Channel Influence
Of course, CCA's change of heart may speak to something larger than missing out on money: the channel's growing pull with providers. "A carrier that has its finger on the pulse of the channel knows what the channel wants and constantly gets feedback," said Bronston. "So if a large master agency is unhappy with the terms of the agreement they signed five years ago, I think there's more of a willingness these days to permit a negotiation ... than there was several years ago." That seems to be because large agents have produced "significant revenue" since signing, Bronston explained, or the provider recognizes a partner could bring in a lot more sales if it was working from more favorable terms.
That seems to be the impetus for the contract revisions at XO. In July, the company debuted its long-awaited new contract, which includes protections for smaller partners, giving them a safe haven at $50,000 in billed revenue with no new sales quotas. The changes came after several years of agent complaints that followed agent contract cuts in 2009. As a result, XO conceded on some important points. "I would love every partner to do a half a million dollars a year in sales, but that's not realistic," Shane McNamara, vice president of XO's partner channel, told Channel Partners in July. "I don't want the partner that does $50,000 a year to feel that we don't appreciate it. ... We are opening this up so all partners have a place to feel appreciated and welcomed within XO."
For some agents, the modifications are welcome. "We're always encouraged when the light bulb goes on around total billed revenue as opposed to just new logo sales or when retention performance is actually measured and rewarded," Greg Praske, CEO of ARG, which has had a direct contract with XO for the past six years, told Channel Partners in July.
But some fears around the XO contract remain, which may indicate the agreement is a win-win. "There's an old expression that if both sides are ecstatic after a contract negotiation, or if both sides are a little upset, then it's probably a good deal," Bronston said of contracts in general.
