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Birch Talks Partner Numbers, Expanded Strategy

By Kelly Teal
October 21, 2013 - News

Birch Communications now runs a thousands-strong dealer network thanks to the addition of many partners from the recent Lightyear Network Solutions and Ernest Communications purchases.

The $22 million Lightyear deal closed in early October, just a few weeks after the Ernest deal was wrapped.

During the acquisition process, Birch was working on new contracts with Lightyear and Ernest agents. To date, of the partners who were actively selling for Lightyear, Birch has signed between 90 and 100 percent of them, said Vincent Oddo, president and CEO of Birch Communications. Of active Ernest dealers, "every single one" had been signed by Oct. 16, except for one remaining contract that was expected to be inked by week's end. "So, 100 percent," Oddo said.

"We have 6,000 productive dealers that sell for us," said Oddo.

Those numbers indicate the channel's importance to Birch but partners do not provide the company's only go-to-market strategy, Oddo noted. That's why Birch executives disagree with sources' characterization in a recent Channel Partners article that the company's M&A strategy of assuming only assets (partner contracts are viewed as liabilities) puts 15-20 percent back into Birch's bottom line. The figures are more like 3 and 4 percent, Oddo said. If they really totaled up to 20 percent, that would mean Birch gets all of its revenue from the channel, he said. But Birch sells through seven different avenues, including direct and telesales, and the channel represents just a part.

"Dealers, partners are a piece and, for us, it's sort of in the middle," Oddo said. These partners, he added, play a "significant role. They're one of our seven important channels."

And as Birch branches into new regions (such as Kentucky, because of Lightyear) and areas of expertise, the company is looking to certain types of agents to thrive. The strongest partners are the ones who have found a niche they can serve well, Oddo said. Think a certain vertical market or knowledge about multilocations' unique needs.

Indeed, Ernest's strength lay in the multilocation arena and gives Birch a new capability. Ernest, a virtual network reseller, did not have its own infrastructure but served larger SMBs with locations throughout the country. That multilocation focus "was a nice sort of bolt-on for us," said Oddo. "It takes a special knowledge to get that right."

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