Selling in a Slowdown: Agents Help Customers Control Telecom Spend

As the economic forecast predicts more doom and gloom, customers will want to take control of their telecom spend. AOTMP’s Telecom Expense Management Market Landscape from Fall 2007 found that 71 percent of enterprises are seeking to reduce their telecom expenses. And, Gartner estimates that the TEM market generated revenue of approximately $600 million in 2007 and will grow to $1.7 billion by 2011. Herein lies the opportunity for agents to upsell current clients and engage new ones with TEM solutions.

David Spofford, CEO of Invoice Insight and president of TEMIA (Telecom Expense Management Industry Association) believes a poorly performing economy holds opportunity for agents because it creates a sense of urgency for a prospective client to take action. “A downturn brings cost savings to the forefront of the prospect’s mind,” he says. “TEM solutions will flourish in an economic downturn if customers are properly educated on the magnitude and the rapid rate of savings achievable.”

Traditionally, he says this is thought of as hard-dollar savings through bill reduction obtained by billing error correction, inventory rationalization or contract rate reduction. However, he says, a good TEM solution will create value in more ways than just reduced bills.” Spofford explains that economic downturns usually lead to hiring freezes and other time crunches for departments like telecom, IT, finance and accounts payable. This presents an opportunity for agents to help customers be more effective with fewer resources.

Michael Shonholz, director of channel sales at iTEMize Technologies, says an agent can essentially become the RFP for a client when it comes to negotiating and implementing new services. “The cost and time spent by an organization to assess their needs, survey the marketplace and project manage a new network can be immense,” he says. “This concept of outsourcing to an expert or specialist is just taken one step further with the implementation of ongoing TEM software and managed services.”

Shonholz says TEM solutions deliver great ROI in both good and bad economic times. “If the average cost of a TEM solution with a full complement of associated managed services is 5 percent or less of the client’s spend, the math is very positive for the client. And the hard cost savings from finding billing anomalies is only the beginning,” he says. There are also soft savings associated with automation and the improvement of the client’s processes from an efficiency standpoint.

Spofford says it is critical for agents to position a TEM sale in terms of both immediate and ongoing benefits, and, furthermore, he warns agents not to commoditize their offerings. “Agents that are stuck in selling on price alone are making a huge mistake. There are few purchase decisions a customer can make that would have more certain return on investment than a quality TEM solution,” he says. “Having ongoing control creates better financial predictability.”

Shonholz says agents are going to have to continuously prove ROI to release funding for new technologies or implementations. “A single month baseline audit may not produce the type of savings that a partner needs to implement a new carrier solution,” he explains. “In order to demonstrate an ROI, the agent is going to have to know exactly what the client has, and this may mean trending data for a few months.”

Once the homework is done, agents have the potential to earn strong commissions from TEM vendors. For example, iTEMize says its commissions on its SaaS platform is comparable or above most carrier commissions. And agents selling iTEMize are also paid residual revenue on the software and any managed or professional services the company provides.

Invoice Insight’s Spofford agrees that TEM solutions can provide excellent returns for agents, but he warns agents to choose their TEM vendors wisely. “Pick one that has a track record of new customer growth with customer accounts in the size range you are comfortable talking to,” he says, adding that it pay s to pick a TEM partner that has strong client-retention.

Spofford also says working with a TEM vendor that can address both wireline and wireless expense management needs is a huge plus. “You want to be able to sell both, but if you are representing two separate solutions (and not a unified platform), you run the risk of getting knocked out of deals where the customer is looking for a full solution – even if they want to start with fixed or mobile,” he explains.

TEM solution sales can not only open doors for agents, but can also give them visibility into their clients’ telecom inventory, exposing other possible sales areas. Once an agent becomes a problem solver for the client in regards to its telecom spend, the agent can continue to solve other telecommunications problems for the client while creating or redirecting new revenue streams back its way.

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