Go to Market Strategies Overview of Calling Card Fees and Selling Rates Successful Marketing Strategies Planning for Long Term Growth

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2 Introduction Overview Current Calling Card Market Analysis How to Start a Calling Card Business 10 Things You Need to Know Before Starting a Calling Card Business Hosted Solutions vs. Owning Your Own Solution Step by Step Guide Go to Market Strategies Overview of Calling Card Fees and Selling Rates Successful Marketing Strategies Planning for Long Term Growth Success Stories No Tech Knowledge? No Problem! VOIP Business, Go Worldwide With IPsmarx Technology About IPsmarx Our Mission Our Partners Contact Us Page 3 Page 4 Page 9 Page 15 Page

3 Overview At IPsmarx, we've helped hundreds of entrepreneurs start and grow calling card and VoIP businesses since 2001 and we want to share some of our knowledge with you. In this guide, you'll find some useful tips and a complete guide to how to start your own calling card business anywhere in the world. It is our goal to walk you through the entire process of setting up a calling card solution and then provide the tools you need to grow your new business. Growth of the Calling Card Industry Prepaid Calling Card Revenues Expected to reach US$ 2.14 billion in 2012 According to analysis from Frost & Sullivan, North American Prepaid Calling Card Markets, the revenues in this industry are expected to reach US$ 2.14 billion in The report sites additional features and benefits, such as internet accounts, and debit and payroll cards as the main drivers in the industry's predicted growth. Prepaid calling cards have been available in North America since 1986 but even though it is a mature market with many contenders, the study predicts a strong growth pattern through

4 10 things you need to know before starting a Calling Card Business The 10 Biggest Mistakes People Make When Starting a Calling Card Business - And How YOU Can Avoid Them Mistake #1: Not having a solid set-up You must have a reliable, tested business infrastructure in place so that the technical side of your calling card business runs smoothly. Look for equipment and service providers who have been in business for a number of years and have built a good reputation. And don't make the mistake of shopping based on the lowest price - find out exactly what you get for your investment dollar. Buy based on quality, and you'll never waste valuable time worrying about or maintaining your system. Mistake #2: Buying equipment from multiple providers You need hardware, software, carrier services, support and they all have to work together. Look for a "turnkey" solution that gives you billing, card and call management software, hardware, and carrier services all-in-one. It will save you money, and since the company knows your whole system you'll get more reliable and comprehensive support. Mistake #3: Using "one-size-fits all" solutions Don't pay for things you won't use! Look for a total solution that can be customized to fit your specific needs. A good provider will be able to design a system just for you, no matter what your budget. Mistake #4: Getting stuck with a system that can't grow with you As your customer base grows, you'll want to add more features and services so you can meet their demands and stay competitive. Make sure your provider can provide a system that is modular and eternally upgradeable. That way you can add whatever features you want as you want them, without wasting money and time on an entirely new system. Mistake #5: Not planning for problems No matter how prepared you are problems will arise. But having a strategy in place means problems won't slow you down! Make sure your software provider has a reliable technical team in place that can support your software and hardware. Mistake #6: Locking in only one carrier Some hosting companies will require you to use their predefined carriers. This can really limit your profit and growth potential! Your selling rates are the key to your business and if you are not able to decide which carrier to use, you're business will suffer. up your traffic in order to negotiate with other carriers when your business grows. 4

