By Frank Ahearn, CEO, McGraw Communications

Whatever happened to the traditional agent? You know, the one that was well versed in the technology they were representing, hard working, honest and had the customer’s best interest in mind.

In my opinion agents are a dying breed. Not that there aren’t any out there but, they are definitely outnumbered by the guy/gal who is looking to make money by just knowing someone or because they sold them something (not necessarily technology related) in the last five years.

Who is to blame for this transformation? Is it because this is a generation of a “false sense of entitlement” or did the carriers themselves create this by paying full agent commissions to “agents” for doing very little. As an owner of a CLEC that has no “private investors” or “public” money it makes it difficult to compete in the agent community. I have a tough time rationalizing paying an agent full commission while having to pay for my full internal resources, never mind trying to cost justify it.

I have no problem with the referral endorser model, the one where two companies (carrier and agent) pool their resources to create a better customer experience. But why does the agent think that he deserves 20 percent? I still have to pay a salesperson (who doesn’t want a commission hit), a project manager, a sales engineer and a highly compensated provisioning team.

Maybe this is why so many telecom companies are not truly making money. They are still concerned with top-line revenue and not true profitability. This is not to say there aren’t carriers making money or who have a true financially legitimate agent model, because there are. Also, there are plenty of “old school” agents bringing value to the carriers and their customers they represent but more and more every day I see the “false sense of entitlement” agent tainting the agent industry as a whole.

Frank Ahearn is CEO and co-founder of McGraw Communications and oversees all aspects of carrier relationships and overall network design. He also sits on Verizon’s Wholesale Advisory Board, Comptel’s CEO Council and Paetec's Reseller Advisory Board.

User Comments !

Agents may have become jaded after having a few checks terminated. (I still feel disdain for Estelle for cutting me out of commissions on services sold). So the mentality is to sell on price, get as much as you can from your rolodex, and move on.

Honestly, there aren't too many things coming out of telcos - ILEC and CLECs alike - that would inspire an agent to change its ways. ARPU is down - and so are commissions, while everything else is going up. What do you want an agent to do?

On the Double Pay: recently, I put a quote in to a reseller for IP. That day, the client gets a call from his long lost AE from that same company. That's the problem.

Not to lay all the blame at MCI, but they helped create the current agent. MCI with its "I can save you money" pitch, then leaving agents in the lurch on unpaid commissions or terminated evergreen contracts.

And competition is coming.

Microsoft VAR's will soon be selling cell phones, hosted PBX, and hosting. Cisco VAR's will be selling gear, IP Phones, Video Conferencing, and Call Manager.

Inter-Connects will be struggling to sell expensive rip-and-replace PBX systems against the marketing power of MS and Cisco.

If you want "traditional agents", well you may have to re-invent what you offer, because it looks like McGraw just resells the same stuff everyone else does. How does that inspire an agent?

Phone+ just ran an article on a round table of resellers. I can not distinguish one form the other. Everyone sells the same stuff from the same underlying carriers. So how would you like an Agent to proceed?

Posted by: Peter Radizeski | February 21 2008 11:24:02

Frank, I agree, and I disagree.   I agree that the majority of agents have become lazy.   I disagree that you should solve the issue by reducing comp to those agents that continue to produce profitable deals.   Want to save money by eliminating slackers?    First off, eliminate the full compensation for both the agent AND the direct channel sales support.   It's either or.... second, place ALL non-producing / small agents underneath your masters and then give you masters FULL support.   

Course that would require true loyalty.   And leading by example.

Posted by: VVD | February 21 2008 14:40:27

My company represents several LEC's and CLEC's.  The value an agent brings is less churn and increased customer centered relationships.  I would love to earn 20% commissions but that is unrealistic in todays market and I want my carrier partners to stay in business.  What all carriers whether wireless or landline need to understand is the customer wants someone to protect there interests and manage there telecom services without cost to themselves.  This is the value an agent brings to any relationship.  Additionally, why would you EVER pay commission to a rep on top of an agent?  An agent has the relationship, the sales rep has done nothing.  I may be old school but there should be agent managers that have the quota of ten sales people managing 20-30 agents.  This enables support to the customer and agent and reduced costs to the carrier.  Your model seems flawed, but what would I know, I have been in this business since 1991.   Speaking of knowledge, when was the last time any sales person other than an agent understood all products from a multitude of carriers?  In the end you get what you pay for.  If you want great relationships that last 2 and 1/2 times as long as direct reps.  keep an agent sales force with residual commissions.  If not complain about what has happened to all the good agents!

Posted by: Brian Miller | February 21 2008 14:44:12

I have been an Agent for eleven years now.  Many/most of my customers have been with me for eleven years with a variety of carriers.  I don't move anyone to make a spiff, I always do what's right by them, in their interest and try to grow my base.  I call them back when they call me, and check in on them periodically.

