TAG: Defining the Master Agent

Posted: 09/2002

Defining the Master Agent

By Tara Seals

MASTER AGENTS LONG HAVE BEEN THOUGHT of as aggregators of business. Webster's Dictionary defines an "agent" as one who is authorized to act for or in the place of another as a business representative. "Master," as an adjective, is defined as being a device or mechanism that controls the operation of another mechanism. Thus, a "master agent" is a business representative who controls the operation of other business representatives.

But that definition is evolving: Customer and subagent requirements, carrier expectations and industry pressures are creating the need for service-oriented, national organizations with up-to-date support infrastructures, in-house sales support and diverse portfolios.

"The master agent as we know it is dead," says Ben Humphreys, president and CEO, Comtel Communications Inc.

He's not alone in the thought. "It's becoming more of a managed channel," says Brad Miehl, president and CEO of Microcorp Inc. and theAgentsNetwork. "The pure model based on the aggregation of agents to hit a commitment with a carrier is starting to have limited value."

Master agency Communication Management Services (CMS) put out a report in 1999, predicting "major competition among agencies and providers will lead to the crystallization of market dominance by efficient master agencies."

Agencies with a high level of automated IT systems that streamline operations will transform the telecom industry into an efficient industry, wrote CMS president and CEO Gene Foster.

Today, "this is now becoming reality," he says.

"Carriers are forcing smaller agents to become subagents of master agents, master agents are gaining market share and seasoned master agencies have invested in infrastructure," Foster explains, "such as back- office staff, Web-based information sources deploying 'at a glance' information and support for all carriers that the master agent contracts with."

At Your Service

Customer and subagent service is a new key to building a value proposition and running a successful master agency. Good service especially builds value now that no-brainer long-distance sales have given way to data and larger voice applications. More complicated sales often necessitate ongoing customer and subagent support.

"Carriers in general are doing a terrible job at customer service," says Humphreys. "This is our competitive advantage. It will demand a thought shift from closing the sale to ensuring customer satisfaction."

Master agents' back-office systems enhance customer service and often are integral to interaction with the customer or subagent. "Agents have been forced first by carrier streamlining and now by industrywide economic necessity to operate back offices that not only provision but become the whole customer interface for their telecom services, and this is where we need to be," says Humphreys.

Back-office support also has taken on higher visibility for subagents that also are service-sensitive. "Agents shop around master agents," says Ted Schuman, president and CEO of PlanetOne Communications Inc. and master agency U S Telebrokers. "For the first time there's a competitive environment."

To win the business, U S Telebrokers has implemented an extensive online information strategy; systems take information from providers' systems and disseminate it to the subagents in a standardized way, giving them access to information once only available at the provider level, in a consistent format. The agency also prides itself on never being late on a commission payment in its 11 years in business. In-house sales engineers and direct sales associates round out the picture. "We've made a significant investment and try to stay ahead of the curve in technology and service," says Schuman. "That's a huge differentiator for us."

Other master agencies also are investing in service mechanisms. MicroCorp, for instance, is hiring channel managers in different areas of the country to manage sales "pods," which consist of independent agents, systems integrators and VARs. "Then they all tie into our online system, where they get leads, training and learn about products and events, all in a single portal," says Miehl. "The portal manages everything."

Master agency World Telecom Group offers detailed carrier comparison grid charts for quick reference; FAQ sheets on local, long-distance, data, wireless, operator services and equipment; a "footprint finder" to see which vendors offer local service in that area; a local loop-calculator and the "Killer APP," or Agent Product Portal, for real-time quotes on all products, paperwork, account status tracking and commissions information. It also offers in-person training sessions and "Webtours."

Subagents should perform due diligence, making sure to ask about the back office, past successes and shortcomings, alignment with providers that may have gone bankrupt. Call with questions and check the referrals, says Schuman.

"There are 10 to 20 premiere master agents in the country that represent a significant amount of the business being written with carriers," says Schuman. "Subagents need to ask the same qualifying questions they would ask a provider."

The Carrier Factor

In the current rough-and-tumble telecom business environment, carriers want to drive costs out of their indirect programs and actively look for master agents that have infrastructure in place to manage commissions, technical support and sales help for smaller partners.

"Through the consolidation of the direct and indirect sales channels, there are more agents claiming to be a master agent, when in reality there are less then 50 true master agents in this industry. " explains CMS' Foster. "There are some carriers that understand the true master agent and their contract requirements state that you must have a minimum of 'x' amount of subagents, and can demonstrate that you have the infrastructure to support subagents, including the continuation of adding on new subagents."