5 Mistake #7: Choosing a solution provider that doesn't offer termination Watch out for solution providers that don't offer carrier services. Most carriers will have a minimum requirement of minutes to sign up with them, and as a new business you will need time to build your customer base and minutes used. By going with a solution provider that allows you to use their carrier service with no minimum, you will be able to ramp up your traffic in order to negotiate with other carriers when your business grows. Mistake #8: Forgetting your real secret to profit - hidden fees Hidden fees are the best-kept secret in the calling card industry. Most companies don't make their profit from their per-minute fees - they make profits from the additional fees they charge their customers. Maintenance fees, activation fees, extended billing increments there are many ways to increase profits and stay competitive. Be sure your billing software gives you the flexibility to set and change your fees whenever you want. Mistake #9: Not knowing your ideal customers Who do you want to sell your calling cards to, and why? Where do they live? Where are they calling? What do they want? What do they need? What will they pay? Generally, it's best to start with a market that you are familiar with and then grow from there. Also, find out if certain customers are willing to pay more than others for convenience (business travelers, for example) or for calls to uncommon destinations. Mistake #10: Neglecting your existing customers Your best customers are always the ones you already have! Make sure customers are happy with your service by knowing and filling their needs. And make it easy for them to do business with you! Use billing software that allows your customers to sign themselves up for your service and recharge their own cards, online and any time. The more control they have, the happier they'll be - and the more they'll keep coming back. Plus, you'll save yourself time and money! 5

6 Choosing a Hosted Solution vs. Owning Your Own Solution Hosted solutions are provided by companies who own their own softswitch or calling card platform and let others resell their services. These solutions generally come with a very low initial investment but you may need to think twice before choosing a hosted solution. Because our clients often ask us, "What is the difference between using a hosted solution and owning your own solution?" we have compiled a list of tips from our successful clients that will help you make the right decision to get your VoIP or calling card business started on the right track. Greater Investment~ Lower Return Our clients have noticed that although the set up fees for a hosted solution are enticing, in the long run it is more expensive to maintain a hosted solution, than own their own system. Confidentiality & Security Risks Using a hosted solution can mean giving access to your secure database and information to outsiders and competitors. Sometimes your company and client information does not belong to you - but to the hosting company. Limited Control of Wholesale Providers Most hosting companies do not allow their resellers to choose their own carriers. Without being able to negotiate your own wholesale rates or choose multiple carriers, business growth can be quite limited. If the carrier they have selected for you goes down, so does your business. Lower Investment~ More Profit Potential With a low initial investment and ongoing support, our clients can begin generating profit within the first few months of business. Since it is a one-time investment to own the equipment, the overhead cost is relatively low. Full Confidentiality & Security Owning your own solution guarantees the security and confidentiality of your information and database. You can rest assured that only you, as the administrator, will have access to your client list, profit/loss report, and other critical information. Full Control to Manage your own Carriers With your own solution, you can choose as many carriers as you would like to work with and negotiate the rates directly with these providers. This eliminates the hassle of going through a "middle man" to make changes to the quality or buying rates for your termination. Lack of Redundancy Renting a hosted solution does not usually allow for redundancy. Therefore, if your system goes down, there is no back up and your customers will not be able to make calls. Fully Redundant Solution Owning your own solution allows redundancy since you can also opt for a r e d u n d a n t s o l u t i o n t h a t w i l l b e automatically activated if there is a system failure. 6

7 Hidden Costs & Extra Charges Renting a hosted solution can mean money pitfalls, unnecessary costs or unseen charges. Some hosting companies charge an additional per minute fee on top of the termination rate. Clear Upfront & Operating Costs When you own your own solution, you know the set up cost as well as overhead costs so there are no surprises once you go in to business. Limited Growth Potential Because it is rare that a hosted solution will add competitive features specific to your business model, growth potential can be limited. Endless Growth Potential With IPsmarx solutions, we are constantly developing new features that will enhance your existing offering so there is always opportunity for expanding your services and growing your business. We can also develop custom features, based on your requirements. 7

