Masters Examine Subs Commissions, Incentives

As a general rule, master agents are loathe to share their compensation structures, or any other financial information that might give competitors a leg up. They also tend to downplay any emphasis on commissions, focusing instead on the importance of subagents signing with masters who have solid and reliable vendor agreements, and who pay on time.

For this months installment of Master Minds, T@G sought to obtain as much information as possible that will help subagents find the right master agent. However, not all of the master agents T@G contacted responded to interview requests. ; The ones that did provided information enough to fill two columns. Next month, T@G will continue the conversation about the kinds of compensation mixes masters are finding work well with subagents.

Commissions, Incentives and Spiffs

You are a subagent, an independent contractor. Subsidizing your own taxes and operating costs are more reasons to look for master agents that offer promotions, incentives and good commissions. Relationships are crucial, but, ultimately, everyone wants and needs a chunk of money. To that end, T@G asked master agents what sets them apart from others in terms of commissions subagents can earn.

Our agent agreement is brief and mutually beneficial, says Steve Snure, COO of X4 Communications. We are also public with the commission percentages that X4 receives from each carrier and pay our agents a percentage of those amounts. Snure adds that X4 receives highest available commission with nearly every carrier, and passes on that advantage to agents in the form of some of the highest commissions in the industry. In fact, agents often receive the same or higher commission than what they would be offered with direct carrier agreements, he adds.

X4 recently offered a $1,000 signing bonus to new agents submitting orders in excess of $3,000 in monthly recurring revenue. Snure says X4 also is planning to introduce a presidents club incentive.

Spring Valley Marketing Groups Doug Boyce, though, says he hopes nothing sets his agency apart when it comes to commissions. We aren’t out to pay the highest commissions possible; we’re trying to provide the best agent/customer service to our agents while at the same time providing them with top-quality carriers offering competitive products and services with fair and competitive commissions, the vice president of finance and sales says. He notes SVMGs commissions are very close to the norm and says the agency passes on 60-100 percent of carrier incentives and spiffs.

Telecom Brokerage Inc. President Geoff Shepstone, says commissions promised to an agent are only as good as the contract that binds the master agent to paying the subagent. TBIs agent contract states that as long as the company receives commission payments from the carrier, subagents will be paid their share. That is pretty hard to misinterpret, Shepstone says. The terms in the contract also include that the customer relationship belongs to the agent. At no point will TBI hold the agents base hostage. Unfortunately, that happens far too often in our industry.

TBI pays as high as 90 percent of what it receives from vendors. If an agent is sending TBI clean orders, works to ensure the install goes smoothly and is the customers primary point of contact, then the agent deserves the majority of the commissions, Shepstone says. The caveat would be if an agent is a consultant and asks TBI to take the lead in the sales role, present completed paperwork to the customer, provision the account and remain as a customer contact. Then commissions would be significantly reduced, Shepstone says.

Meanwhile, PlanetOne CEO Ted Schuman says his agency distinguishes itself by paying up to 85 percent in residual income received from carriers and 100 percent of upfront spiffs or carrier incentives. We’ve also been successful in negotiating out most or all of the “penalties/teeth” in our vendor agreements, Schuman explains. This is a direct result of our volume of business and [that we] continue to write with several of the top telecom providers.

Schuman also adds that PlanetOne offers so many incentives that the company dedicates a portion of its Web site to that issue alone.

Finally, Vince Bradley, president and CEO of World Telecom Group, says his master agency makes its mark by offering more products and services that lead to more commissions overall, commissions he says end up being slightly higher than the norm. We offer local, long-distance, data (including Wi-Fi), wireless (cellular but more than just a portal, we have a full division), equipment, operator services, bill auditing and cost containment, he says. We have designed some programs that have an option to pay commissions upfront or residual. This has enabled many agents that are new to the indirect side of the industry to get their business going with little or no capital. WTG also holds annual events to reward its agents and pays on all spiffs, Bradley says.

Look for Part II on Nov. 1, in which these master agents continue the discussion on compensation. They also will talk about how commissions might be structured differently for newer technologies and services such as VPNs and VoIP, and will provide some holiday sales strategies.

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