Too Big for the Channel?

Josh Anderson, founder and CEO, Telephony Partners

Last week I found myself in the middle of a battle that’s all too familiar – trying to explain to a large carrier why an agent who brought a large enterprise deal should be paid on its growth. This battle has been waged before, even over this particular deal. By the end of it I couldn’t help but wonder if many large carriers simply believe that big deals just aren’t for the channel, as if the channel is only worth paying on deals that a carrier doesn’t want to hire internal resources to pursue.

In this instance, the agent has been paid on the deal for nearly a decade. Over that time, the decision-making executive has changed four times. The account has both grown and shrunk, sometimes by more than $50,000 at a time. The agent, for his part, arguably has continued to provide meaningful value, placing employees on-site to perform consulting services for free, sometimes for over a year at a time. This isn’t a case of an agent selling a small deal, then going on vacation while the carrier grows it and he cashes the checks.

Six months ago I met with an executive at the carrier in question and this account came up, along with a few others (our 10 largest accounts, in fact). The message communicated was that I would be wise to make sure our agents continued to bring value to the accounts or we might find ourselves muscled out. Most of these accounts were customers that this carrier had no knowledge of prior to the agent bringing it. In one case, what started as a single long-distance T1 ended up growing into a multi-product account billing more than $100,000 per month.

As agents, we are often at the mercy of our carriers, particularly on enterprise deals, and it seems like many carriers recognize this and use it as leverage. Very few enterprise deals can be successfully won by an agent without engaging the carrier, and that engagement often – rightly – turns into a relationship between the carrier and the customer. It seems like carriers understand that it would be suicide for an agent to attempt to leverage his relationship with a customer to encourage that customer to back him up in a compensation dispute. Not only do customers not want to get involved in that mess, it would be hard for the agent not to lose some credibility in the process.

Is this just the dirty nature of the beast? I know I’m not the only one in our industry to deal with these types of tactics, and although we generally succeed in protecting the agent, it’s guerilla warfare. There’s no hard-and-fast strategy I’ve found to prevent these types of attempts by carriers besides fighting tooth and nail with whatever tools are at my disposal. What have you experienced and what have you done to protect yourself? Are these types of disputes more common these days? Are some deals really just too big for the channel?

Josh Anderson is the CEO of Telephony Partners, a telecom master agency he founded in 2002 leveraging engineering and software expertise. He also is a member of the 2008-09 PHONE+ Channel Partners Advisory Board.

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