Level 3 Chief: All Partners Now on Same Contracts

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After months of prolonged negotiations, all Level 3 Communications indirect sales partners are now on the same contracts.

The long-awaited plan to normalize indirect sales partners’ contracts following the fall 2011 merger with Global Crossing was rolled out in January 2013 but delayed by partner protests and complicated by the resignation of channel chief Michael Jerich in May.

Level 3 Channel Chief Garrett GeeAn initial March 29 deadline for partners to sign the new agreements came and went, as did an extension. But, Level 3’s new channel chief, Garrett Gee, who was named to the post in late June, told Channel Partners in mid-December that the carrier had collected outstanding signatures on the new paperwork within the prior 30 days.

“We have successfully signed all of the agents that had indicated they were going to sign with Level 3,” Gee said. That’s not counting about 20 percent of the agents with direct agreements who have opted to roll their bases under a master agency, he noted.

“What we did was eliminate those parties from the negotiation process because they were essentially sitting on the bench, waiting for us to come to terms with the rest of the partners, i.e. master agents, so they could move their bases,” Gee said.

The consolidated Level 3 channel partner program and associated agreements institutes a new tiered structure Elite, Premier and Authorized that defines both revenue minimums and sales quotas associated with levels of support, as well as additional benefits like dedicated account teams and MDF.

Partners’ complaints generally centered around aggressive sales commitments. This likely was among the reasons that one in five partners decided to assign their revenue to a master agency. Gee said others decided to sign into a lower tier despite qualifying for a higher one based on their revenue.

Another issue, particularly for Global Crossing partners, was a reduction in commissions.

“There was a variance between Global Crossing and Level 3 in the way that we paid. There is no disguising that,” Gee admitted, noting that third-party consultants were brought in to benchmark partner compensation for the new program. ”Based on the tiers that were developed, there may be some partners that have more favorable terms with regard to percentages and there may be some partners that had less favorable terms.”

Despite the prolonged negotiation process, Gee said Level 3 was able to create consistent contracts across its partner base.

“One of the goals coming out of the integration of the two companies was that we had a bunch of different paper and we wanted to consolidate it into something that was fair across the board,” Gee said.

To make that happen, the carrier did not negotiate one-off agreements.

“Our commitment to our partners  and we believe that we have honored that commitment  is that any concessions that were agreed to during the contract negotiation phase were extended to the broader partner community,” Gee said.

That means any partners that signed new contracts in early 2013 are operating under the same terms as those who signed in the fall.

“The people that signed with us early didn’t get the short end of the stick for doing so,” he said.

Partners speaking to Channel Partners on condition of anonymity said they were concerned about meeting the new sales goals in part due to continuing issues with Level 3’s service delivery. It’s risky for partners to place a large sale with a carrier that underperforms or cannot deliver service in a timely manner, they said.

Gee said improving the customer experience is a top priority for the company, noting that Level 3’s biggest investments in 2013 were for headcount and systems impacting service delivery and service management. During 2013, as one example, Level 3 consolidated about 90 percent of its quoting functions into a single-source system, driving efficiencies for the implementation team.

“If you are getting orders from a single source versus two or three, it obviously can reduce the overhead on those people, so they can be more effective in their jobs,” Gee said.

Operations periodically shares progress toward performance goals with channel management, which is passing that information along to its partners. It was a key topic for the Level 3 Channel Partner Advisory Board, which was held in November and included participation from Jeff Storey, Level 3s president and CEO; Andrew Crouch, regional president of North America; Lisa Miller, vice president of sales; and Maggie Chan Jones, senior vice president of North America marketing.

“We polled our partners before they came out and asked them what they wanted to hear about. Customer care-related issues was one of the top items. We spent a good part of the day discussing that,” Gee said.

The indirect channel partner support organization also is available to help, Gee said.

“If, for whatever reason, we do fall short, that’s when our partner experience team will come and be an advocate to help navigate and get those answers back to the partner and customer,” he said. “They can act as an escalation path and get things done maybe quicker than someone outside our organization.”

In 2013, Level 3 added headcount to the partner support team and changed the model from “first come, first served” to dedicated account management.

“The good thing about that is that a relationship can be built there, and the partners can feel they can trust those individuals. It’s been very effective,” Gee said, explaining that as a result, partners now have an account team, including the channel manager, sales engineer and partner-experience specialist.

The Level 3 channel also has an initiative to streamline its upfront order capture process.

“We are re-evaluating when we need to collect information and how much information we need to collect,” Gee said. “A lot of those things can be collected later on in the process and allow us to do other activities and that allows us to provide a better customer experience.”

While Gee stepped into the lead role in the Level 3 channel midyear, he said that his long tenure with the organization (he has been part of the management team since the channel started in 2006) enabled him to hit the ground running and move forward with the strategy that was minted under his predecessor.

Besides a continuing focus on improving the customer and partner experience, in 2014, Gee and the Level 3 channel team will push the corporate strategy of profitable growth.

“We are not chasing lines or seats. We are not just chasing top-line revenue growth only. We are chasing top-line growth with an acceptable variable gross margin or EBITDA contribution,” Gee said, explaining that the channel is targeting certain customer profiles and also enabling its partners to sell on-net more easily.

Gee also is keenly focused on developing IT VARs as partners. The 2013 program enables VARs to work directly with Level 3, partner with one of its agents or team with the Level 3 direct sales force.

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