PHONE+ Asks If Residuals Still Rule

Q: Do residuals still rule?

“Yes, residuals still rule! And it’s probably the No. 1 financial reason many of us became agents. However, if you can be compensated $1,000 per month for 36 months versus $36,000 upfront and that's it, then the $36,000 upfront is financially better for you (you can leverage it immediately and you won’t lose as much to devaluation or inflation). The key is really the evergreen — when you continue to get the residuals as long as the customer stays with the service beyond the original contract. Then, the po-tential exists for many more months of that $500 residual and that will earn you more in the long run.”

— Dan Vidal, Managing Director, Telecom Advisors, Independent Agent

“In our world, residuals still reign supreme. Our business model is to bring the best quotes and options to the table for our approximately 150 agents and 3,000 customers, but we are seeing a growing trend where our agents are specifically requesting proposals from our residual-based carriers. In fact, Chorus ... has a situation right now with two of our largest carrier-partners regarding residuals. One of these firms does not currently offer residuals and our agents are complaining loudly and have begun to direct their business to the other company.”

— Robert Molinaro, Vice President, Chorus Communications, Master Agent

“No, I do not believe residuals rule. We have a value in the designs and applications that we present to our clients that they cannot attain from a carrier or carrier’s sales rep directly. If we do not put a value to that and sell that to our clients, we will always be at the mercy of what carrier is providing us the highest re-sidual. That does not mean residuals are not vita, but they can no longer be our driving force. I prefer much larger upfront payments than larger residual payments."

— Orlando Lopez, President, Synergy Concepts LLC, Consultant

Up Next: Does exclusivity pay?

Send your answer to Cara Sievers at csievers@vpico.com by Aug. 1 for possible inclusion in the September edition of PHONE+ Asks. Any answer submitted is eligible for publication and may be edited for clarity or brevity.