We have to start selling gear in the near futue, its plain and simple.  The turnkey location solution will take over in about five years, so there's no time like the present to figure out what to do.  Definite changes are in the wind direction.

Its like trying to run a full court press trying to stay in front of carriers that will continue to pay you, but you just have to keep a man on the ball at all times, watch them, and if they try to drive on you, pick the ball clean and stuff it back down their throat on the backside (ie have strong enough relationships to be able to quickly move business when necessary).  

There is nothing worse than having to do this to a customer, but when a carrier is screwing their sales people, they are probably going to start screwing the customers too. . .  7 x 24 Service from Bangladesh, that kind of stuff.

Posted by: Dale Bohannon | February 21 2008 15:42:51

Frank, did you have a bad day when you wrote this blog...an agent that just ticked you off or something?

Peter, VVD, Brian and Dale have covered most of my thoughts after the initial read of your blog. However, from a more general view, I can't move past the point that some portion of your sales come from agents and you are publicly bashing them as a whole.  I thought the idea (of an effective leader) was to motivate and incent the right behavior, to praise in public and criticize in private and to show appreciation to those who butter your bread (to some degree). 

By the comments already posted, your "half empty", pessimistic, cynical style here seems to have only alienated some agents. In my opinion, you would have produced a much more favorable outcome for yourself (short and long term) if you had shared some of the qualities of the agents you like best to make your point.

Posted by: David Goodwin | February 21 2008 16:24:11

Being from both sides of the telecom sales fence I have a pretty good pespective and would like to address some of your comments.

In regards to taking care of clients, when would you like to address a direct rep fitting a round peg into a square hole by over-stating their company's service just to meet his/her monthly quota?   A good agent know what carrier(s) and service(s) fit their client needs not what best lines their pockets.  Plus I have yet to see a direct rep personally take on any or all post sales issues for a client once switched to their company.  A good agent not only leads the client to a good mixture between carrier(s) and product(s) but they also take direct accountability in managing any post install/migration issues that come up between their client and the carrier they brought to the table and done so through their carrier's channel management team.  They don't leave their clients to fend for themselves with a new carrier's "customer service department"; which we all know is mostly made up of entry level position filled by people normally new to the telecom industry in general.

In regards to paying commissions to agents, first off this business model is the pure John Smith version of receiving revenues; if we want to eat we have to work.  We earn 100% what we get from our carriers and nothing is "given" to us upfron or on the back end.  There are no base salaries to help us get ramped up and the "extras" a direct rep gets from their employer (ie Matching 401k, Cell Phone Expense, Partialy or fully covered insurance, other expense wirteoff's, etc...) comes directly out of our pockets to help search for and close new business for our carriers.  Then there are the other cost factors in hiring, firing and replacing direct reps too that we do not burden our carriers with.  So overall compare the average FULL operational cost of your sales force per person against what you pay an agent and then compare the revenues each brings in monthly, quarterly and annually and I'm sure you'll see that this business model is actually a more profitable and efficient business model vs. having direct reps.  Also I think you'll find that there are larger internal operational issues/inefficiencies that are the cause of any CLEC's to not be profitable vs. what they're paying an independent sales force based on what they produce.  The portion of your overhead expenses that goes to pay commissions to an independent sales force is a very small fraction to the overall cost of operating a CLEC.

Posted by: Casey Roe | February 21 2008 19:00:52

Frank, you certainly got people talking! (Which is the whole idea). Tonight, I was at a meeting of a local master agency, Telephony Partners. Ivan, the CEO, Ivan; Peter Davis, XO CM; and I were discussing Master Agencies. The discussion centered on how little pre-qualification is done as well as the on-boarding process by Masters. It's not a numbers game, although many people like to run it that way. The more the master knows about the agent - like the target or niche that they are comfortable in - the more the master can focus (guide, coach) the sales effort of the agent. How many have agents and sub agents that generate very little business? Ask why.

Posted by: Peter Radizeski | February 21 2008 22:29:58

In light of the discussion on this blog, I am going to paraphrase Seth Godin from his blog
(http://sethgodin.typepad.com/seths_blog/2008/02/advice-for-real.html) yesterday.

Advice for Telecom agents (quit now!)
I had the good fortune to speak to a large number of telecom agents this last few months. Here's my best advice (everyone knows an agent or two, so feel free to forward this along).
Plan A: You should quit selling telecom.
I'm serious.
Quit being an agent. Get a job doing something else.
Some of you have been waiting to hear that. My pleasure.
...
Now, if you're still with me, you'll be glad to know that the competition for attention just got smaller. The agents who built their business on low balling rates, arbitrage plays, and the inside-outside-double-team (the order takers) have left the building.
The ones that are left, that's you, can consider Plan B:
If you're not going to be able to make a living by taking orders, by selling telecom the way everyone else does, by using the never-ending race to the bottom in prices to make sales, then what are you going to do? Whining is not an option.
In fact, I think this is an extraordinary opportunity for you.
Without a frenzy, without short-term competition, you can actually build assets that will pay off for the long run. I have two in mind:
The first is to become the expert in what you do. Which means micro-specialization. Who is the single-best agent for DIA in your state? Or for Hosted PBX for multi-location offices? Who is the one and the only best person to turn to if you're looking for MPLS?
</stop para-phrase>
Does your Agency have a specialist in data? in IP? in gear? in SAAS? Why not?
It is way easier to sell to your strengths.
In Seth's book The Dip, he explains that the Long Tail can work in your favor, especially if you become the best in the world. How do you do that?
You define "the world" specifically. "the world" can be in your state, your niche, your product.

