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Over the years I have worked with many VoIP Providers. A good chunk of my consulting is on The Channel, Referral Systems, and Sales Compensation.

There are a number of landmines that can destroy a relationship with an independent sales agent. These include but are not limited to:

1. Your quoting system (or time to quote)
2. How you track the sales and provisioning process.
3. How you track Compensation.
4. How you handle agents calls / issues / sales / payments.

All of these mines have subsets as follows:

• What is your number porting process like?
• What is your training like for customers? for Agents?
• What does your marketing collateral look like and say?
• Issue Resolution

It is no small thing to acquire an Agent. You are asking someone to spend the effort to:

1. examine your service offering
2. negotiate and sign an Agreement
3. Learn all about your service offering to the Comfort Point
4. Now go market & sell it

It is similar to buying a franchise agreement. Foremost, you are asking for the Agent to trust you and to lend his reputation to your company and its services. That's a Big Step.

You have to ask yourself: Why would he take a chance on me? Here are some things for you to think about:

1. Do you have a clear USP?What differentiates your company?
2. Do you sell to Verticals with a clear and concise ROI or TCO?
3. Do you know who your best customer is and why?
4. Do you do any marketing?
5. How much time and effort can I give each agent to get off the ground?
6. What happens if he sells something?
7. What systems do I have in place for that?
8. Will those systems Scale?

Some companies have a Referral Plan now. (I won't even call it a system because it isn't.) What does it consist of? Mentioning that free month if they refer someone? WOOT! Yeah. That won't cut it. A System is a consistent process that involves a plan, a goal, and how to get there. If you want a Referral Plan to work, you have to work the Plan. By that, you have to remind folks that you have it in creative, mentally sticky ways. You have to even give them a script on what to say or a coupon or email link to send to their family and friends network. You have to reward them tangibly and thank the best referrers publicly. Then start all over again. (It doesn't happen automatically).

Now back to the Agent Channel that you want selling your VOIP Service. Why not just hire a Sales person? Too expensive, right? Too time consuming? Don't want to manage a sales guy? These are reasons that your channel will fail as well. Imagine spending money, time and effort on people you have Zero Control over. Imagine them forgetting to propose your services for months, then call with a White Elephant and not close it. And disappear. Lots of work; little return. Welcome to the Channel. The Channel is a case study in Pareto's Principle - the 80/20 Rule. About 80% of the sales will come from 20% of the agents. About 80% of your time will be consumed by the least productive 20%.

How do you get it going then? A system. A plan. A goal. In reverse order.

This from Telephony online and the Convergence Consulting Group:

The latest in an annual study of the bundled services market shows US telecom service providers are losing wireline voice customers at a faster pace and being transformed in the process into companies that will look very different from their traditional telecom roots. The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless, released this week by the Convergence Consulting Group, shows maintaining a broadband connection is increasingly important to telecom providers, as wireline voice services become much less important.

If you look at the numbers in that PDF report and you still think that the QBPP is a viable option or that the last 400K businesses in the BellSouth region will somehow see the light and convert, I have some land for you in South Florida.

I have written about this in years past: the telcos have finally hit the wall. Everything is flat or down now: TV, wireline, cellular, and broadband. Granted most numbers are for residential, not business accounts which agents sell, but this will affect the entire telco business. Telco moved from the most profitable service - Voice - to Internet (the 2nd most profitable) - into TV, which is te least profitable. Why? Set-top boxes cost $400 per pop. How do you recoup that $5 per month rental? Most of the pricing goes straight to the content. You know, Disney and ESPN want their dough. Then there's the network upgrade for TV (and high-speed internet), which although VZT says is under $900 per home passed, the numbers I see are closer to $2000. Let's factor in the advertising. I get something almost everyday from VZ. At even $0.75 per mailer that's $15 per month. Times how many homes passed?  See how that may slow the telco engine? Plus MSO's moved from the least profitable service (TV) to the most profitable (Voice). And MSO's are getting into mobile data and maybe cellular voice with Sprint.

When you look at the summary from Convergence Consulting Group, it looks bleak.

• We estimate Cable's double play base of TV and Internet subscribers YE2008 at 61% (we forecast 79% YE2011). The RBOC/Telcos residential telephone to broadband overlap was 33% at YE2008 (we forecast 54% YE2011). Hence, it's easier for Cable to add voice customers off this overlap than for the RBOC/Telcos to add TV customers.
• 2008 RBOC/Telcos residential wireline telephone line loss was 10%.
• Wireless Substitution was responsible for about half the loss and Cable for the other half.
• We forecast Cable will have 23% of residential telephone subscribers by YE2009.
• We estimate wireless-only households at 20% at YE2008.
• Wireless annual subscriber additions continue to slow, 2008 saw 15.6M (2007 saw 22.4M) and we forecast 13.9M in 2009.
• Data continues to drive wireless ARPU growth (voice ARPU is declining). We forecast that price competition, which intensified in 2008, will continue to increase going forward.

