Master Plans: Top Master Agents Address Evolving Role

Shepstone: It depends on the size of the vendor. AT&T and Verizon are the most resistant. If you look at XO and Jim Delis (he would be a good person for the Channel Executive of the Year Award), they listened and they executed. They sat down with Intelisys and TBI and others. We all gave them the same list of things to do. Sometimes in the carrier meeting you will tell them what they need to do and they all shake your hand and leave and do nothing. That was a differentiator for XO, and it shows.

Allen: I would agree with the comment about Jim Delis. We saw a huge turnaround. Requests and issues are taking different ways by carriers. For the ones that shake your hand and do nothing, I think they don’t know what to do or they are not in an organization that encourages change or optimization. The other way they can do it is to deal with it and look for a solution. That’s what XO did two years ago when Jim Delis came in. They continue to take feedback and they actually follow up on it. In ’05, our revenue completely dropped off with XO. XO was a dirty word among our agents and it turned around. … Revenue follows when you are responsive to requests and systems are tuned up. Agents are not stupid, a point of commission is a point of commission, but to have half of your sales fall out, that’s half of your commission that goes away. The carriers that are easy to do business with attract the revenue.

Schuman: In our opinion, the 80/20 rule applies at PlanetOne with our vendors. About one in five do an above average job of working directly with us and are fully engaged and show some compassion and genuine concern for our businesses, and really try to do the right thing for the customer and for the agent relationship.

The others, frankly, all they really care about is getting the revenue from us. We occasionally hear from them; they are not engaged; they don’t understand why we are not giving them the numbers. … They think they are going to get a contract with a name-brand agency and expect the revenue gates will open up and magically tap into a revenue stream overnight. It doesn’t work that way as we all know. It takes many months and, in some cases, a year or two before you start gaining traction. For whatever reason, these carriers think they can throw some holy water on an agent agreement and then call a month later to find out why we are not producing. How about putting some skin in the game? Throw us some resources and invest in the relationship.

At this point, the reason that we have so much caring and sharing in the Agent Alliance is the amount of resources and energy it takes and I am not talking about sweat equity, I am talking about capital. We took a straw poll recently just on the IT side on how much we had spent over the last year. It was north of $2 million. Granted, we are large agencies, but in most cases our neighbors don’t know who we are in the office complexes we reside in. Most of us are relatively small businesses.

It’s just amazing to me; it’s not that difficult. Pay some attention to us. Give us the resources we need. Get some skin in the game. Show up in our offices more than once a quarter. Then, and only then, can you expect to tap into a successful revenue stream with these partners.

Vince Bradley: On this point, Level 3 has done a phenomenal job rolling out this channel and so I am confident they will get past the provisioning problems. To Ted’s point, it’s so true. These carriers don’t show up. They just look for the revenue. Come out more than once a quarter. Show us the love. Give us access to information. Ultimately, the bigger carriers are not giving us access to their systems. I think it’s interesting how it all comes full circle back to Ted’s point about the relationship. You have to rely on the relationship because the big carriers won’t let you automate.

Foster: For several years we had Sprint employees housed in our offices. They were dedicated exclusively to us. There was a point in time where we did a study for three months where we provisioned 160 orders bypassing the regular systems and using the Sprint employees. Out of those 160 orders, we had 100 percent accuracy. The next three months we did equivalent orders through the normal process. We had a 60 percent failure rate. What we have here is the Tier 1 providers don’t give us access to their internal systems, which if we had we would have more success provisioning our own orders. We have found a majority of the resellers do a better job than the Tier 1 providers.

Raue: I’m fortunate enough to sit on the AT&T National Advisory Board that meets twice a year and has two conference calls a year to give feedback and address issues. And, like some others, I meet twice a year with XO to give feedback and discuss business operations and strategy. Communications with partners is key to a provider’s success, and the good providers get it. So, I believe they do listen. And I see positive channel changes that come out of these meetings. Sometimes it just doesn’t happen as fast as we’d all like. Overall, I believe most providers do care and do listen. Some just implement change better than others.