If I owned a Master Agency I would poll my agents to find out how I could help them become the best at whatever niche they wanted. Not everyone can sell Up Level (waves and GigE). And its likely those people can't sell DSL or PRI. Why make them? Help them have the best catalog of services to sell that they have a passion and knowledge to sell. (Some coaching required).

Posted by: Peter Radizeski | February 22 2008 11:03:42

I would like to offer a different perspective.  I have only been in telecom for 11 years and have been an agent for 6.  I assume that everyone that has written so far probably considers himself one of the good, traditional agents, as do I. 

I don't really think the number of "quick fix" agents has increased.  They have always existed and I would argue that they have existed in the past with the same ratios to traditional agents as they do today.  When I was in direct sales I can recall several of my peers seeking agent agreements with carriers to sell a competitors service so they could still get paid.  They went after that one-off quick fix model that you are describing.  To this day, we still occasionally run into customers who have been sold by this type of agent but I would not say that it has increased by any means.

Reading your blog just tells me that you are frustrated because your agent program has probably not taken off the way you expected.  Most likely you feel you are seeing more of the “quick fix” agents and I would probably attribute that to the fact that McGraw is recently (past 12 months) trying to grab a piece of the agent pie.  In that short time, yes, you are going to deal with a lot of headache and agents who will never sell anything with you.  But, what you have to remember or perhaps realize, is that we as good agents want to protect ourselves as much as possible.  With that in mind, relationships tend to be everything in this business.  It takes time to get a "traditional" agent to trust any new agent program.  I refer to new as new to the agent, regardless of how long a carrier has run a program. 

I personally just became familiar with McGraw’s program 6 months ago.  Being an agent for several carriers and resellers, I agree with Peter that McGraw has to do something that others don’t.  McGraw can’t just offer a different way to pay us, offer something we can’t get elsewhere with our established relationships.  When you simply offer a new way to get paid, you are going to definitely attract the “quick fix” agent or newer agent who does not have a track record, a base of accounts, or much experience being an agent; therefore; he does not have anything to lose.  I cannot vouch for the rest on this blog or other traditional agents, but I can say that my company NEVER positions a carrier simply because they will pay us more.  All other things being equal, if given the option of using an existing relationship with our existing commission structure vs. selling a new carrier with a higher commission, we will almost certainly go with the existing relationship.  We know what we are getting.

Lack of knowledge of products, pricing, and processes tends to steer agents away from committing to a new carrier.  Even with some reassurances and guidance, I would guess that most "traditional" agents would tend to proceed with caution.  We have always made it a practice to test carriers for a few months before aggressively putting business on them.  If you take into account time to train, let's say 30 days; Time to pitch to someone and close first deal, let's say 60 days;  Time to install and customer to receive first bill, let's say 60 days;  Finally, agent to receive commissions, let's say another 30 days.  A traditional agent who is conservative would most likely test the carrier for 6 months, based on the above example, before starting to put a lot of business on them.  That is assuming that you can get off the ground with the Agent and get them to quote your services within the first 30 days and sell within the first 90, as the assumption above shows.

I agree with David.  In the future you might want to think twice before posting a blog stating that you hate paying those you are trying to court.  That type of stance does not provide reassurance that you are committed from the Top (as CEO) to the Agent program.

Posted by: Robert Hayes | February 22 2008 12:31:40

No, I didn't have a bad day nor did an agent just kick my dog.  Obviously there are still many "Old School" agents passionate about what they do, which is great news.  This blog was not intended for them. 

People alluded to the fact that I dislike agents or even went so far as to infer that I hate paying them.  This statement couldn't be farther from the truth.  I love good agents and I love to pay good agents.  It is a great financial model as long as everyone does their part.  As many of you may not know, I am one of the owners and co-founder of a very successful agency since 1992, so I get the agency model as well as anyone.

My point, which I obviously didn't convey clearly, is that we run into more and more people looking for large payouts for very little work.  (Not a good model) If you are not one of those people, this was not pointing a finger at you. 

BTW - while in Las Vegas at the CP Show I had many peers approach me to say they are experiencing a lot of the same thing.  My response was "why didn't you respond to my blog?"

Posted by: Frank Ahearn | March 13 2008 09:41:05