Telcos are building out high-speed networks for TV and Internet, which is costing a bundle, at the same time that they are forklift upgrading the cellular networks to 4G. Have they even paid off the debt from constructing the 2.5G and 3G systems? Meanwhile, Charter is bankrupt and the rest of the MSO's have to upgrade to DOCSIS 3.0 while also constructing WiMAX networks. All while the ARPU is decreasing and the customer acquisition costs are increasing.

With these kinds of pressures on the RBOCs, imagine the pressure on the ILECs without a cellular division like QWEST, Embarq, Windstream, Frontier and Fairpoint. Landline losses that cannot be off-set by TV or cellular revenues. Yikes! Basically, the EarthLink strategy right? Cost cutting as the primary executive decision. Right out the knitting until its over.

Where do you think Agents come into that play? With losses, an easy cost cutting measure is to stop paying agent commissions. Think about your Channel Partners in 2009.

So a client calls me. An agent sent him an unsolicited quote for 10MB of bandwidth over Ethernet for a ridiculously low quote. Since I have a long history with the client, he offered me the chance to match it and take the order.

So I go back to the carrier and ask for a match. I'm told no. "A competitive quote on the competitor's letterhead is required, which must be 10% to 15% less than the discounted price available with this promotion."

There are a couple of things wrong with this:

1. Why can't I offer the same quote as the other agent -- it's the same carrier?
2. How did tthe other agent get this price without a competitive quote?
3. Why do you want me shopping this client around? If I found a better quote, I would sell him that because you made me jump through these ridiculous loops!

This is the type of policy that drives agents crazy. (Where's the common sense?)  It's one reason that resellers are taking business from the carriers.

Amid phone calls with agents who are in a struggle over commission payments with carriers, I have been speaking with finance companies about telecom stocks. Lots of debt out there. Not really enough revenue to cover most debt.

The other problem I see is the operational issues that most telecom companies face. Just getting a quote out of most these companies is an ordeal. And the pricing is anything but standard. Two agents and a Direct will likely produce 3 separate quoted rates. WTH? And that's just to get a quote. Generating a contract, especially from the Death Star, can take up to 10 business days!!

One other discrepancy is that agent paperwork is usually more than a direct sales drones. We have to add a Letter of Agency (LOA), at the least, to show our permission to act on the client's behalf. We also usually have other paperwork - like credit applications - that directs get to skip. Why? No idea, but I have seen enough of it over the years.

So now we get the quote and the contracts. As the agent we explain why we need the LOA and that we won't be taking the client for a ride. We are the trusted advisor, right? Now with signatures and a mountain of paperwork, we submit the order. That's fun too. The order site crashes and saves no work. Start over. The email address doesn't auto-respond with a tracking number. (Re-submit. Re-submit. Call. UGH!)

Then we wait to hear if the order was accepted. Likely something on the paperwork will slow it up. Get that fixed requires being tricky or returning to the customer to explain how we missed a page or a signature or something. When we finally get a FOC date, we are half way there!

Last Ma Bell Internet T1 order, after the FOC date, no install because of address mismatch - over a suite number! One telco closet for the whole building and the address was the same as a DSL circuit and 3 phone lines that the RBOC was already billing to the disputed address.

In cases of fiber, there is usually customer premise make-read work to do. Likely, someone will be told what that work is but not any of the contacts on the paperwork. Even in the case of T1, conduit and other inside wiring issues could delay things.

So now we have the circuit installed. Just have to get it turned up. Tele-installs are great. One person reading from a script talking to the office manager. Eventually it works out.

My advice now is No Managed Router! Ma Bell has resorted to email only to make config changes on the router. No phone to call. One time the tech was in Raleigh. The second it was Singapore. Just to get NAT and DHCP turned on and the SIP phones to work.

The time versus compensation meter is tilting upside down. With rates sliding downward on every telecom service, commissions have too, which means agents are working harder in a broken system to make less money. And that's if you don't have any commission issues with the carrier, which every agent has. It's telecom for gosh sakes. Of course, there is commission errors. Billing errors too.  How did it get this broken?

Did you know that as an agent you can broker energy? Paetec is plugging agents into the energy business - after it purchased an energy broker. I know a couple of agents that have been in the energy business for a while. I don't think it can replace its telecom business.

In other energy news, the telecom companies are also looking to get into energy management in the way of the smart home. Most homes do not have the equipment necessary installed in their homes to take advantage of this service. Likely, this will change as time goes on. It allows the telecom connection to the home be more productive. At the end of the day, people aren't buying telecom - they are buying a communication device or a platform for productivity or entertainment or knowledge or whatever. That's what telecom companies need to keep in mind.

