Since Ken Royer joined Deltacom as vice president of alternate channels just shy of 18 months ago, the CLEC has re-evaluated its indirect sales strategy, trimming its traditional agent ranks on December 2009 and targeting VARs and dealers as exclusive agents. Now, the company and its channel are facing another big change its pending acquisition by Earthlink Inc. The ISP plans to operate Deltacom as a wholly owned subsidiary not unlike New Edge Networks Inc., which also has its own indirect sales channel.
PHONE+ interviewed Royer about the recent changes in the channel and the pending sale.
PHONE+: Deltacom recently added an exclusive agent program. Can you explain why?
Ken Royer: Deltacom long had a traditional agent program, where we pay a percent of the net monthly revenue to the agent each month in return for a contract commitment of monthly or quarterly sales production. That program did well and still has a strong position in our Alternate Channel Program. However, what we noticed is that there are a large number of VARs, IT professionals and independent sellers for whom this type program just is not a good fit. In our assessment, there are a lot of these professionals in the market and they were not comfortable with carrier contract commitments, didnt like the low monthly residual model and found it hard to focus on the network solution with their core focus elsewhere. We also knew that this community tended to be very loyal to a specific vendor or business relationship. We believed that we could launch a program where exclusivity was OK, we did not ask for contract commitments and we would be willing to pay 15 percent of the 36 months contract value up front. With this program, these partners get paid in a fashion that is rewarding and makes sense, where they can capitalize their business and invest in the relationship and it does not task their core competency but rather complements it with support and resources. Additionally, Deltacom can be very selective about which partners can join this program and truly bring to the customer community a valued relationship that they can trust and will meet their needs.
P+: How is that program progressing in terms of number and revenue?
KR: The program is growing rapidly since we launched in February of this year. We exceeded 100 quality agents last month and our trend of interested and recruited agents has increased since that announcement. I cant share specifics about our financials but can tell you that this channels sales production is growing at impressive numbers quarter over quarter with broad contribution across the agent community. This is exciting since many channel programs will only see about 20 percent of their agents really quoting and selling services. We are seeing much larger numbers than this. The partners are really embracing this model and their success is ours.
P+: You still have the traditional agent program. How many agents are part of that and how much revenue is coming from that channel?
KR: We do still have a traditional agent program and it is strong in force with multiple quality partners in almost every city where we provide network services. This program has also grown steadily since January and we are happy to say we are getting requests every month to move agent contract commitments up so that they can earn more as they sell more. This is exciting.
P+: Deltacom has been criticized and sued in a few cases for cutting agent contracts. Can you speak to how many agents were cut and the reasons for those cuts?
KR: As any typical carrier program would do, we went through a process of reviewing the performance of our agents and, in some cases, took action in accordance with the terms of each agents contract to best serve the business and our shareholders. Deltacom made various business-related changes, sometimes properly adjusting contractual commitments to the right production levels, and terminating some agreements in accordance with the applicable contract terms. Deltacom does enforce our contractual commitments and we continue to do so monthly. Ultimately, any agent continuing to do business with Deltacom is honoring its contract with us and continuing as a valued part of our Alternate Channel Program.
P+: I understand that some of the agents that were cut have rejoined the program.
KR: When we terminated agents last year that were in breach of their agreement, we did offer a new agreement with terms more in line with a going forward relationship that made contractual sense. Some agents did not respond to this opportunity and some signed the new agreement and are now very valued partners.
P+: What are your goals for the Deltacom channel?
KR: Our strategy is to deliver a best-in-class program where doing business with us is easy, profitable and just makes sense. One of our recent announcements is a very impressive agent portal that allows you to easily track commissions, quotes, orders, manage inventory, launch and track trouble tickets and more. Look for continued improvements there. We are moving forward with aggressively growing our new Exclusive Agent program while focusing heavily on winning more and larger customers. This means more and more support around complex customer sales. We put heavy emphasis on improving and growing our training programs and tools that allow agents to easily and comfortably do business with us. And, expect to see more of us in the media, in local market events and customer initiatives with some exciting new announcements coming in 2011!
P+: What are your key partner-enablement initiatives?
KR: Deltacom developed a quality on-boarding initiative. When you sign into our program, you immediately receive a welcome phone call where we lock in dates for process, sales, product and tool training. We focus on two phases of development and do not move past those stages until we truly believe that our efforts are well received and the agent is comfortable moving to the next step. We find that an agent that mostly completes Phase I on-boarding is three times more successful with Deltacom. We provide a well designed and informative welcome package and make sure that, every step of the way, the agent receives checkpoint discussions to validate that things went smooth, identify challenges and provide guidance for the next step. It is a team effort and our agents are not left alone with a good luck and well check back later.” We make sure you are comfortable, knowledgeable and empowered.
P+: In light of the pending Earthlink acquisition, how do you expect the channel programs to benefit or change?
KR: This is an EarthLink question and it is really too soon to discuss what, if any, changes there will be. But, I am excited about what this means for my team, Deltacom and our agents.
P+: What products do you think will be successful/hot for partners in 2011?
KR: We just launched our Converged Minutes solution that enables customers to purchase Deltacom Simpli-Mobile and voice solutions but pool all the minutes from one bucket. The mobile devices are included in the monthly fee and everything appears on their single, integrated bill. This option is very attractive to customers. Agents can sell this and get paid for the mobile as well as the voice solution. It is a great upsell tool, a competitive edge and a great way to double commissions while meeting customer needs. Our SIP trunking solution and hosted solutions are around the corner. Plus our integrated T1s will continue to be a big hit, our MPLS network is solid and tends to be a big winner for multisite needs. We also have a great Ethernet product that is priced well and, again, mobile is gaining momentum.
P+: What will be the biggest challenge/opportunity for channel partners generally in 2011?
KR: Finding new business is always a challenge and how your carrier partner supports you in this effort can make all the difference. We recognize this and are always looking for ways to assist our agents with exciting solutions and tactics to upsell into their customer base and angles to drive new business. We are working with agents on co-branded collateral strategies, customer seminars in their markets, awareness campaigns, leveraging corporate lead generation tools and some other investments that we think will help our agents with this hurdle. If we can help them win more, we all win.