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CenturyLink’s Savvis Channel Sales Rules Raise Concerns

Some members of the CenturyLink Channel Alliance (CCA) are upset with the initial rules and compensation the carrier set for sales of  hosting services from Savvis, the data center company CenturyLink acquired last summer.

The new rules, issued last week, prescribe interim processes and compensation for CCA sales agents and CenturyLink Business Markets Group’s direct sales reps selling Savvis hosting to prospects and customers. According to documents obtained by Channel Partners, the rules state that compensation will be “reduced by 50 percent” for all Savvis hosting sales to current CenturyLink hosting and non-hosting customers. (This is essentially splitting the commission between CCA/BMG and Savvis.) Additionally, CCA agents must refer all prospective (non-CenturyLink customers) hosting sales to Savvis; closed sales will be paid a “referral spiff.”

CenturyLink's Chris AncellThe compensation structure was a hot topic among attendees at the CenturyLink Channel Alliance Expo 2012, which is being held in Denver, Jan. 18-20. CCA leaders declined to comment for this article, but Chris Ancell, president of CenturyLink BMG, acknowledged the discontent among partners and direct sales representatives in his remarks at the channel event. “I appreciate the concerns and suggestions around things that we can potentially do differently. We are looking at all of those things,” he said.

Ancell also assured partners there were reasons for the rules and also that they are likely to change. “What we really bring to Savvis is a big distribution opportunity — both from the Business Markets direct side and then even more from the indirect side. The thing that we want to make sure is that …everything is nailed down and functions exactly how we want it to function so there is no negative impact, no negative perception with customers as we roll that out,” Ancell said. “There is real thought around the rules of engagement, why we put them in place, the things we are trying to leverage and the things we are trying to avoid. I am absolutely convinced that it will continue to evolve over time.”

In fact, the CCA document obtained by Channel Partners refers to the rules as “Phase II.” The first round was issued in the middle of fourth quarter 2011 and offered CCA agents and BMG direct sales reps a one-time referral spiff on Savvis sales on an individual case basis.

CCA Advisory Board Member Mike Saxby, chief strategy officer for master agency Telecom Brokerage Inc. (TBI) told Channel Partners he expects the next set of rules in six to 12 months.  He also is confident those rules will better match CCA agents’ expectations. “CCA sees the same vision as the partners, but they need time to build the relationships, provide the metrics and build trust” with the Savvis team, he said.

Meanwhile, Saxby said that partners have the choices they’ve always had, which are to sell Savvis under existing contracts — their own or a master’s — or to sell another hosting provider’s services. Lost sales could reinforce arguments for a properly compensated channel.

While agents understand that the policy is a stop-gap measure until the two companies are fully integrated, they would like another option sooner rather than later. Ben Humphreys, president and CEO of agency Comtel Communications and vice chairman of the Agent Alliance, a buying consortium of 17 agencies, said the decision forces partners to look at hosting alternatives and discourages bundling of CenturyLink network with Savvis hosting.  ”It’s an extremely disappointing decision even though we understand the reason behind it. We hope CenturyLink management reconsiders.”

Mike McKenney, vice president of partner sales and business development for master agency Intelisys, said the situation presents an opportunity for CenturyLink to send a message to valued sales partners by bending somewhat on its margins to make partners whole. Meanwhile, he said those with Savvis contracts like Intelisys and its subagents can conduct business as usual.


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