What is a Partner Worth?

Hopefully, yesterdays panel got down to the heart of the matter on this question: What is a partner worth?

Unfortunately, this letter goes to press before the roundtable, so I cant comment on the discussion. But I didnt want the opportunity to slip by altogether.

My personal feeling is that the worth of a partner is dependent entirely on your viewpoint. And I dont mean the obvious differences between the agents and carriers views; I mean the differences from carrier to carrier. Let me explain: Some carriers have agents because the field is crowded and they are trying to get in front of as many customers as possible. Others have agents because they want to make it more convenient for their customers to order their services all at once from the guys who install their phone systems.

These motives are very different and the perceived value from these agents is very different. The former wants to incent agents to put its products front and center. The latter merely wants to acknowledge the agent for placing the order, so its own sales people didnt have to. Let me put it another way: Its the difference between how much I am willing to pay you for going out and finding a customer and selling them my product versus you taking an order I would have gotten anyway?

Not surprisingly, historically, there was little crossover between the agents who filled each of these roles.

The problem now, in my opinion, is those worlds have collided particularly following the many mergers of incumbent local exchange carriers with competitive long-distance companies. The culture shock of these combinations is evident in the channel programs. Verizon Communications Inc. has been fairly forthcoming with PHONE+ about its efforts to resolve the dichotomy; though this is little solace to the agents who have problems with their ultimate approach. AT&T Inc., however, has yet to agree to an interview on the grounds that it is not ready to talk. I can only imagine that it, too, is struggling with this task; though agents have told me they are doing a better job of it than Verizon.

At the same time, the expectations for agents and their performance continue to grow. Many carriers have adopted two-tier models offloading significant back-office responsibilities to master agencies. They like the channel and the sales, but they dont like the administrative hassle.

They dont want to have to pay someone to train and support the agents that are non-producing and there are a lot of those. Not surprisingly, they kick them down to the masters. After all, the cost of the indirect sale is widely expected to be less than for a direct sale. When it ceases to be so, then a host of questions arise. Namely, what is the return on the investment? Are the sales bigger? Do the customers stay longer? The trouble is that the carriers want bigger ARPU, longer terms and a lower cost of sale. Their methods for achieving this (e.g., no evergreen contracts) dont always set well with the agents. How about training, profitability programs, or efficient quoting tools? How about improving installation and customer service so agents dont have to baby sit those processes?

The true value of the partners will always be in the eye of the beholder. However, I think expanding the metrics for measuring that value to include more than What have you sold for me lately? would be a good start toward common ground.

Khali Henderson
Group Editor
PHONE+, xchange and New Telephony

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