Bommer: I think this is both carrier and size specific. The carriers have done a better job. There are some where we see no channel conflict whatsoever. There are others where we see a lot of channel conflict and we choose not to do business with them. So that resolves itself. The carriers are doing a better job advertising in advance where they tend to play. I see them going more upstream, getting rid of the direct reps on smaller projects. Verizon is capping it at $40,000 from $25,000 in the last six months. I see that being the trend. The agent side of the house, it’s a smaller deal and we are not seeing the conflict.

Kinney-Matione: Ours has gone down quite a bit, especially since we had a lot of problems in the local markets with Verizon and MCI. What we see is now is the large account conflict. We can’t sell into those accounts because they are protected. We use alternative resellers who can sell directly to an account and there is no conflict at all. That’s how we have gotten around that issue and it’s been very successful. Our agents have taken to it quite a bit.

We didn’t have any conflict with BellSouth. Now that they are AT&T, we are seeing it more. We are going around it with a wholesale provider. That is working.

Raue: I believe it is less than it used to be because the providers are seeing agents having more options than ever before and if they protect what they can’t do themselves with a competent sales team, then the customer is going to go with another provider.

Schuman: I wonder if the direct agents get a list of agent accounts that they can’t sell into because they are protected.

All: Laughter.

Edwards: I am a new entrant into the market. I’ve only been in telecom for six years. What I noticed since from that time is the change that has taken place. Even though all of those elements are important, I see less importance on aggregation and protection of subagents. We heard right here, a master agent is just as likely to cut you off. It’s not so much for protection and aggregation as it is for services. I think the ease of use and support for an agent are becoming more critical. As Curt mentioned, it’s an expectation now. … The expectation continues on where the master agent provides value, not just aggregation. I think there will be more emphasis placed on that — whether it’s automation or one-on-one — that compels them to do business with you as a master rather than going out on their own or doing business elsewhere.

Allen: Some carriers have embraced the master agent model and have seen the value of aggregating low-producing agents under master agents. XO has cut upwards of 70 percent of its direct agents in the last three years looking to aggregate them under masters. It’s a value to them because we deal more efficiently with them.

Raue: Every carrier’s demands and requirements on an agent differ. Commissions and contracts are tied to performance and relationships. Time is limited and for carriers to invest in new agents when they can help their existing agents hit their sales goals with master agencies that are meeting expectations. If the carrier can hit their assigned sales targets without new agents, they will focus their day-to-day efforts on those folks.

Knocke: Going back to the supplier concerns, the one we didn’t touch on was contracts. Verizon is coming out with some new contracts this year, which raises the specter. A contract can be a critical milestone in whether you can make a successful master agent value proposition going forward. They have an opportunity to make it a good value proposition or a challenging one.

Allen: Commissioning levels, but also to protections. I do think terms and conditions are important to our subagents. Anyone who has been in the business has been stung.

Bommer: It’s not only commission, but evergreen clauses, quotas, demands they make and the support you get. It’s a myriad of factors. It’s causing a number of masters to work together. You are getting better support, so I will work through your support system if that’s the way the carriers want to be.

Schuman: I don’t know what kind of parallels or examples you want to give, but I am looking at the logos on my Web site and ranking them one to 10 based on the homerun agreement I have with them. The four that I rate the highest are the four that get the most revenue from me.

Allen: Yeah. Shocker.

Schuman: Go figure. We don’t own assets. We do but not in the traditional sense. I mentioned this at the last Channel Partners show: We own cash flow and relationships. We are only as good to our subs as the cash is green and timely. It’s pretty simple. If we don’t have a good agreement that protects that asset, you are wasting your time selling for that carrier.

Jay Bradley: It’s a good point. We go through a ranking process every six months. The ones that come up on the top are the ones that provide a high level of support. They do show up more than quarterly. They do throw resources at us. There is a good news side to that story as well – those are the ones that get all the revenue.

Kinney-Mantione: When we get agents, the top-producing ones, it’s because they have been stung by not having the kind of agreements that we have in place. It’s a great story that we can tell them as we are bringing on new agents or when someone is coming on saying, “I am scared because all the sudden my commissions just stopped and I worked so hard to sell.” They didn’t know how to protect themselves in the contract.

Miehl: I think over time the value prop for the master agent is to enable subagents to secure more business. The contract I think is a very critical piece of that. I agree that the carriers that have the greatest ease of doing business and are more channel-friendly get most of the business. The other side of that is what value are we providing back to the channel in terms of enabling the agent to get more business? From our stand pint we are bundling inventory management. I think things like that will help add value back to the channel.

