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The Final Chapter

Posted: 03/1998

What To Do When the Big Three Beat Your Price

By Dan Baldwin

The Final Chapter

In the November issue of PHONE+ we began a three-part series on what you can do
when one of the Big Three beats your price in a deal you thought you had closed. This
month’s column is the final chapter, and the information comes from an actual case (like
most everything we write about in this column) with the names slightly changed.

To review, Mary at ABC Technology and I have volunteered together at a non-profit
organization for years. Several months back Mary mentioned to me that her boss was going
crazy with his "$4,000-a-month phone bill" and was there something I might be
able to do for them?

Well, I went in and picked up the bills (two months’ of local and long distance) and
found out that, indeed, the company’s long distance carrier had them at 27 cents per
minute interstate and completely obscene international rates. Per my usual plan I had the
boss sign a letter of authorization, which gives me authority to call the company’s
telecom providers on their behalf acting as a consultant.

My plan with the existing long distance carrier rep was to:

  • Find out whether or not the company was on a contract.
  • Find out what the best deal was the long distance carrier would be able to offer.
  • Put the long distance carrier rep at ease about having me (the "consultant")
    work with him so he didn’t have to deal directly with the customer.

(Every deal is won or lost at this moment. Nothing is more important than getting the
customer to sign a letter of authorization. Obviously you’ll have to win the client’s
confidence first with anecdotes about how you’ve helped this customer or that customer the
same way.)

When dealing with the rep I learned–to my complete dismay–that the long distance
company’s Option S offered international rates that I couldn’t come close to touching.
Since international was what the customer uses most, at first I thought I was sunk.
Whenever you’re feeling sunk, though, just go back and review the "Three Agent Rules
to Win By."

Rule Number One: Always be in control of the deal. Fortunately, I was running
the deal since the company and the long distance carrier both trusted me.

Rule Number Two: Improve the customer’s situation. Notice that the rule is not
"Save the customer the most money possible." Putting yourself out of business in
the process of saving a customer money is a bad result, so any rule that would drive that
result must itself be bad.

Rule number two always helps me out. The day before I came along ABC Technology was
paying its long distance carrier about $1.50 per minute to call from San Diego to Tijuana,
Mexico (about 40 miles). Am I a bad guy if I tell them, "Hey, I’ll save you a buck a
minute for that call," (and still make a nice commission) knowing in the back of my
head that the long distance carrier could do it for just 14 cents a minute with its Option
S package? My promise to my customers is that I’m going to give them what they want out of
their telecom lives.

So what did I do with ABC? I educated them on how to make the right decision by sharing
with them the following:

"You can clearly see from your own phone bill that your long distance carrier had
you contracted into miserably uncompetitive rates for your international calls. Are they
bad guys for doing this? Not really. The long distance carrier has a fiduciary
responsibility to do the right thing for its most important constituents–its
stockholders. (Sorry, did you think it was going to be you!?) The best way for the carrier
to maximize shareholder return is to lock its customers (you) into incredibly high rates
for as long as possible. It’s the ‘old way’ of buying telecom services and the way I was
taught when I first got into the industry.

"Fortunately there’s a ‘new way’ to buy telecom services–by taking back control
of the process. Rule number one in the new way is to never sign up for a term of any
length or for any minimum monthly dollar-volume commitment. Why would you? Won’t you stay
with the carrier for as long as it wants spending with the carrier what it wants you to
spend if it keeps offering the overall best deal around?

"The ‘old way’ is all about the carrier controlling you. Controlling your freedom
of choice. ‘Found a better deal? Sorry, you can’t get that better deal because we still
control you, remember!?’ What it ought to be controlling is its own ability to improve its
product so you won’t want to leave.

"The new way is about you controlling the carrier. When you’re free to leave at
any time you’ll know just how you truly rate as its customer. Want good service and low
rates? Just let the carrier know you’re happy today but you stay in constant touch with
the market so you can take advantage of anything at any time. A healthy fear of loss is
about the only thing that produces good customer service in the telecom industry today.

Your long distance carrier is a shining example of why the ‘old way’ is going the way
of the dinosaur. It had record layoffs last year and just last week it announced it was
laying off an additional 19,000 people–15 percent of its work force. Look at your own
situation. Here you’re spending $2,000 a month paying the highest possible rates. Did the
carrier even call you in these past two years to offer you a better plan? I have been in
contact with your rep and he advises me that his company, in fact, has a plan he can
switch you to today that will save you 15 percent over what you’ve been spending, and you
know the funniest thing? This plan that will save you 15 percent comes with no term and no
commitment. It’s called the ‘Model T.’ I guess it’s the carrier’s ‘old-fashioned name’ for
its ‘new way of thinking.’ You don’t even have to sign anything, I’ll just tell him we met
and ‘Duh! Yes, we’d like to be saving the 15 percent without any commitment while we hunt
around for something even better.’"

