Master Plans: Top Master Agents Address Evolving Role

What's for Sale?

Edwards: Some of the services that we are going to try to push are the ones you talked about — managed services, software as a service (SaaS). We really see the change taking place of data pipes as conduits to applications — voice being one of those applications. We saw software as a service in the late ‘90s just never worked because bandwidth was not plentiful nor was it cheap enough to execute. I think a lot of the applications weren’t mature enough. But we are seeing a lot of that take place now. We just switched our accounting to an online service. We see that as a big push internally.

One of the challenges that we are going to have — speaking candidly — is that we are 100 percent agent-driven and, as a result, it’s easier to have things pulled through a channel than to push them out and say, this is what you must go sell. It’s easier when the agents come to us saying, I have customers asking for this. We will have a challenge there pushing these out. I would like to see some revenue growth there. I don’t have any numbers about what we expect in '08, but we will be adding those and pushing those internally.

Is anyone else looking at some of these diversification efforts? Is anyone staying away from them for any reason?

Schuman: I have mixed feelings about this. The gadget/techno side of me wants to embrace the new services and leading technologies because as a consumer — on a personal level — it appeals to me. To Adam’s point, I think one of the greatest challenges that we have had over the years, speaking for PlanetOne, is when you have the agent asking for technology and services because the consumer is asking for it on their end is a much easier bridge to cross than pushing these peripheral, new, leading-edge services down to the channel.

We have not seen the traction or success over the years, and we made some concerted efforts on various services like when fax broadcast was all the rage and everybody was going to jump on board with that, even today up to and including something as simple as conference calling. As much as need is there for it and it’s an obvious money maker for the channel, we can’t get guys to embrace certain technologies. We just look at it and say, “I don’t get it. Why are they not doing it?” Another example is wireless. There are tremendous opportunities in just regular cellular voice. For whatever reason, a lot of agents haven’t embraced the wireless play yet, and there’s a lot of companies offering significant residuals.

When you are talking about pushing and leading the way and blazing a trail to get the channel to produce effectively month over month and to take your eye off the ball from the sweet spot — the stuff that’s making the people on this call a lot of money, there’s a part of it that wants to embrace it and another part of me that looks at my financial statement and says, “What are you out of your mind?”

At least three of you are involved in the wireless space — CMS, Intelisys and WTG. Can you speak to your progress or successes in getting agents to sell wireless?

Vince Bradley: As far as wireless is concerned, I have to agree with Ted that it’s almost like the agents are leading us to the services they want to sell. If you talk about voice over IP, we have sold a lot of it, but only in the last couple of years. Agents were extremely scared of voice over IP. They also are similarly scared of wireless. They still seem to think it’s an upfront, one-time commission and you have to stock phones in your back office. That’s not the reality today. There are a lot of automated drop-ship programs for wireless carriers now — very turnkey programs. Certainly there needs to be a subject matter expert involved in this kind of division.

We have had great traction with wireless lately, but it’s been a lot of work. We’ve been doing it over five years, probably actually six or seven years now. It’s taken a long time to get them to come and drink the water. While we have had success, it’s been around solutions selling, trying to get them to look at everything, bringing in professional services like TEM and looking at the whole picture, instead of saying we are going to look at your wireless today. We have been successful with bundling wireless products and services.

I really think wireless is going to explode with WiMAX coming. But, ultimately it’s a very big challenge for agents that don’t want to scale to learn new products and services. They are comfortable like we are comfortable with our core competency and the money makers. It’s hard to expand if you don’t see the ROI. Agents feel the same way. Agents don’t want to sacrifice core businesses. If they don’t have the knowledge of wireless, they are afraid the customer will ask them a question that they can’t answer or if they have problems with the phone, they will call the agent. These are things that are not big issues today. They were five years ago certainly, but it’s changed significantly.

Jay Bradley: I would agree with Vince in many regards. It is a tough job to get folks to go into the wireless voice and/or data area. The toughest part about it is that you have to tell them where the applications are. You have to say, here are the customers that are buying that solution. Here is where they are located, go get them. You have to find someone who is interested in taking advantage of that opportunity and exploiting that marketplace. We have found some pretty good success on the mobility side, but it’s been in specific applications where we can tell someone how to solve someone’s problem or an industry’s problem or a marketplace’s problem. Once you tell them that, you get a lot more traction. If you just roll it out and say, "Hey, wireless and mobility and routers and WANs and backup and disaster recovery, it’s all coming and it’s going to be huge," then, no, [there's] not a lot of traction there.

Shepstone: In the past we were rolling out all our new products by doing Web conferences. Unless you hounded them and hounded them and called them and got individual commitments from people to show up and then 90 percent of them still don’t show up. It’s just so hard to drive the learning and getting them to embrace a new product.

What I have seen that is successful … it comes down to the channel managers. The vendors that will engage a one on one —— meaning a channel manager who goes out and meets with one of the agents and says, “You have the customer contact, bring me into your account and I’ll go out and sell it. I’ll do all the work.” Once they see it, they get a comfort level. They typically have to see it a couple of times. Then they start getting money, and money drives everything in an agent’s behavior. I think it depends on having that great channel manager. There are not a lot of them out there that are willing to roll up their sleeves and get the work done.

