Product and Service Mix: Bad News and Good News for CSPs

In the first blog of our “commvergence” series, we noted the very competitive nature of the communications service provider marketplace. Over 3,200 companies defined as CSPs are in the market, with over ten times that many (32,000+) defined broadly within the managed services industry.  

To play in such a crowded market is challenging enough, but even more complexity is added when you consider the number of potential products that CSPs can sell, particularly within the channel.

At Rev.io, we have a unique view of the go-to-market stance of our roughly 250 automated billing clients through their unique product catalogs. Because we serve a wide variety of clients in terms of size and vertical focus, we have clients with anywhere from dozens to thousands of unique products that they offer to their end customers. These service types have proliferated in recent years, particularly as more Big Tech players add new offerings to the channel to compete with some of the traditional telecom providers. 

Which Products to Offer?

CSPs have a significant number of possibilities to consider in their catalogs. Here are just a few of the more popular offerings that we see among our client base:

• Unified-Communications-as-a-Service (UCaaS): Defined by Gartner as “a cloud-delivered unified communications model,” this model encompasses a full stack of communications functions that in previous eras had been treated separately. This stack includes enterprise telephony, meeting platforms, chat/messaging, and the processes to underpin each of these different solutions. Many CSPs resell UCaaS, while others manage and sell their own proprietary platforms.
• Communications-Platform-as-a-Service (CPaaS): While UCaaS leverages the cloud to offer end customers a wide range of solutions, CPaaS allows those business customers the opportunity to deploy real time communications tools into cloud applications. These tools can include the same voice, messaging, and video conferencing solutions as in UCaaS, but customers will also have flexibility to customize their needs via API. That customization is the key differentiator, and for customers with more development expertise in house, CPaaS can prove to be the right option.
• Contact Center: Yet another platform offer, a contact center supports customer interactions in a multichannel approach. This can encompass voice, email, chat,  ticketing, and even social media interactions. Gone are the dreaded “call center days,” in which customers saw a phone call as their only recourse to get the support they needed. Now, CSPs are taking advantage of B2B customers’ need to respond quickly to customer requests in the medium of their choice. The best CSPs are layering innovation on top of the products that comprise the contact center, with interactive voice response (IVR) being a key example.
• Wireless, Mobility, and IoT: While this category covers a wide range of offerings, ranging from mobile telephony to smart devices, we can categorize them all under the theme of distributed work and the need for wide band connectivity in a variety of settings. Even in a post-pandemic world, some form of distributed work will continue, which will create growing and sustainable demand for mobile work devices as a replacement for older PBX and traditional work phones. As another use case, smart manufacturing and machine-to-machine automation are revolutionizing traditional factory settings. While there are a lot of complexities in this space, CSPs that are forward-thinking on technology have a chance to see excellent growth in this segment in the years to come. 

Don’t Forget about Managed Services

The most prevalent example of the commvergence over the past few years has been managed service providers getting into the service and resale market for communications offerings. But while these technologies tend to get a bit more of the attention, there are still great opportunities to grow within the managed services segment.

Those of us of a certain age will remember the “IT guy” in our offices. He was the helpful person who showed up if those of us who were less technologically-inclined caused an issue on our PCs, printers, or other office hardware. As cloud computing technology began to replace on premises hardware (and as large enterprises sought to be more uniform in their technology standards), the MSP model grew in prevalence as a third party provider of IT support.

Initially, many of these companies relied on simple service contracts and the typical “break fix” model of the past. But as time has gone by, extreme competition and margin compression have led more forward-thinking MSPs to grow their proactive support and services in areas like network development, cybersecurity, and data center management and hosting. 

With the increasing complexity of companies’ communication and collaboration networks, MSPs will be able to be a full partnership via sales, support, and helping their clients stay ahead of the technology curve by helping them see and implement what is next. 

So, What’s the Bad News?

The bad news is simple: CSPs and MSPs will continue to be in a competitive environment that we do not expect to get any easier. Getting your product and service mix right is step one to thrive in this environment, but one can see the challenges of keeping all these technologies straight. And that’s before you get into how you are going to market and sell them correctly.

The Good News Outweighs the Bad

Even with so many challenges in place, we know that the best CSPs and MSPs can thrive even as competition heats up. How can we be so sure? For one, the expectations are that business IT and telecom spending will continue to grow even as the economy faces an uncertain near term. Additionally, at Rev.io we have seen hundreds of our clients succeed over the years despite having very different product and service mixes that they sell to their end customers. 

There’s truly no right or wrong answer to the product mix question, as long as you follow these guidelines:

First, pick the right product and service features for your customer segment. We’ve mentioned in this series that there are tens of thousands of service providers in North America alone, so there’s no way for all of them to compete effectively across all customer types and geographies. 

Our strongest clients are very clear about who they serve, which helps the end customer find them more easily, as the customer’s search mindset will be for their specific needs. Additionally, by becoming an expert in the specific needs of your segment, you will be able to tailor a product offering that fits their unique needs. A prominent example is that of HIPPA compliance, which healthcare customers demand to stay in line with rules related to patient medical record privacy in communications.

The second guideline relates to your back office system, and making sure it is both configurable and scalable. At Rev.io, we offer an automated quote-to-cash solution that helps our clients easily manage and deploy a large and growing list of products. Some of the key features include: 

• Product Catalog – easily categorized by service type, you can easily modify rates, add new products, and specify whether it is recurring/non-recurring/usage based for rating purposes. You can also easily build predefined product packages and efficiently assign them to services on an account. 
• Inventory Management – you can easily manage assets with unique attributes, while also viewing available and assigned inventory items. This allows you to easily understand what inventory is available and when new orders need to be placed with vendors to replenish supply. 
• Reporting and Analytics – you can utilize both “out of the box” reports and customizable reporting building capabilities to analyze key metrics and insights related to your offering. You can also utilize our Analytics product, which includes insights on your product-market fit and potential upsell opportunities.

If you are interested in hearing more about how our clients succeed across a wide variety of product types and want to learn how Rev.io could help, contact us today!