Upsell Your Customers – What to Sell

One of the best strategies you can undertake to improve bottom line performance is to increase your average revenue per existing customer by getting those customers to buy more of the services that you already offer. These are customers who already know you and trust you and send you a monthly check, so there is no target market that has a higher potential for successful marketing.

Many of my clients have been very happy to sell basic packages to customers for years. But as I have discussed in other blog posts, the traditional products that many carriers sell are becoming commodities and now have market alternatives available. Households have been dropping voice lines for a decade and are starting to drop cable connections. Many of my clients are seeing significant customer losses in their traditional products and things like long distance have withered away. These same clients have a number of products and services available to them that they are not selling. If they are going to stay profitable and remain relevant to their customers for the coming decades they are going to have to find new products to replace the ones they are losing.

If you want to undertake an upsell program you need goals. Do the math, but most of my clients would be very happy if they could increase margins per existing customer by a few dollars a year. So set a specific goal each year and then develop a plan to get there. I will have some future blogs discussing the best ways to upsell, and in this first blog on the topic I will look at the products you can sell as part of this process.

So, what are some of the products you can be selling today? The following is just a partial list that is intended to show you some of the possibilities. I have clients successfully selling all of these products:

Voice. Today, anybody with a softswitch has a score of communications tools that hardly anybody is selling. This includes such things as:

  • Unified Messaging. Almost everybody has this available on their switches and yet hardly anybody sells it. This allows customers to seamlessly move communications across all devices and once customers see how this works many want it. We are no longer talking about the ability to toggle between a cell phone and home phone, but also to tablets, laptops and any other device capable of receiving an Ethernet stream.
  • IP Centrex. Again, anybody with a softswitch can probably offer this service, and if not you can partner with somebody who offers it. This is becoming the new standard product for businesses and many home businesses will also be interested because it can allow them to act like a larger company.
  • Cheap Second Lines. Second lines today can be little more than a number of you deliver the service over Ethernet. So sell $5 or $10 second lines for teens or home businesses.
  • Other Advanced Features. Softswitches come with dozens of features that almost nobody sells. These include features like seamlessly integrating emails and voice mail; integrating voice with computers; advanced screening and call control. I have a few customers who have figured out how to sell these features and they are almost 100% margin if you have already bought them with an existing switch.

Wireless. As long as there is good cell phone coverage in your area, you can now be in the cell phone business through an MVNO program where you resell somebody else’s wireless minutes. This is very different from the resale in the past where you resold a large carrier’s products with little margins. With MVNO you can repackage minutes into your own products, and if you match this up with household Wifi you can have very good margins.

Cable TV. And on the cable TV side of the product line

  • OTT Access. Add over-the-top programming to your channel line-up. Rather than risk losing customer to OTT, let them easily get OTT directly on your video line-up without needing to buy a Roku or Apple TV box. There are numerous vendors around who have created channel line-ups for OTT programming.
  • Cable Portability. Enable your customers to watch the TV programming you sell to them on portable devices around their home like computers, cell phones and pads. If you buy programming from the NCTC coop this is now becoming available.
  • DVR Services. Provide whole-house DVRs, or even better offer centralized DVR where you do the recording on servers at your hub. Centralized DVR greatly reduces the bandwidth you have to send to customers while allowing them to easily record multiple shows at the same time. Centralized DVR also means you don’t have to invest in expensive set-top boxes.

Security. Many of my clients are doing well with security products:

  • Cameras. The simplest product is to sell and install security cameras and then set customers up to monitor these themselves from any ethernet device.
  • Safety Monitoring. Sell, set-up and monitor safety monitors for things like fire, radon and CO2.
  • Burglar Alarms. I have many clients selling ‘traditional’ burglar alarms. This is now easier than ever to do since there are a number of vendors who offer the police monitoring and as a carrier you supply the equipment and get a monthly line rental.
  • Advanced Security. Many business customers will be interested in advanced security systems that can monitor all sorts of things in addition to traditional security.

