Post-WorldCom and Global Crossing bankruptcies, agents have been forced to evaluate how much carrier diversity to offer in their portfolios. This month, T@G converses with three master agents about the advantages and disadvantages of carrier diversity. The main response? The only drawback to offering a variety of carriers is increasing the chance that salespeople and end users alike could succumb to information overload. In that case, these masters call for more training and the focus on a consultative, rather than a salesy, approach.
Here Emmet Tydings, president of AB&T Telecom, Richard Murray, general manager of CarrierSales.com, and Steve Braverman, CEO of X4 Communications, share their thoughts on master agents and carrier diversity.
T@G: What are the benefits of offering a number of carriers and providers to clients?
Tydings: Offering a well-rounded choice of services ensures that our subagents and VARs can access what they need to win more business with their clients. Too narrow of a product offering hems in subagents to the point where they cant provide the customer with enough alternatives to keep them from looking elsewhere. Diversity also ensures that all stakeholders are offered the latest services in an ever-changing environment that no single carrier can keep abreast on.
Murray: Solution selling. The biggest advantage to offering multiple carriers is you can move from being a salesperson to a consultant. If you are well informed regarding the current products, pricing, and promotions you become a resource, not a nuisance to your clients. The credibility gained by a non-biased approach pays huge dividends. By offering solutions, instead of a specific carrier, to your clients, you position yourself for years to come.
Flexibility. No provider is the correct solution 100 percent of the time. The flexibility of offering multiple carriers ensures youre never out of an opportunity. A few years ago the trend was to put all of your services with one carrier for simplicity reasons; the trend now is to go with the best carrier and price for each product.
Braverman: X4 prides itself on offering a carrier-neutral experience to its clients. In todays competitive world, clients demand objective information in order to determine which carrier(s) and product(s) best fit their needs and budget. And since not all carriers offer all services in all locations, it is essential to have a choice. Another big reason is diversity for back-up and disaster recovery.
T@G: What are some of the drawbacks to carrier diversity? If you dont think there are any, please explain why.
Tydings: No question that the larger the service set becomes, the harder it is to be an expert on them all. However, even though this can be a challenge, it can also be a benefit when we perform better in this area than the competition, and we usually do. In the majority of sales scenarios, we are not competing against other subagents or master agents because we effectively provide everything our agents and VARs need to address their customers. In other words, the drawbacks are outweighed by the benefits.
Murray: Agent noise. Offering multiple carriers creates a level of complexity with staying on top of the latest promotions, products and pricing. With so much out there, it can overwhelm individual agents. However, using a master agent with a top-notch back office helps individual agents sift through the noise and alleviate this problem.
Customer noise. There is the potential for overwhelming the customer with too many choices. The key is to focus on the carriers that best meet their individual needs in terms of product, price and service.
Braverman: The main drawback from a consumer standpoint is confusion. If we offer too many choices of carriers and service options, we put ourselves at risk of overselling and losing the clients attention.
T@G: If a master agent signs 90 percent of its business through one carrier, what does that other 10 percent bring to the table? In other words, is it worth it to keep those providers on tap?
Tydings: A master agent writing 90 percent of its business with one carrier is flirting unnecessarily with disaster if there is deterioration in either the relationship or in the carriers viability or service. History has proven the negative impact of this dynamic over and over again in the past several years of the master agency business.
Murray: Yes, it is worth it to keep the other carriers, even if the closing percentage is small. If you track what your sales people are proposing, you will find that 90 percent is mostly one product such as long-distance or data. But trends change often, and within six months it could be a different product that your main carrier is not the best at. If you keep your carriers, even through the lean times, chances are their product mix will come back into play, and then you wont be scrambling to sign contracts or find carriers to match your customers needs.
On the whole, no agent should place 90 percent of their business through one carrier. If WorldCom taught the agent community anything, it is the need to create diverse revenue streams. While it is okay to focus on a carrier for a time, the need for revenue diversity is greater than any comfort in the familiar.
Braverman: If a master agent signs 90 percent of his/her business through one carrier, I would question his/her business plan. With todays rocky financial environment, this is not an option for a master agent.
T@G: Is there anything else about carrier diversity agents should know?
Tydings: The biggest challenge with carrier diversity for a master agent that deals primarily through subagents (whether VARs, system integrators or interconnects) is marketing. Effectively educating our reselling partners on what services are available, how to sell them and how to grow their business is a monstrous challenge. Managing multiple carrier relationships with their volume requirements and attendant personalities involved is still not equal to the marketing challenge of effectively educating our reseller base. At the end of the day, customer acquisition is what the entire master agency model is based upon. Being more effective at a lower cost in acquiring customers than the carrier is what drives the business and is where the master agent provides the most value. It takes strong marketing focus to acquire good reselling partners and their end-customer orders.