Effective April 1, TNCI added a Business Downturn Flexibility clause to its terms and conditions for providing telecommunications services to end user businesses.
The clause is designed as a method for renegotiating service agreements due to a change in the customer’s business situation as a result of the recession. In addition, TNCI hopes that it will aid sales of its services through its agent channel by eliminating a potential obstacle to contract closure.
“The reason we started looking at it was agents were asking,” said Brian Twomey, president of TNCI. “Apparently, it is a bigger struggle to get customers to commit to both volumes and numbers of facilities and a lengthy term in this economy.”
The clause, which applies to new and existing customers, essentially recognizes that customers may experience a “temporary but measurable reduction” in the services they are using and allows them to initiate discussions with TNCI to establish a Temporary Alternative Agreement (TAA), adjusting parameters of the agreement. TNCI has 30 days to respond to such written requests.
“If there is reason for adjustment, then we want to work with them to do that,” Twomey said. “That’s a whole lot better than having a customer that is frustrated or wants to roll over. It’s a way of maintaining and enhancing the relationship.”
Twomey said TNCI expects the clause will be invoked by agents, who go to the agent manager about a specific customer’s concerns. An example might be that the customer has 42 retail locations and needs to shut down three of them and, therefore, must cutback on their MPLS network in the middle of a term.
In the three weeks the clause has been in force, TNCI has not had requests to review customer contracts.
However, agents are optimistic about how it will impact their ability to sell. Speaking for the Agent Alliance, CEO Bill Power said the clause is a selling tool for agents with those customers that need to make a commitment in volume or term to get desired rate structures, but are concerned about doing so.
“There is an incredible amount of interest and willingness (on behalf of customers) to engage, particularly with a focus on saving money, but there is a corresponding challenge in closing the customer,” Power said. “Any arrow we can have in our quiver that can help address any of those impediments to getting from interest to ink, those are wonderful tools for us to have.”
Twomey said he hopes the clause will have a positive impact on TNCI’s relationships with customers, but more importantly, on its relationships with agents. “What you never want to have happen is for an agent to have their customer relationships fall out because of the way they are treated by a carrier,” he said.
As for potential abuse of this policy, Twomey said there is risk, but the review will be looking for concrete business changes and true hardships, not simply a desire to hold onto cash, which is something every business is dealing with today. “To the extent they have real business issues that impact the way they need to run their business, we really wouldn’t be a partner to the customer or agent if we weren’t willing to consider that,” he said.