Cloud Service. Everybody is talking about things moving to the cloud but very few smaller carriers are marketing any cloud services yet. This is an area where a small carrier is going to have to break the mindset that you have to own and control the back office system behind the product. Instead, you need to find partners who offer cloud services and then repackage them to your customers. This will not be a static transaction since these products are going to change a lot over the next decade. But you can’t wait for this market to ‘stabilize’ because it may never do that. So you should start looking for cloud partners today.  Some of these services include:

  • Data Backup and Storage. While there is free back-up available on the web, many customers still prefer the safety of backing up for a fee and there are many for-pay back-up services. We are seeing is that many people would prefer to back-up their data with somebody local rather into the ‘cloud’.
  • Centralized Software A lot of software like Windows, Microsoft Office and other popular products are now available at the cloud level, saving customers from having to keep buying these for every machine they want to operate.
  • Medical Monitoring. This will eventually be a huge business and most people will elect to get monitored. It’s just starting, but worth getting into early.
  • PC Replacement. Let customers use your storage in place of their hard drives, meaning they can get to their data from any device capable of using the software.

Home Automation. I have several clients who are successfully selling and installing home automation systems. These systems are commercially available, but only really geeky customers feel comfortable making this work on their own. So the product is selling / leasing the systems, making it work, and continuing to integrate future customer devices into the systems.

Geek Squad. I have a number of customers, particularly in rural markets that are doing well offering the same sorts of services that the Geek Squad sells. They will go into customers’ homes and help customers manage make their computers, TVs, energy management, and anything else that is electronics based. All this is sold on an hourly or an insurance-type basis.

Managed LAN Service

local area network

local area network (Photo credit: benschke)

If you serve business customers you should consider offering managed LAN service. This is a service where you manage your customer’s LANs for them. The service has been around for years and was often provided by local IT companies. But as LECs, CLECs and cable companies have become more data-centric and are delivering Ethernet to businesses, the line between wireline provider and IT provider has blurred.

Customers want managed LAN for a number of reasons:

  • Eliminates staff and costs. With managed LAN a business would no longer need a dedicated IT person on staff. Before my own business went virtual we had a staff of about 15 in our office and we needed a full-time IT person to support us. This was an expensive overhead that I finally avoided by going virtual, but that many businesses still incur. Some businesses have solved this by hiring part-time IT help, but that is still more expensive than a managed LAN service.
  • Saves on Investment. The servers and software to support a LAN are costly. In our industry we are already familiar with helping customers made decisions about buying PBXs versus lines and this is the same sort of decision for a business.
  • Takes Away from the Core Focus. Businesses should focus on what they do best and not become IT shops.
  • Trusted Vendor. Many businesses prefer to work with somebody they know and trust. There are numerous online data centers and vendors promoting things like Managed LAN and IP Centrex, but most businesses will not trust their data and communications needs to an anonymous company in the cloud. Many businesses also prefer their data being stored somewhere locally and not in a faraway state.

The decision to offer Managed LAN Service should be driven by your philosophy as a carrier. I have talked in other blogs about the choice that you have to either be a dumb pipe provider or a full service provider. If you want to be a full-service provider, then helping your business customers with their data needs is probably a better long-term strategy than helping them with their voice needs. Many businesses are now totally reliant upon their data and as a full-service provider you can assure them that their data is secure, stored redundantly and accessible where and how they need it.

There are several ways that you can offer the service:

  • Operate the Customer’s LAN Remotely. This is the traditional model that has been used by local IT shops. Normally the customer is still expected to own the equipment and software and the service provider just takes care of the LAN remotely. The problem with this approach is that the customer doesn’t save money on equipment, and you are going to have to visit the customer’s location from time to time, adding to your cost, and the price you must charge. One option is for you to own the LAN, but that still has you buying one device for one customer which is not any more cost efficient than the customer buying it directly.
  • Put the LAN in your Hub. The most competitive scenario is for you to put the needed LAN in your own central office or headend. This allows you to buy servers and storage devices that can serve multiple customers, thus allowing for a savings on hardware and software. It also allows you to run all of your managed LAN customers with the same underlying hardware and software, making it easier to operate and troubleshoot. And if you are also the one supplying the data pipe to the business you control the customer’s data from end to end.
  • Outsource to a Data Center. If you only have a few businesses that want this service, or if you don’t have the expertise to do this, you can buy these services on a wholesale basis. There are numerous data centers around the country that offer these services and you can repackage this and still make a profit.