Raue: We strategically are adding new providers’ products, such as wireless, e-fax hosted products and software-hosted products, in order to have a complete product line for our agents. However, the bottom line to our business and our agents is increasing revenues and profits. While the focus is to provide expertise and product for all potential customers, the focus has to be on being more productive and increasing sales on our core product lines. The bottom line is to be the best at what you do — and we all have reputations as being the best master available to our agents for our chosen key providers. So we keep current with the latest portfolio but the latest portfolio won’t impact revenue growth in 2008.

Allen: Our core competency is our national and regional CLECs partners. A very high percentage of our business is local dial tone, integrated circuits, DIA, PRIs. I would echo what Ted and Geoff said. At the end, we lean on our carrier partners. We are a pure master agent; we don’t sell direct. They are the market makers for us as far as emerging products. We support their efforts on what they want to sell. That demand gets driven down to the customer level and then the agents come looking for it. We have had a lot more success with that than trying to force hosted VoIP down their throats.

Raue: I’d like to echo Curt in that our greatest revenue growth in 2008 is going to come from our core providers. AT&T is our primary partner and largest revenue source other than our own long-distance. AT&T’s global reach combined with 20 percent growth year over year for MPLS PNT, MIS and high projected 2008 sales expectations for their latest VoIP product, IP Flexible Reach, will increase our revenues significantly with AT&T in 2008. We also see increased revenue growth from AT&T by picking off AT&T Win-back sales from “low-hanging fruit” left behind from the demise of UNE-P.

Our national agreements with TNCI and XO will also increase our revenues in 2008 due to their more robust product lines and commissions in 2008. We also have some regional providers, such as US Signal on the data side, and various integrated regional providers that we work very well with and have great business relationships with our agents and us. The “preferred” provider relationships with your agents is crucial to growth and must be taken advantage of.

Foster: Going back to wireless, our focus is wireless going into '08 and for the next three to five years. We have looked at partnering with the right companies. I agree that it’s really, really tough. It takes a lot of work to try to teach your subagent base to sell wireless. We’re not focusing on our existing subagent base. We are recruiting new agents. When Sprint and Nextel came together, they took several hundred wireless agents and put them into the channel. We found that there are a lot of telemetry partners out there that have an incredible amount of knowledge in selling wireless and it’s now about selling cell phones to make voice calls. That’s going to happen. Our focus is selling solutions and managed care.

We are also a direct VAR with RIM and a direct VAR with Ingram Micro. That gives us a lot of CPE we can sell and a lot of third-party applications. If you look at digital advertising, it’s just one of many areas that someone can focus on in the wireless arena. We recently signed an exclusive agreement with Top Global USA as a North American distributor. We have some 3G/4G routers out there that you can put two data cards in — one carrier or different. Using Sprint, you can bond two together and get twice the bandwidth. We are doing a test right now with select customers for VoIP applications. That’s where we see our revenue coming from.

Brad: The greatest percentage of our revenue is coming from the data side. We still sell a ton of MPLS. The success we’ve had with ancillary services like wireless has been with solution selling — when we are going in and looking at all the products and services the customer is using and coming up with an alternative solution and packaging it together and encompassing our software around that to help them manage their assets on a go-forward basis. For us to be successful on the wireless side, we have focused on the business customers with more than 50 devices, and, also by looking at wireless data solutions. That’s a pretty hot product. There’s definitely momentum there. It really came in when we took on a solution selling approach than focusing on one product.

Bommer: I’d like to comment on products and services agents want to sell and what we know they should be selling. We see that as well. The difference being on the direct sales side, I can tell you that we have about double the wallet of our customer spend in telecom versus our agent. The agents are capturing about 25-35 percent of the customer wallet in telecom spend whereas our direct guys are capturing 65-70 percent of the wallet spend. I am not happy with that. The biggest hunk of the gap that we are missing is wireless. What we are seeing is wireless is 10-35 percent of spend right now. We know that’s our biggest hole and we’re addressing it at the moment.

But, we can’t even get the agents to close the gap between the sales they do have and what we would say is the low-hanging fruit. We have data agents that sold the data and couldn’t be bothered to talk about a PRI or POTS lines or UNE-P or whatever. Likewise, we have voice agents that don’t know the data guy and don’t want to talk to him. There’s the disconnect. The agents sell the comfort zone — the voice or the data or both but on a certain customer size. Agents tend to bring in the same types of revenue. The guy that brings in integrated T1s is going to bring in integrated T1s. Don’t wait for him to bring in an MPLS network. It’s not going to happen, not unless he stumbles upon it.

That’s where I see our growth — getting a bigger wallet share of our customers on the direct side. I have all but thrown in the towel on getting the agents to sell product and services the customers need and want, but we are not going to break the confidence with the agents and go directly, but you can’t force the agents to sell something they are not comfortable selling.