Cbeyond has cut hundreds of entry-level jobs as the communications company adopts a strategy to focus on SMBs in need of more sophisticated networking and cloud services.
The Atlanta-based company revealed last week that it was cutting 300 entry-level sales staff and supporting personnel.
Most of those reductions occurred last Thursday while the rest were done through prior attrition, Cbeyond President and CEO Jim Geiger said last week during a conference call with investors.
“The staffing reductions were primarily in markets that underperformed our expectations,” Geiger said.
The company disclosed it was cutting its entry-level sales force roughly in half.
Although Cbeyond has let many employees go, the company is simultaneously building a new sales team dedicated to selling exclusively to customers that it classifies as “tech dependent.” Geiger said the company will be roughly halfway through a goal of adding 125 sales reps by the end of the quarter. Cbeyond also is hiring cloud sales enginers and professional services talent to help its customers seamlessly migrate from reliance on onsite infrastructure to cloud services.
Cbeyond is hoping to significantly upsell nearly half of its base of roughly 62,000 customers because it believes that 46 percent of its customers are “tech dependent.” Geiger said these companies share certain characteristics; most importantly, they view technology as a tool to grow their business, he said.
These businesses “want someone to manage an experience, not an environment,” Geiger said. “It takes a consultative sales to get a customer comfortable with changing up with what they do today to move some elements of their data needs from the closet of their office to an invisible data center in the cloud.”
Cbeyond has found that such tech dependent customers spend more than $2,000 per month on combined communications and IT infrastructure and consulting services, Geiger said. That’s more than twice what customers purchasing traditional communications services spend at Cbeyond (less than $700 per month), he said.
“… Our traditional bundle was designed to capture most of the small businesses’ monthly operational spend on communications services. And we’ve been really good at that,” Geiger said.
However, the tech dependent customers were incurring capital expenditures on such things as firewalls, routers, servers and PBXs. And these expenditures previously were “effectively off limits to our Cbeyond 1.0 business model,” Geiger said. “Our cloud assets have changed this equation dramatically.”
Cbeyond made acquisitions in late 2010 that brought the company cloud server and cloud PBX capabilities, Geiger said.