales approach and in the cloud products themselves will be key in giving your sales teams the knowledge, tools, and confidence to incorporate cloud services into their customer conversations. Investing in an overlay team of more experienced, technical pre-sales resources to assist in the sales process can be useful but, once again, putting the right incentives in place to encourage effective collaboration is key to the success of this approach. Further measures such as ensuring that your sales reps are users of the technology they are selling, ensuring sales’ confidence in the provisioning and support processes, producing engaging collateral and sales tools, etc. are all of significance.
As with any major strategic departure, there is no silver bullet in creating an effective cloud services ales engine but rather the solution lies in a programme of incentives, training, resources, etc. and, most importantly of all, a recognition of the value and importance of cloud services to the future success of the telco and its customers.
by The Secret Service Provider