At the Channel Partners Expo, on individual calls with agents, and on a conference call with a bunch of agents today, I noticed something big: the Channel is shifting.

I have known for a while that VAR's would replace the traditional telecom dialing-for-dollars, save-you-10% agents. It's coming because sales cycles are longer; the product set is very different; and it's all about IP and Apps. (Net-head versus Bell-head).

There's another shift happening: agents are banding together every way they can to get leverage against the carriers, who hold too much power. It started bubbling  in 2007 with my post called What's a Partner Worth? In the 2 years since that post, there hasn't been much change on the carrier side.

Agents first started bonding together as Master Agents. Then came the experiment called the Agent Alliance - a group of master agents banding together for group buying. I guess its a master master agency. None of those entities speaks for the agents.

"There is a serious disconnect between many agents and their suppliers on the expectations they have for each other in developing a mutually beneficial partnership," says PHONE+ Editor Khali Henderson. "Some of this may be a failure to recognize the changing dynamics in the telecom industry and their impacts on the participants in the value chain. Starting a formal dialog in the industry may help to overcome these gaps in understanding."

The dialog today starts when commissions aren't paid. You look at the situation for agents with MCI when Verizon bought them and changed the MCI Agent contract. Over 100 agents got screwed out of commission because the new contract was unfavorable or untenable. It happened with Cable & Wireless. Many mergers have had similar results for agents. 

I will have to say that most of these issues are contract related. The quotas and other issues are spelled out in the contract - IF you read and understand the fine print. If you use a Master Agent, you don't even get to see the fine print, because this Industry loves the NDA (non-disclosure agreement). It's why agents can't get a fair shake - they have no idea what is availble to negotiate. Cisco just lost in court with the judge declaring that Cisco's partner agreement was unconscionable, meaning that the contract is too one-sided. I think that if that precendent stands, agents will have a leg up.

I've been on the receiving end of a carrier (BellSouth) taking away a boatload of hard earned commissions, so I understand the frustration. (After 5 years, therapy, anger management classes, blogging and drinking, I can almost move past it). But at the end of the day, what band of agents has $1M to hire an attorney to fight a carrier over a contract dispute? That's what it would take. About $1M and a long time (7 years). What do you do in the mean time?

Not to be mean, but the industry is almost tipping over with bad debt, rising costs of goods, lower margins, and, let's face it, failing strategies. By that I mean, how many carriers have a solid long-term strategy?

[I deleted my FiOS is a losing strategy rant here]

Let's just say that I look at many CLEC's who are so obviously selling underwater that I want to take a SCUBA test. And it isn't just the Channel - the direct side is drowning in there too. In fact, the direct side is usually the one that starts the price war against the agent side. And where are the policies and guidelines in place for that Not to Occur?

Some carriers (like the ones on Moody's Death Watch list) may not be around in a year, so agents need to watch that to.  Agents need to be aware of how inter-connected the whole CLEC and Reseller market is. Reseller A buys from Carrier V and Reseller B and D, who buys from Carrier Q and Reseller A and D. When one collapses (like Alphared did recently), it cripples the rest. And there isn't enough margin - room - for that kind of error.

At the end of the day, the agents need to band together - to do more than swap tales of woe and vent - and that's why a bunch of us have put in many hours in the last year to create the Technology Channel Association. Join now! It's free through the end of March for agents and we offer group health insurance for our members.

Software-as-a-service (SAAS) is the new buzz in 2009. Salesforce.com hit a $1B in sales so its the poster child. Google is the other golden child of SAAS pushing is Apps and Gmail to businesses. For me, even hosted email is SAAS.

I am a referral agent for IKANO who is a Google Apps aggregator. , I am having trouble selling service providers on moving to Gmail and Apps. The overall ROI certainly makes the migration appealing, when you take into account Postini anti-spam licensing, server lease, power consumption, collocation space, email server licensing costs, maintenance and support. Seems like the ROI would make it a slamdunk but it is not.

Top 3 Reasons its hard to sell Google Apps:

1. FOG
2. Control
3. Change

FOG is fear of Google. For ISP's, Google is a competitor. Not really, but techies seem to find bogeymen behind every door. Which leads to reason two: Control. Techies have to be able to see the box (server). I call it humping the box. But the service providers have to have total control over the server or they can't sleep at night. Afterall, they are techies, who can run a server better than them? However, if you want to make the transition from techie to businessman, you make decisions based on what is best long-term.  Hey, Nuvox moved to Google Apps - and uses it to get appointments by telling every prospect: "We are partnered with Google. Can we meet to talk about that?" Appointments up 25%.