8 Step by Step Guide to Getting Started IPsmarx calling card platforms exist in over 62 countries. When you purchase an IPsmarx calling card platform, you get access to expert consultants, the latest hardware and software, and all the training and technical support you need. Whether you are a veteran entrepreneur or ready to become a new business owner, follow this step-by-step guide to successfully launch your calling card business with IPsmarx. 1. Talk with our team of VoIP consultants about your business plans. Our staff is knowledgeable in every aspect of the VoIP business. Ask us questions and discuss ideas. We come up with the strategies and logistics to help you develop your business solution. 2. Set up Your Requirements Your Account Manager will be able to guide you through getting your requirements set up, including DID's (local access numbers), internet, and card printing. 3. Participate in software training to learn how to manage your business. Everyone will benefit from our training sessions, whether you are familiar with the calling card industry or not. Even if you have little or no technical knowledge, our detailed training session will teach how to manage your business. We pride ourselves on customer support and want to answer all your questions. 4. Consult with us on Web development. Our web development team will help you customize a website with your logo and company information. This website works with our billing system, so your customers can download, activate, and monitor calling cards in real-time. 5. Use IPsmarx as a carrier to terminate your calls. IPsmarx offers reliable, high-quality calling, so your customers will never be disappointed. As a unique value added service to our clients, we have no minimum traffic volume for our calling card clients. That means as a new business, you can start taking advantage of our competitive termination rates right away. However there is no obligation to use our termination, so you may choose a different carrier. 6. Keep up-to-date with new features from IPsmarx to help your business grow. Since we develop our own software solutions in-house, we are always working to provide you with breakthrough technology and make you a leader in the calling card industry. 8

9 Optional Fees for Calling Card Providers With an IPsmarx calling card platform, you choose your fees, set the conditions and amount of fees that are placed on your cards. With these advantages, you can afford to advertise a competitive per-minute rate while maximizing on profits from fees. IPsmarx integrated billing software keeps track of all the fees and talk time for you. All you have to do is decide which fees to add to your IPsmarx calling card solution. Connection Fees: Add these fees to every call and make money in no time. With this fee you are charging the customer every time a call is connected to its destination. The fee is deducted before the remaining call time is announced. Maintenance Fees: These fees are added to calling cards whether or not the customer is even using the card. The Maintenance Period, the Maintenance fee, and the Maximum Maintenance Fee determine how much you will profit from this charge. Once a card is activated (meaning once the PIN is used, whether or not the first call connected or failed), our billing system begins to count the number of days in a specified Maintenance Period. If there is still a balance on the card after the period ends, then a fee is charged for that cycle. This arrangement continues until a Maximum Maintenance Fee is reached or until the balance on the card is exhausted. Toll-free Charges: These fees are based on numbers. When calls come from numbers, you charge the customer to have the call forwarded to your local router on top of his or her existing per-minute rate. Service Fees: This is a simple flat fee that can be charged to a customer's account after he or she completes a call. This fee would be charged per call, and if there is money remaining in the account. SurFees: This is also a post-charge fee. This fee is added after the call is complete and if there is money remaining in the account. You determine the Surcharge fee and the SurTime. SurTime is the time when the Surcharge occurs after the call is connected. The Surcharge is applied only after the talk-time exceeds the SurTime. If the SurTime is 120 seconds and a customer places a call for ten minutes, the customer is charged his per-minute rate as well as the Surcharge fee. 9

10 Minute Rounding: As a service provider, you have the option to charge a customer for an increment of minutes used rather than charging a call on a minute-to-minute basis. If you decide that every minute of a call should be rounded to five minutes, you are making money on the amount time a customer did not use during a call. A customer could make an 11-minute call, but you can use the minute rounding system and charge the call for 15 minutes. IVR Switch Add-On: This feature gives you the opportunity to reduce the amount of talk time on a calling card by decreasing the number of seconds in a minute. If you choose to reduce an actual minute to 48 seconds, that is 80% of an entire minute. Customers will pay for a 10-minute calling card, but you may shrink the amount of time they can actually talk. Setting the minute shrinking percentage to 80% means that the customer will only receive 480 seconds of actual talk time instead of 600 seconds from a ten-minute card. Activated and unused cards: This frequently happens. A customer buys a card, sets a PIN, and then never uses the card again. You immediately make money because the customer pays for all the minutes on the calling card, but does not use your service. Least Cost Routing: You can manage multiple carriers using our platform. Every carrier maintains a different rate, but our software routes calls through the cheapest carrier. This guarantees that your customer is always calling at the lowest rate every time he or she places a call. Provide Your Own Route: Eliminate the cost of your carrier by providing your own termination. Our softswitch solution enables you to establish your own Gateway in the location of your choice. Route your own calls and reap the economical benefits. IPsmarx does not endorse or suggest any calling card fees. Every country and region has their own regulations regarding calling card fees. Please check with your local authority for regulations and policies that apply to your business. 10