Master agents often become the top tier in a channel program, with second-tier partners purchasing underneath them. These second-level partners almost never deal directly with the carrier, which leaves the support, commissioning, technical resources and training responsibilities to the top tier partner. Many carriers also require at least an eight- to 10-person master agency staff to help ensure the agents have adequate resources. Also, the magic number of subagents that carriers look for, CMS' Foster says, is in the neighborhood of 50.

"We look for masters that have a process in the way they manage their subagents -- a back room, a marketing vision, a growth theory," says Jeannine Haney, director of channel sales at Internap Network Services Corp. "They are marketing-centric and process-centric."

Schuman concurs: "Carriers are looking at systems, headcounts and technical expertise. A lot of providers are doing roll-ups under master agents, and so you have to be positioned correctly and have the resources for a scalable buildout."

In fact, last year Qwest Communications International Inc. and Cable & Wireless Inc. announced "channel optimization" strategies to consolidate their agent channels under master agents. In addition, Sprint Corp. announced last fall that it would move to a two-tier model when acquiring new business partners. In the second tier, regional and national VARs and existing independent agents still can contract directly with Sprint, but new agents who can't commit to higher volume commitments are encouraged to represent Sprint under tier-one master agents or distributors.

"Being profitability-challenged in the market today, over the last year we adopted a two-tier strategy," says Sprint's Darlene Daude, group manager of indirect channels. "We can generate higher levels of revenue while still driving costs out of the channel that are inherent in the back-office support infrastructure."

Sprint's criteria for master agents include a proven track record and a level of technical expertise in dealing with carriers, in addition to volume. Sprint is networking with master agents to create an interface for seamless order-entry and flow-through process. "Subagents don't want to deal with all of the back office," says Daude. "They look to the master to interface with the carrier and provide back-office support. We look at their applications and how they provide that support, so the sub in turn can sell more Sprint [products], and the facilitation of the back-end processes is very easy."

Some master agents have created an environment to manage multiple vendors within a back-office system or portal, with everything from commission payments and order entry to lead dispersal and training available online for their subagents.

"Every vendor we have is gravitating to this model," says Miehl.

Portfolio Diversity

The master agent model also has shifted toward consistently bringing new products and services to market. Independent agents often don't have the resources or expertise to package solution sales for customers' communications needs and business processes. Master agents can perform complicated sales and often must in order to add value to their bases continually and remain viable.

"In the past, small voice deals have been the master agents' bread and butter," says Humphreys. "Today, data and larger voice applications are becoming critical for our survival."

For instance, as new applications and opportunities emerge, MicroCorp often takes a best-of-breed approach, tying services together for complete solutions. The company is focusing on applications that drive bandwidth. "With Internap we've negotiated our own MicroCorp product," says Miehl. "We'll put together dedicated Internet services and a disaster recovery ASP application."

MicroCorp also constantly monitors its base of customers based on vertical markets and new services. "Our system build a prospect list based on existing customers as new offerings become available," he explains. "We can go back and upsell, and the more services, the better the retention."

While it's in an agent's interest to look for add-on and complementary services, vendors also encourage master agents to embrace portfolio diversity. "Managed network services is a product we think has a lot of opportunity for growth and opportunity in the marketplace," says Sprint's Daude. "So in that area we'll be looking not at the partner models so much as what other kinds of services they're going to provide, such as wireless applications."

Since launching its partner program in January, Internap has signed up several strategically chosen partners across the country, including some of the largest master agencies. It also has specific criteria for signing up master agents, including 50 or more subagents, the potential to bill $1 million in revenue on an annualized basis and a complementary portfolio.

Internap offers intelligent IP routing as a managed service, which ensures customer data are routed with reliable and predictable response times across the public Internet. It automatically selects whichever Internet backbone will bypass congestion and avoid packet loss and latency issues.

"We look for agents that are data and IP-centric and can sell a noncommodity-based product," says Internap's Haney. "This is more of a value-added proposition, a mission-critical sale, a solution sale. We don't sell price only."

To fit the program, a master agent's portfolio needs to align with Internap's core business. "We meet with them, look at their facilities, talk to their employees, then we see if there's a strategic alignment that we can help them round out their portfolios," says Haney.

"Also, the bigger carriers want to fly out and check out the operation, because they want to know that a master's shop is focused on their product," says WTG's founder, president and CEO, Vince Bradley."

Is a master just signing to have the product and still focusing on LD, or are they really selling a lot of local and/or data?"