And finally the change thing. No likes change, especially when we have so much going on around us. It's the same reason that businesses are taking so long in the sales cycle - fear of change. But making No Decision is still making a decision.

You will hear other objections like:

• I just bought the server
• I just upgraded to version 0.7.1.1.1.3b and paid for it.
• I just re-cast my Postini contract

The servers can be re-used for something else. The sunk cost on the software can probably be re-claimed by the move to Outsourcing.

Today, I was talking to a salesperson for Hosted Exchange. We agreed that there are big obstacles to people buying into hosted email - whether Exchange or Gmail.

1. Change
2. Headcount
3. ROI

Again the fear of change is number 1. No one wants to make a decision for it to turn out wrong. No one wants to make a decision because CYA right now may mean you keep your job. But in some cases, making the decision could save your company because SAAS is a cost saver in many cases.

This leads us to Head count. An IT manager isn't going to move to SAAS right now because he will lose the budget justification for his head count (number of employees in his department). Maybe Tech One-Twenty spends only half a day each day on email issues. If you outsource it, what do you do with Tech One-Twenty? He can start working on priority projects or long term initiatives (if he has the skill). Likely, he will need to be let go - and someone has to pick up his half-day of work. Dilemma.

Finally, there is the ROI (return on investment). In some cases, there may not be a return enough to make the move. Even calculating the total cost of ownership (TCO) may not be enough if there is an IT staff.  But if the business doesn't have an IT staff, then moving to SAAS should be a no-brainer.

So how do you sell 40M paid mailboxes on Zimbra? One small business at a time. SOHO and every business with 50 employees or less. Or businesses with old servers or software (like Exchange 2003).

We did discuss that the customer acquisition cost is large. If the sales cycle is 6 or 7 months, a sales person is spending about 4 hours or so on contacting the client to get to the close. then maybe another 3 hours to demo, propose, paperwork, and survey. Provisioning is about 8 hours. So 100 email boxes is costing you 15 hours of labor. At $25 per hour average for a $50K salary, that's $375. But it is really about $488 when you consider that salary is only 70% of it. If you move them to Gmail/GApps the profit is $10 per user / mailbox per year. That's $1000 from $488. That doesn't include ongoing support costs. Just something to think about. 

Telecom is broken. I can't remember the last time an order went smooth. Well, wait, I can actually, it was a BellSouth Metro E. The REUC order center for BellSouth FCC circuits really knows how to work an order. For 10 years that group in Sunrise FL has been outstanding to work with. (The former DSG and the MEOC had some great people who made my life easy too. Those grooups are gone now).

This week just trying to get quotes has been a struggle, but the topper on the cake has been an Internet T1 install. It was delayed for weeks due to address mismatch -- not the street address, the suite number. (The customer was moving into a bigger office space in the same building). Eventually, I just submitted without a suite number.  On install, client was told that the tech would come back. Waited two days, no tech - then told by provisioning that no tech was coming. We finally get to the turn up and I walk the customer through the install on the phone (twice actually, two different people). We get through turn up.

The managed router did not have NAT or DHCP turned on. One day  just for that. No phone number for router configurations. You have to order changes by email!!! And only from the 2 email addresses on the order form. WTH?

Then we add the IP Phones, but we need to modify two lines of the config. We are waiting again.  This is too convoluted for me. The ROI is negative. The turn up alone was 20 hours of time. 

Can anyone guess what carrier this is?

ACC Business is a subsidiary of AT&T. It uses the AT&T network to provide voice, data and Internet services to small and medium business via agents only. ACC Biz does not have a direct sales force. Tech support and billing through ACC Biz is actually more customer friendly than using AT&T. And ACC Biz is MUCH easier to deal with.

When ACC Biz lost Ben Ho as National Sales Director last year, I started to ask what's up. AT&T has a love-hate relationship with their channel. They love you when you fall in line and sell what they tell you to and hate you when you don't. (You can guess where I sit, right?)

So watching the internal moves being made at both the parent company and the step child, my prediction is that ACC Business gets swallowed whole in 2 years.

The product line at ACC Biz hasn't changed much. They are just now getting Ethernet offerings. No VoIP or SIP Trunking, which has been a big hit to SMB. Add in the personel changes, like Dan Morford and Ben Ho, and you have to wonder, what the future holds.

As it turns out, Airband is NOT leaving the Indirect Channel altogether. My source corrected me that Airband did let two channel managers (East and West), but  that these C.M.'s were not making their numbers. Airband did retain the channel manager in Dallas and is interviewing internally to fill a channel manager position. Airband will be putting some more focus on it. Maybe that focus is the result of the extra $3M in funding Airband got last month.

Final quote, "Just thought I would let you know it looks like they may have been shedding some dead weight, but not eliminating the channel all together." Thanks for letting me know.