Winning and Growing Recurring Revenue with Unified Communications
Managed Service Providers (MSPs) have an opportunity to rapidly capture more of their customers’ monthly ICT spend with unified communications (UC). For too long UC and voice services have been overlooked as a way to increase monthly recurring revenue (MRR) and win new and larger contracts. MSPs that offer broadband, cybersecurity, IT desktop support and other business solutions cannot overlook voice and UC as a driver for growth.
Since the COVID-19 pandemic, there has been a surge in demand for flexible, adaptable and omni-channel communications amongst enterprise customers. Data scientists at careers’ advisor Ladders estimate that 25% of all professional jobs in North America were remote by the end of 2022, with this number increasing throughout 2023. Growth in remote working and changing workforce and consumer behaviours have caused enterprises to move away from legacy voice services and deliver UC strategies that include collaboration, mobility, messaging, and innovative integrations with vertical-centric 3rd party applications via APIs.
Enterprises increasingly see voice as a business-critical application that drives productivity, enables new customer experiences, and supports work-from-anywhere scenarios. This isn’t just dial tone and desktop phones. It is a market that is innovating and remains essential for enterprises. The global unified communications market was valued at $113.48 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 17.4% from 2023 to 2030, according to Grandview Research.
For MSPs, the traditional view of voice as a complicated low- value service no longer aligns with UC offerings and the margins that can be captured from customers. If enterprises view UC and voice as just another application, then there’s an opportunity to add it to an MSPs product portfolio. Enterprises can consolidate their ICT services with a single supplier and simplify ICT management.
The upside for MSPs is that UC is now the bedrock of business communications, and voice is still the most important way for end customers to interact with enterprises. The more valuable the customer the greater role voice plays in customer interactions.
With the right partner MSPs can seamlessly adopt UC and immediately start capturing new margin from voice. They can plug UC APIs into existing offerings and deliver services that go way beyond basic dial tone. MSPs can shape their UC offering to specific vertical use cases in their brand and laser-focus on their core segments. It is about creating high-value customer experiences and repositioning voice as an application that drives margin growth while increasing customer loyalty.
Why Voice Matters More Than Ever for MSPs
Differentiation
MSPs face an increasingly crowded market with a growing number of players. There’s an opportunity to differentiate product offerings with value-added and adjacent services. Offering voice and UC ensures customer IT spend is centralised with a single provider.
Enterprise behaviour
Single Point of Accountability. Enterprises are seeking to rationalise supply chains and are seeking solutions as they build closer ties to their vendors.
High churn rates
When service offerings lack differentiation, enterprises can move between MSPs easily, causing churn rates to increase and MSPs to lose out to competitors. The progressive MSP’s can create unique voice service propositions and integrate these into other applications bringing their customers greater value.
Adding value
Many MSPs will offer the same set of services with little value added on top of their offering or service bundling to target specific customer needs. Providing tailored solutions and value-added services aimed at specific verticals enables MSPs to stand out from the crowd.
Scaling up efficiently
MSPs are challenged to grow in their given geography, identify new sales opportunities, and find ways to upsell to existing customers. The challenge is to match growth with efficiency.
Maintaining and growing margins
MSPs need to capture profitable and sustainable growth and avoid services that are difficult to deliver or require a lot of resource while delivering thin margins.
Winning new and larger contracts
Growth strategies tend to focus on reaching more enterprises with marketing, competing on price, and basic revenue stacking without looking at innovation, verticalisation or increasing customer loyalty.
Creating High-Value Customer Relationships
MSPs have an opportunity to reimagine voice and use UC to meet their business objectives. With the right UC partner, they can capture up to 80% margin while increasing customer loyalty. Voice and UC remain some of the stickiest services in the ICT ecosystem. Enterprises need robust communications and MSPs are ideally placed to expand their relationships with customers.
They can increase customer life-time value by capturing more of an enterprise’s overall ICT spend while simplifying their vendor management. This ensures that the MSP is their customer’s sole ICT provider and positions them to upsell adjacent services over time. Most enterprises do not want to work with large telcos and want a provider that understands their business and will cater to their specific needs. In this way, UC offers MSPs the ability to reduce customer churn by 10% or more.
Where legacy voice required specific technical knowledge, platform-based UC is easier to adopt, deploy, manage and support for enterprise customers
At the same time, there are opportunities to develop vertical-centric UC offerings that target specific segments. Innovative bundles, services and templates can differentiate an MSPs offering and enable them to own a niche. Companies, from pest control to hospitality, all need voice services that cater to their unique needs and offer specific customer experiences. The right UC partner enables MSPs to shape service offerings and build solutions that address challenges or opportunities for enterprises.
The result is a differentiated offering and new competitive advantages. MSPs can offer UC to existing customers with a very low cost of sale while winning new business with bundled services. MSPs that play in both data and voice spaces have an automatic advantage over more siloed players. They can compete with traditional communications service providers that layer data services into their packages, while beating direct competitors with a comprehensive service offering.
Unlike legacy voice services, there are few barriers to entering the UC market and it provides an easy way to make an MSPs offering sticky through vertical integration, a unicorn in any new offering. Where legacy voice required specific technical knowledge, platform-based UC is easier to adopt, deploy, manage and support for enterprise customers. Today, the margin opportunity in UC far outweighs the challenges in getting started.