Bommer: As far as trying to educate the carriers, I am like Ted, and getting old and tired of beating my head against the wall. You can talk ’til you are blue in the face. We are bloody from trying. They will take it and smile and nod up and down and not change their ways. Or there are the people that get it and you don’t even have to try; they are already doing it. Why spend the energy trying to teach a duck how to fly like an eagle.

Edwards: I have heard this comment several times stating that some agents just aren’t going to get it done and also that pushing products to the agents doesn’t work, it’s got to come from the agents. I am convinced that with the new opportunities will come new agents. There are people out there who haven’t considered becoming a telecom agent before but it’s going to be a part of their business — people who are selling software as a service are effectively going to be VARs. Hosted software requires a data connection. I think there is going to be more and more of that. While we will focus on expanding the sales of our existing agents, we are looking for new agents as well.

Miehl: I would agree. I think you have got to go outside of the channel as we know it to increase your distribution. That’s going outside of the independent agent. If you are attracting more VARs and giving them the tools they need to be successful selling carrier services, they can have it as an ancillary product. We still need to support them and that’s part of the value proposition a master agent can bring to that particular segment.

Jay Bradley: I think also I see the trend for a lot of folks on the direct side coming over to the indirect side. We definitely want to take advantage of that. That’s one way to facilitate bringing more spend from direct to indirect. We see a lot of people that are very interested in making that shift, so we are going to focus on those folks and helping them become successful.

Raue: We all need to keep growing our agent channels. Adding new subagents and making current relationships more productive keeps us working day and night to make the value proposition to our agents get better every day. If we take care to our daily business and continue to work our individual business plans without taking shortcuts, we will continue to grow and succeed. The channel has come along way over the past 10 years. The light at the end of the tunnel is good and not an oncoming train.

Schuman: I agree with Brad. I was the one who put on the [priority list] staying focused on what we do well. We have double-digit growth for many years in a row. I am not going to deviate from the core that pays the bills, but I also think you need to a certain amount of that revenue and investment and put it into new markets for distribution channels.

Schuman: New technologies and distribution channels are intriguing. There is a part of me that wants to jump out and blaze a new trail. Our challenge is staying focused on what we do well and not deviate too far from the core services that pay the bills and continue to drive our business and our growth. The challenge is to not be seduced by blazing trails.

Kinney-Mantione: As an example, last year we were focused on VoIP and driving VoIP services. When I look at our numbers in relation to the time that we spent, they were very low. You can push out but agents have to pull in too. So, we are being more careful with how we spend our time and our marketing efforts to be able to make sure we are focusing on the type of business we are selling quite a bit of – MPLS and large call centers. We will not stop trying to push new product out, but watch it very carefully so we don’t waste our internal time. That’s one of our biggest challenges.

Shepstone: We are switching from RPM to Salestream. That’s one of our challenges. Like any small business, just finding the right people — not only internally, but to represent us from particular vendors. If you get a bad channel manager, you have to muscle them out. That representation makes all the difference.

Agent X: Verizon is a concern. They are the biggest vendor out there and they are not channel-friendly as a whole. That’s kind of a big challenge, I think. It will be interesting to see how that progresses.

Foster: My comment [about challenges] was in respect to subagents pitting us against other masters on commission. It was a challenge over the last few years. Our plans as I alluded to is to migrate to wireless — not to say wireline will go away. CMS has a different model than the traditional agent model. We started our 17th year in October. We have always offered the back office and the value-added. … That’s how we put it together 17 years ago and how it’s run today. I think every master agent is now offering that back-office support and service to their subs like we have always done. I don’t see any major challenges based on the path we have mapped out for CMS. But the challenge that we did have was competing on commissions. To find out that a carrier is giving our subs a comparable commission or one or two points less –- as master agents with the investments we have in our back offices we can’t afford to support agents that are pitting us against each other for a point or two.

Vince Bradley: Really we have the challenge of convergence and being able to put it in the channel successfully. That involves a new agent – VARs, etc. Moving up market is a challenge agents have had in the past. Retention is a big one. Automaton overlay is important both internally and externally.