11 Successful Marketing Strategies Fourteen Proven Marketing Strategies for Calling Cards This is a list of the most lucrative strategies our clients can use to get their businesses started. Learn about the best places to market your calling cards and the easiest ways to sell them. Boost your sales and create a larger profit with inside knowledge. Focus on the community around you: Make your own community your target market. Think about where you live and the people who reside in your community. Do they have family members living around the world? This is your opportunity to build a niche market. Target your market by selecting popular community outlets to advertise your business. Promote your business in community centers, newspapers, and bulletins. Community promotions: Being aware of your community may give you the opportunity to create distinctive promotions during holidays or special events in your niche market. Chinh Ly acquired such a large clientele; he started developing special calling card promotions during the Vietnamese holidays. Ly says promotions like this increased his client loyalty and he gets an opportunity to give back to his community too. Simply focusing on the community around you and understanding their needs is an easy way to monopolize the calling card market. Work with Distributors: Since Distributors have a network in place, they take responsibility for ordering and monitoring customer usage. Distributors have access to Agents. Agents are Salespeople who are familiar with the calling card market and can immediately contact Store owners to promote your calling card business. Use E-store: Market your calling cards with E-store, an add-on module from IPsmarx. E-store allows you to create customers worldwide by advertising online. Selling calling cards on the Internet makes your business accessible day or night. Clients can quickly download a card, activate a PIN, and begin calling without ever leaving their house. Go paperless with E-store: Marketing your calling cards online dramatically reduces expenditures by making your business paperless. Take control of your expenses and cut out the cost of creating printed cards and materials with E-Store. 11

12 12 Pair with an existing business: Sell your calling cards in your own retail location. If you already maintain a place of business, why not enhance that business by selling your calling cards there? Market your calling cards in your store to customers who are already familiar to you. In doing this, you will be able to eliminate competition. Loera and Jose Martinez, customers since 2006, opened a mercado that thrived in their community. Soon enough, they were looking for ways to expand business. Mr. and Mrs. Martinez chose to buy an IPsmarx calling card platform for their store. "Selling calling cards is not difficult. We set up a stand near the cash register and the calling cards sold themselves," says Mrs. Martinez. Marketing calling cards in your own store may be the quickest way to generate extra revenue for your business. Use the Home Service option: Encourage customers to enroll in the Home Service option. With Home Service, customers can dial from any landline or mobile phone without having to enter a PIN number. This option supports prepaid, postpaid or pre-authorized payment accounts. Customers can monitor their call history and account balance information online. The IPsmarx Home Service option makes international calling easy for customers and it creates a fixed customer base for you. With IPsmarx calling card software, the transition from the calling card market to Home Service is easy. Thomas Bombata, an IPsmarx customer, started selling calling cards in By 2006, he was ready to start his own phone service with the Home Service Option. He simply referred to the customer database from the calling card software to contact his clients. Then, he used telemarketing to sell the new product to current customers. Include a Rewards System with Home Service: When you add the Home Service Option to your calling card platform, you can market this product to your customers with an incentive program or rewards system. This system gives out bonus points for the number of minutes used. Then, the bonus points can be redeemed for free minutes. IPsmarx platform tracks the minutes used and the bonus points accumulated. All that is required of you is to design a rewards system that meets your business needs. Advertise in retail: Check out gas stations, dollar stores, specialty food markets and places like Western Union. Approach such stores to find out how you can advertise. Some locations may have moving banners where you can advertise your card rates. Other stores may have a TV screen or advertise with a large sign in a front window. These locations get tons of foot traffic and attract clientele, which make these locations make an excellent place to market calling cards.

