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What to Do When The Big Three Beats Your Price

Posted: 11/1997

What to Do When The Big Three Beats Your Price

A Working Example

By Dan Baldwin

Every month in this column we talk about the best ways for
agents to sell long distance. We suggest that the best way to do
this is to go after "Big Three" (AT&T, MCI and
Sprint) customers because they are the prospects who currently
are paying the highest price per minute. It is easy to save
people 25 percent or more if they’re still paying 27 cents a
minute for an interstate call. What do you do, though, when those
competitors, who are considered to be the best on all non-price
issues, start meeting your price? What follows is an actual case
study of our One Plus Agent Association philosophy in action.

A month or so ago I got a call from a casual business
acquaintance. She said her boss just had a talk with all the
employees about how the long distance phone bill was going to put
him out of business if they didn’t do something to "reel it
in." "I know you do something with telephones. Is there
something you can do to help us with our phone bill?" Sue
asked. I advised her that "I help small businesses make the
most out of their phone systems," and that "if saving
money is what you need most, I can certainly review your
situation and point out an area or two ripe for immediate
savings." I told her the easiest way for me to see for sure
was to have her photocopy the company’s most recent local and
long distance bills and send them to me as soon as possible.

To my great pleasure, I discovered several opportunities on
the company phone bills. First, the company was with a Big Three
carrier, paying the highest rates possible (27 cents a minute
interstate and $1.53 to Mexico). Next, employees were using an
old calling card to make calls from the road, which resulted in
calls as expensive as $2 per minute. Finally, I could tell the
company was trying to save money, since on their local bill I
found dial-around charges for instances in which employees were
dialing an access code to try and pay just 10 cents a minute.

I was all giddy at the prospect of doing a "one-call
close" by saving the company about 30 percent while being
able to charge the company rates high enough to make about 35
percent commission for myself. (On a $1,500-a-month bill I would
make about $500, and I wouldn’t even break a sweat!) I wrote a
simple one-page summary that explained how I was going to save
them 30 percent and highlighted the appropriate sections of their
existing bills.

About a week later I met with Sue; her boss, John; and the
office manager, Linda. After initial pleasantries John pushed for
the "nitty gritty," so I launched into the one-call
close.

"John, on your long distance bill you can clearly see
that the ‘post discounted’ amounts you’re paying are quite high
by today’s standards. As well, your local exchange carrier (LEC)
is not doing right by you with these exorbitant calling card
prices. Finally, with this dial-around company you’re using, it
seems that with four out of five calls, you’re getting charged
their three-minute-minimum of 30 cents. When you factor in this
minimum and the $5 per month per line charge to get the 10 cents
rate ($40 on your eight lines), your actual per- minute charges
are 20 cents or higher.

"In every category of traffic, we are going to save you
money. We can take your 27 cents-a-minute interstate rate down to
12.9 cents. We will give you a calling card at a flat domestic
rate of 30 cents per minute with no ‘bong’ charge. Finally, since
two-thirds of your calls are international, we will lower their
cost 30 percent across the board. Best of all, you need never
sign a term contract or commit to a monthly minimum with us.
We’re so sure of our ability to keep you happy that we want you
to have the ability to leave us at any time–it keeps us on our
toes! To get started, I just need you to ‘OK’ this form
here…"

"Well Dan, it all seems pretty good," was John’s
non-signing reply. "Linda, do you know if we’re still under
contact with our long distance carrier?" She didn’t know.
"Since we act as ‘telemanagers’ for you, I’d be happy to
contact your long distance carrier on your behalf and determine
the contract’s status, if any," was my reply.

Looking at his watch, John concluded, "Dan, that’d be
great–why don’t you write it all up in a nice proposal and we’ll
take a look at it next week?" I got him to sign a letter of
authorization so I could act as the company’s telemanager, set
the appointment for next week and smiled my way out the door.

Sue called later to say that John thought the meeting went
great, which was unusual since "John normally hates
salespeople." I thanked her for her kind words and promised
to put together a package that was guaranteed to make them happy.
My main disappointment was that John was not going to be a
"roll-over" and give me my $500-a-month commission.
(Don’t you hate it when people can’t be happy just saving 30
percent?) My main concern was that once John got my proposal he’d
call his long distance carrier to see what its counter-proposal
would be.

My first call was to the company’s long distance carrier,
since that was bound to be John’s first call after getting my
proposal. (The only way to get John to sign at our next meeting
was to truly act like a telemanager and find out what the long
distance carrier’s best offer would be and tell him). Within a
day I was talking to "farmer" Ben. This long distance
carrier’s reps who are charged with managing existing customers
actually refer to themselves as "farmers" (as opposed
to "hunters," who go after non-existing accounts). I
told Ben that I was a consultant with a letter from the customer
so he could answer my questions. He assured me they were no
longer on a contract and they could indeed get better rates that
he’d fax over shortly.

Better rates! Ben faxed over rates quite a bit better than I
had hoped to offer. "Those are our best ‘Option S’
rates," Ben advised. "The company hates when we offer
them up out of the chute, but I figured we’d get there anyway,
what with you being a consultant and all."

Half of Ben’s international retail rates actually were lower
than my costs. How could I not share with my prospect this
information that they would find if they made a simple call? I
decided to focus on Ben.

"These rates you’re quoting are on a one-page letter with
only your signature on it. This two-page Option S contract
summary you’re asking us to sign clearly states that anything not
in the complete text of the Option S tariff (which we can’t see
in this summary) doesn’t count and that any other promises (like
what you’ve written in this letter) are null and void. Would it
be too much to ask for you to pony up the whole printed text of
the tariff for our review?"

Replied Ben in his best patronizing corporate tone: "In
my 16 years of doing this, no one’s ever had this problem of
needing a ‘gold-plated’ proposal. We don’t actually have access
to the tariffs and I’m sure they’re hundreds of pages anyway. You
can trust me on this: I’ll give you what I’ve written
there."

"Thanks for the pat on the head, but I don’t trust you or
anyone in this industry; getting proposals ‘gold plated’ is what
I, as a consultant, do for a living; and as the biggest dog on
the block, your company should command the resources to produce
the complete text of a contract you’re asking people to
sign," I replied.

The subsequent whine indicated that Ben would not produce the
tariff in a timely manner, so I dialed up the Federal
Communications Commission’s web site. Within 24 hours I had
AT&T’s Option S tariff on CD-ROM. Tune in to this column next
month to find out: a) what the tariff really states; b) what Ben
and his company had to say about it; c) what I recommended to the
customer; and d) what the customer decided to do (and how much,
if anything, I ended up making on this deal).

Dan Baldwin is president of the One Plus Agent Association
(OPAA) a nonprofit corporation dedicated to agent professional
development. He can be contacted at
dbaldwin@opaa.org.
Support the agent marketing channel by joining OPAA as an agent
or vendor member. Call (619) 685-3465 or surf
http://www.opaa.org
today.


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