How did the pitch work? Great! I’m in complete control of the account and I’ve improved
the customer’s situation. The company is saving 15 percent with its current long distance
carrier without having to recommit to any contract like the one that had recently expired.
Too bad the long distance carrier isn’t paying me. I’d love to leave the account with the
carrier but that would violate

Rule Number Three: Make as much money as possible while still being fair.

(Fair to whom? To the customer but mostly to yourself.) The long distance carrier
doesn’t pay me commissions, but other carriers do. So the customer must move to another
carrier. How? Part of my initial pitch to any prospect is the fact that I can get paid one
of three ways. The customer can pay me a straight $75 per hour consulting fee. If it’s
just total savings the customer is after, it can pay me 25 percent of what I save the
customer for so many months, or the customer can simply switch to a carrier I represent
and have the carrier pay me 10 percent of whatever the customer spends in long distance
every month. (I’ve never actually had a customer pick one or two since I pretty much
always sell the customer on letting the ‘bad old long distance carriers’ pick up the tab.)

My "assume the sale" final pitch goes something like this: "So you’re
starting now to see how this whole game works and why the ‘new way’ is really the only way
now to buy telecom services. My job is to always be there for you like I’ve been with you
these past weeks straightening out this whole mess. This is what I do for my customers.
Whatever telecom challenge you’re encountering you just give me a call. If you think it
has anything at all to do with dial tone just give me a call. Because as you can see I can
fix it for free. The reason it’s free to you of course is the carriers pay me to keep you
happy. And why shouldn’t they? They’re the ones making all the money, right? You don’t
really want to write me a check for consulting, right?

"The carrier I use for customers like you is XYZ. It really doesn’t matter though,
what with all the carriers using the digital fiber and the SS7 technology. Thanks to
modern technology long distance has become a pure commodity. When people call you long
distance you don’t know whether they’re using a Big Three carrier or brand X because all
calls now are crisp, clear and quickly connected. That’s another one of the Big Three’s
problems. The biggest difference between carriers isn’t quality. The biggest difference is
the answer to the question, ‘What is paying your phone bill buying you?’

"Paying your XYZ bill next month will buy you ME. And the greatest thing is you’ll
always have complete control. The actual switchover is so completely invisible that I’ll
actually have to come back next week to make sure it happened. If for any reason you’re
unhappy with me or the carrier, no problem, because you still have control. We’ll pay to
switch you to another carrier or even back to your current long distance carrier. Isn’t
that the fair way to do it?

"We’ve already got everything we need, copy of the old phone bills, letter of
authorization and the like. As you’d expect we’ll keep you informed every step of the way.
Do you have any questions? . . ."

So you see that beating the Big Three is easy. Them beating your price really has
nothing to do with anything since those low Option S rates required the signing of a
contract and customers don’t sign contracts in the ‘new way.’ So everyone wins. The
customer got lower rates to the tune of 15 percent from the long distance carrier, who
wins because it thinks the customer is staying on its new Model T product. And last of
all, I win because when I match the carrier’s Model T rates of about 14 cents a minute for
interstate traffic and switch the customer to the carrier I represent, I earn a healthy 35
percent commission.

What do you do when the customer calls you with offers from other carriers? Do what a
member of the Big Three does when it’s doing its job right–stall for 45 to 60 days (to
earn more money at the higher rates) and then split the difference on the rate after
bad-mouthing the competition. "You know when I said it didn’t matter which carrier
you were on I meant it didn’t matter except for that carrier. Yeah, I think they’re having
some legal troubles–slamming or something like that. Did you get those baseball tickets I
sent you?"

Better yet, prevent problems before they start like I do. "Oh, by the way (Columbo
impression). Don’t you hate it when the telecom salespeople call all day about this offer
or that? I mean they might have a good deal that we need to know about, you just hate to
have to endure a sales pitch to get the information, right? Well my other customers keep
my ‘back door’ number handy. It’s a line I just answer ‘Dan Baldwin.’ They say, ‘you’ll
have to talk to our telecom manager, Dan Baldwin, his number is…’ If they’ve got
something we need I’ll be able to strip it from the sales pitch and call you back to give
it to you straight." You’d be surprised at how many calls I get. It works great.

This overall approach is actually guaranteed to keep you and your new customer happy.
Why? Because the customer can, in fact, leave you at any time and cut you off from what is
now a serious amount of money. In this one case I’m making $500 a month from a
$1,500-a-month customer. There’s a lot I’ll do to keep $6,000 a year happy, but that’s
another column.

Dan Baldwin is president of his own sales agency, San Diego Telemanagement, and a
board member for the One Plus Agent Association (OPAA). Support the agent sales channel by
joining OPAA as an agent or vendor member by calling (619) 522-6221. Contact Baldwin via
e-mail at danbaldwin@pacbell.net.


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