13 Advertising on satellite TV is not as expensive as you may think: Advertising on television may be an excellent way to target your niche market. Cable television stations or small networks often host community programming. Develop a commercial or infomercial and reach thousands of community members at once. Also, advertising on cable stations costs much less than advertising on major networks. Calling cards for businesses: Many small businesses sell products around the country and around the world. Small companies doing international business may run up hundreds of dollars in long distance bills per month. Offer your long distance services to businesses: Offering your long distance services to businesses will be highly profitable for you as well as essential to the business itself. Go national/global: Market your calling cards in the United States as well as other countries with just one system. When you purchase an IPsmarx calling card platform in the U.S. For example, IPsmarx can set you up virtual numbers or Gateways in other countries. This way you can market your cards in other countries without having to purchase an additional system. Focus on few routes: By concentrating only on a few destinations with your calling cards, you acquire negotiating power to get the best deal from carriers in those particular locations. Choose limited locations to send your voice traffic and let the carriers compete for your best rate. Corner the market with a premium rate from the least expensive carrier, and take the opportunity to try new selling techniques. Try different cards: "I sold cards with pictures of flags or symbols from different countries. I also sold cards with different rates and fees to see which combinations attracted the most attention. This was a good way for me to grow my business and now I know exactly what kind of products sell the most in my community," says Marcus Boneo, calling card owner. The more traffic you send to the same locations, the more business you create for the carrier. In turn, you will receive better rates from carriers and the ability to dominate the market in your calling community. 13

14 Planning for Long Term Growth Most of our successful clients have started with a calling card platform but then expanded their business as they began to see a return on their initial investment. When you are ready to offer additional services to increase your market share, IPsmarx makes it easy to upgrade and add features to your existing platform. Here are some popular upgrades that can be installed with zero down time to enhance your calling card business. Home Service Allow your customers to create an account with you so they can pre or postpay for their usage. They can check their usage report and recharge their account at any time. They will have a local access number to dial when they want to make long distance calls and will never have to enter a PIN because the module has ANI recognition. IPsmarx billing for Residential/Business services provides you a complete toolkit to manage billing, customer and call information related to both prepaid and postpaid service options. Features include: Invoicing for postpaid and prepaid customers Low Balance Alerts Invoicing via Referral Program and Bonus Points Online Customer Registration (With the purchase of Online Payment) E-Store The IPsmarx Development Team will integrate a complete E-Store Module into your existing website. Through the IPsmarx E-Store Module, you customers can buy your Calling Card or Home Service Products. We also customize the interface of the module to match it with your existing website. During the registration procedure, your customers will receive an , including PIN number, access number and all other necessary information. PC to Phone Provide your clients to make phone calls from their computers. Residential VoIP Service Provider Solution Offer full-featured residential IP phone service with call-forwarding, voic , video calling, call-waiting and other popular features. You can allow your customers to talk for free within your network, set up your own monthly calling plans, and offer phone numbers to each of your clients. Hosted Callshop This module allows you to resell and create callshops or internet cafes with different levels of access. You can have callshop resellers, agents and callshop owners and each of them works. 14