Choosing a UC Partner
MSPs need a UC partner that is more than a platform provider. They need a partner that will be their guide as they enter the UC market and enable them to sell services effectively. When choosing a UC partner, MSPs should look for providers that are ready to support them end-to-end, from the platform to regulatory considerations. They should provide tools to help you support your end-users, such as a Knowledgebase and API’s, and should be there to make launching and selling UC simple, seamless, and efficient.
Basic UC features might not vary widely across platforms, but business models, support and operational environments do. Voice, collaboration, mobility, messaging, reporting and analytics are all prerequisites, supported with centralised management and dashboards. How MSPs monetise UC is a key differentiator.
MSPs should look at which partners will support their growth and have models that are optimised for their success, and that are continously innovating to keep you ahead of the competition.
In the era of remote working, it doesn’t make sense to be limited to offering a “seat” with desk phone when only 20% of the workforce actually has seats and desks. The workforce is looking for more flexible solutions and that should be reflected in UC pricing models.
Similarly, APIs provided by the platform should deliver the flexibility to plug capabilities into existing systems and shape services for customers, and integrate with a wide array of CRM and Business Applications systems. It is not a matter of just handing off a platform but putting the MSP in control of the services they offer with a model that supports their long-term growth. An MSP’s UC partner has to be committed to MSP growth and have clearly invested in making success simple.
An ideal UC partner facilitates multiple deployment models many of which lower the barrier to offering voice services. A UC platform should be able to be deployed on an MSP’s infrastructure directly on top of their network or the MSP can develop a solution in the partner’s cloud with their own managed service. The choice is usually reflective of the core offering of the MSP and their customer profiles. A UC partner should also offer full PSTN termination with ingress and egress, as well as integrated number porting services, ensuring all compliance issues are covered.
Capturing the Opportunity in UC
Long-term ROI
MSPs that offer UC grow faster, capture bigger margins, and are more attractive when looking to exit. They are able to stack revenue with long-term contracts and demonstrate sustainable and consistent revenue streams. Higher margins enable MSPs to reinvest in their businesses at rates much higher than most other services.
Limited customer churn
Enterprises that adopt UC do not like to change providers. They get comfortable with the services they have and rarely ‘rip and replace’ services. Once you’re in, you’re in.
Seamless upselling of new services
UC delivers long-term relationships that enable and support service threading. The total customer life-time value grows as relationships last longer and MSPs are positioned as sole ICT providers in an enterprise’s ecosystem.
Freedom to grow and target verticals
A flexible and API-centric UC platform ensures MSPs can develop new solutions, target verticals and incorporate communications into vertical- centric offerings.
Health and sustainability of the business
MSPs that efficiently expand their service portfolio with UC have healthier balance sheets and are insulated against economic downturn or other unforeseen external forces.
Adaptability and Future Proofing
MSPs can pivot, adapt and monetise the remote working and work-anywhere scenarios with UC. They’re able to capitalise on global trends and new operational models. UC now plays a central role in the future of work.
The Need for Innovative Models
TSI enables MSPs to adopt UC platforms and provides step- by-step on-boarding support.
Jack Michalski, Director at TSI, notes that one-size doesn’t fit all when catering to specific industry verticals. He says, “In the hosted telephony market, it seems like everyone is selling the same wine but in a different bottle. Just because it’s always been done the same way doesn’t mean it’s right. If you’re using the standard model, it can be prohibitive to serve verticals such as Hospitality or Education. If you are offering them UC services with a fixed per seat model, it becomes extremely expensive.”
TSI offers a “mix-and-match” of 5 different subscriptions types, all on the same platform, which makes a handset in every hotel room or classroom viable.
In this way, TSI’s MSP partners are able to go after different vertical industries, knowing that they won’t price themselves out of the market.
Michalski says, “You can harvest these opportunities while making your customer a lot stickier. You’re also automatically closing the door on all your competition that will try to compete for this business. MSPs should also take note of the PTSN switch off in the UK in 2027. There’s an opportunity to capture market share by migrating customers to IP-based communications. There is still a worryingly large number of PSTN and ISDN lines out there and there is a lack of coherent information being shared with end users.”
“In the hosted telephony market, it seems like everyone is selling the same wine but in a different bottle.
Just because it’s always been done the same way doesn’t mean it’s right.
If you’re using the standard model, it can be prohibitive to serve verticals such as Hospitality or Education. If you are offering them UC services with a fixed per seat model, it becomes extremely expensive”
Jack Michalski, Director at TSI
The legacy Public Switch Telephone Network (PSTN) will close in January 2027 in the UK. From 1st February 2027 all phone calls will have to be delivered over IP.
TSI have prepared a PSTN replacement product on the Cross Connect platform that MSPs can offer today, all managed from one pane of glass.
Innovating in Experience
The MSPs that adopt UC today will gain long-term competitive advantages. They will be positioned to play a greater role in their customers’ ICT ecosystem and have greater opportunities in sales, not just in UC but across all their services. As remote working continues to ramp up, analytics around communications will become even more important in managing workforces, making UC an essential tool beyond basic communications.
At the same time, the rise of AI will create greater opportunities for automation and bring increased precision to customer experiences, from call routing, providing immediate responses to customer queries, through to generating Auto Attendant and Music on Hold messages. The integration of UC and AI will shape the future of customer experience while ensuring that voice remains relevant for decades to come.
There will be greater sophistication in communications services while MSPs that are bold will be empowered to innovate and shape new solutions for their enterprise customers. UC is enabling the creation of dynamic and fluid communications services that benefit MSPs, enterprises and end users. It shows that voice is still a ‘killer app’ and essential within an MSP’s product portfolio.