Selling Managed LAN opens up the door for a host of other services. A very popular service is redundant data back-up, and you will need to establish a second storage hub or else work with a data center to back up data you store at your location. You will also find that businesses that use you for Managed LAN will look to you for all of their IT advice and will ask for your help to buy and repair computers, implement custom solutions like transparent LAN or video conferencing, etc. So this business line will create an opportunity to sell your technician time on an hourly basis.

The main advantage of this business line for both you and your customers is that you can provide them with a unified solution to all of their data needs. If they use you for Ethernet and voice and somebody else to manage their LAN then they are not getting the ideal data network with seamless integration of voice and data. We always talk about customer stickiness in the industry and I think this is the best ‘stickiness’ product you can offer.

Transparent LAN Service (TLS)

local area network

local area network (Photo credit: benschke)

Transparent LAN Service (TLS) is an Ethernet service that allows a business customer to connect together multiple Local Area Networks (LANs) without complex protocol conversions, carrier equipment or expensive dedicated facilities. Probably the best way to think of it functionally is as the Ethernet version of frame relay, only much improved in terms of speed and cost. The product goes by many different names, but we prefer to call it Transparent LAN Service because transparency is the major benefit it brings to businesses. Properly configured it removes all of the barriers that were in older technologies and connects LANs and WANs seamlessly.

Transparent LAN service can be configured in multiple configurations including both point-to-point or multipoint-to-multipoint arrangements. In the past businesses with multiple locations had to buy dedicated facilities to connect their LANs together. And typically the dedicated facilities were expensive, were slower than the speeds of the corporate LANs and had issues like carrier demarcation points and protocols to deal, which required quite a bit of expertise on the part of the business IT personnel.

Businesses with multiple locations like banks and grocery stores, educational institutions and government agencies are examples of institutions that want simple, distributed LAN connectivity. These kinds of business customers have outgrown the traditional LAN connectivity offered by most telcos because they have significantly greater bandwidth needs than in the past because of applications like remote monitoring, distance learning, business location integration, business disaster recovery and interconnection to cloud services.

There several variations of the service with the two most common being:

Any-to-Any service (E-LAN). This service allows any connected site to talk to any other connected site across the carrier’s network, with only one physical connection at each site. With this service, the customer controls VLAN IDs so that he can segment traffic in any desired manner among his connected LAN locations. All sites share one EVC (Ethernet Virtual Circuit). To the customer, this service is “transparent” across the carrier’s network and the customer controls everything.

Point-to-Point (E-LINE). This is a point-to-point EVC (Ethernet Virtual Circuit) solution where the carrier controls which customer sites can talk to which customer sites. This service allows one or more EVC per User Network Interface (UNI). The customer does not control VLAN IDs so that he can’t segment traffic among his locations. With the carrier controlling the site ingress and egress, better Quality of Service can be offered across the carrier network. To the customer, this service is not as “transparent” across the carrier’s network, but many customers prefer that the carrier control the network.

There are a number of benefits to customers from Transparent LAN Service

  • Reduces IT personnel expertise requirements for WAN hardware, software, protocols, testing and maintenance;
  • Reduces WAN equipment requirements;
  • Reduces complexity of networking – single network capability;
  • Can increase WAN speed to LAN or near-LAN speeds;
  • Increases network manageability – can look like single LAN for all customer sites;
  • Scalable bandwidth that can be changed as needed;
  • Accommodates a single physical interface at each customer site;
  • Scalable site connectivity – easy to add or remove sites from network;
  • IT staff can still self-manage network if desired;
  • Allows efficient redundancy across carrier’s network;
  • Allows QOS access carrier network.

And there are benefits to the carrier from offering Transparent LAN Service

  • Can leverage fiber and IP network as well as legacy transport network;
  • Managed services make your customers more dependent on your network and value-added services;
  • Less costly network compared to SONET;
  • Multiple services can be provided over a single network;
  • Can offer value added services like QOS/Performance Control over delivery of customer’s traffic.

Transparent LAN Service can be a valuable addition to your carrier Ethernet service offering. This product can support multiple locations for the same customer and can bring solutions for greater bandwidth to WANs, video content delivery, disaster recovery, and cloud services. When done right this is a killer app for larger businesses.

While this product sounds simple there are a lot of options and it can be tricky to set up. You can call Derrel Duplechin of CCG at (337) 654-7490 if you want to know more about the product.