15 No Tech Knowledge? No Problem! From reseller to international business owner in just one week with a customized, costeffective VoIP solution Azad Kundakchi had decided to make the move from reseller to service provider in the booming U.S.-to-Turkey calling card market. He knew he would make more money with his own business, and he knew his market inside and out. But if he wanted his existing five thousand customers to use his new service, he'd have to offer them something better than what they already had. He wanted them to be able to call their access number from anywhere in the U.S. without having a toll-free connection charge hidden in their rates; he also wanted to have an access number in fifty U.S. states so that his customers could use his service anywhere without paying long distance fees. The problem was the cost involved. Having an access number requires a T1 line from the telco; fifty access numbers meant fifty T1 lines. With an installation fee of around $300 and an average monthly fee of $400, plus the cost of installing and maintaining a Quintum box in each location, Azad was looking at huge monthly expenses. And Because he had no technical experience - and no budget to hire a team - he needed a system he could easily run and maintain on his own. So far, he hadn't been able to find anything that fit his needs and business model. IPsmarx handled every last detail for Azad, from getting his equipment to arranging his carrier service. His system was custom built from the ground up and combined two solutions into one: VoIP from the caller's state to his platform, and then VoIP from his platform to the caller's destination. IPsmarx found a company to forward the outgoing calls from each state via the internet, thereby bypassing the PSTN and avoiding expensive switching and long distance charges for both him and his customers. This system also enabled his customers to use the same PIN from anywhere in the U.S., giving them total mobility. Because IPsmarx develops everything completely in-house, with no outsourcing or third-party software, Azad had a one-stop tech support system to turn to whenever he needed help with any component of his system. A simple training session taught him everything he needed to know about use and maintenance; all he had to do was print his cards and he was in business! IPsmarx took care of the rest. In just one week, Azad went from reseller to business owner. Currently, almost 70% of IPsmarx calling card solutions operate on this T1Over IP model. Access numbers can be forwarded from anywhere in the world, which means that Azad can expand into new, markets anytime, anywhere with ease. "When I first contacted IPsmarx, I knew nothing about how this stuff worked. It didn't matter! They handled everything for me, and the training I received was easy to follow and understand. And somehow, IPsmarx designed the exact system I wanted, right from scratch, and still kept my costs low. The value of their service is unbelievable. I wouldn't have a business without them." Azad Kundakchi / Michigan, U.S.A. 15

16 VOIP Business, Go Worldwide With IPsmarx Technology April 11, 2008 The Immigrant Magazine VoIP (Voice Over Internet Protocol) is quickly becoming the most popular way to communicate worldwide. According to Infonetics Research, an independent, international market research and consulting firm, the number of worldwide VoIP subscribers is expected to top 47 million, and to continue booming over the next five years. IPsmarx gives anyone, with or without technical knowledge, the opportunity to join in the growing Internet telephony industry with only a minimal investment. One can begin by selling calling cards or start a company like Vonage. IPsmarx provides the technology and training needed to get the business started. An IPsmarx business opportunity is especially useful to those who maintain a network of people in the United States and overseas. Such entrepreneurs can market their services to local communities in the U.S. and provide identical services to friends and family in other countries. As a service provider, businesses can offer free calling within their network and assign multiple phone numbers to their end users. For instance, Linda moved to the U.S. from Cameroon. She took advantage of IPsmarx systems and started her own IP phone service similar to Vonage in Alexandria, VA. Linda provides services in the U.S. and in Cameroon. Clients in Cameroon and the U.S. can talk within her network for free, for a monthly fee. "Linda's success can be attributed to the fact that she understands her community and saw a need for this service," says Carrie Hartford, Account Manager at IPsmarx Technology. "Like most of our clients, Linda had no technical knowledge, but we worked with her to ensure a successful start to her new business," says Hartford. IPsmarx offers user-friendly technology, convenient features, and plenty of training and support. Anyone who is ready to join the VoIP business can get started now, even with no prior technical knowledge. With a small investment, entrepreneurs can provide inexpensive international calling services in their community using IPsmarx Technology. 16

17 Our Mission Our mission is to facilitate communications, provide value added solutions, and adapt to the constantly shifting dynamics of today's communications market. We are committed to continuous progress and growth through research, development and implementation of innovative technology and services. Our Partners 17

18 Contact us: Washington DC Office Plaza America Drive, Suite 2000 Reston, Virginia USA Phone & Fax: Tel: Fax: Canada Office 44 Victoria Street, Suite 915 Toronto, Ontario M5C 1Y2 Canada Phone & Fax: Tel: Fax: New York Office 48 Wall Street Suite 1100 New York, New York United States Phone & Fax: Tel: Fax: For more information, please visit us at or us at info@ipsmarx.com Limitation of Liability We shall not be liable for any loss, injury, claim, liability, or damage of any kind resulting in any way from (i) any errors in or omissions from this document or information obtained, (ii) the content contained in this document. 18

19 Copyright Information and content contained in this document is Copyright C IPsmarx Technology, Inc. All Rights Reserved.