Upstack Annual Report Gives Clues Into TA Market Size
Upstack shared some big numbers about its organic and inorganic growth. What are other tech advisors saying about market expansion?
![Upstack Annual Report Upstack Annual Report](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltd5930fe743ac1b8d/65ce1f609cf57d040aeae887/Annual_Report.jpg?width=700&auto=webp&quality=80&disable=upscale)
Upstack reported a net promoter score of 83. That compares to an average NPS score of 64 in the tech and services industry, according to Retently.
Two data points connected to that NPS score revolve around time and money. First, Upstack reported that customers saved an average of 32% from their initial quote to their final negotiated rate. Second, the company said that its customers' average time in projects from start to installation decreased 15% with Upstack's involvement.
![Upstack's J.R. Vernick Upstack's J.R. Vernick](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltee6193704ae64f94/65ce1fffffffcd040ab0aec9/Vernick_JR_Upstack_2024.jpg?width=700&auto=webp&quality=80&disable=upscale)
Upstack's J.R. Vernick
“As a customer experience company, there is nothing more important than customer satisfaction and the value we bring in our efforts on behalf of our customers,” said Upstack executive vice president and co-head of customer experience J.R. Vernick. “No matter what, our CX team is here to support the customer every step of the way — from providing recommendations and account management to ensuring a successful delivery of solutions and continued customer support, Upstack delivers the best possible service experience.”
The customer base, and the ongoing residual revenue coming out of that customer base, may be an agency's most valuable resource. Many of the largest private equity backed "superagencies" have shared the total number of businesses they're serving.
Upstack counts more than 6,500 businesses in its base, an improvement from 6,000 in 2022. New Jersey-based Bluewave Technology Group on its website counts its customer base at more than 7,000, and New England-based Amplix boasts 3,500. California-based Bridgepointe Technologies said it has worked with more than 12,000 clients. Virginia-based ARG said it has worked with more than 4,000.
These numbers, however, might not make for an apples-to-apples comparison. One company might count all of the companies it has ever sold to, even if all contracts have expired, and vendors are not billing anything. Other numbers might add in customers who have engaged in non-recurring projects with the partner for a one-time fee, while other numbers may only take into consideration clients that they are actively billing.
Moreover, the customer base often grows through the agency buying other agents' books of business. These different firms are all at different stages in their consolidations, with some starting as far back as four years ago and others less than a year into M&A.
Upstack coming out with some financial data is good news for industry observers who are trying to measure the size of the technology advisor channel.
Historically, the only publicly available data has come from tech services distributors (TSDs) such as Intelisys recognizing top performing agents. For example, Intelisys shared in 2021 that RDS Solutions (which Upstack acquired in 2022), was managing more than $5 million in monthly customer tech spend. In other words, vendors whose software and services RDS recommended to customers billed those customers more than $5 million combined.
That adds up to $60 million annually, and it doesn't include business RDS would have transacted through other TSDs.
Intelisys announced in its latest earnings that its vendors were billing $2.64 billion to end users annually. It's worth noting that Intelisys serves as a services distributor for many of Upstack's customer engagements, so the $2.64 billion and $550 million cannot be combined.
Many technology advisors tell Channel Futures that they rarely compete with each other on deals. Instead, they consistently report that direct sales teams from vendors pose the biggest challenge.
In other cases, agents are competing against VARs, systems integrators and other partners that operate in a hardware resale model. In that model, the reseller delivers a piece of hardware to the end customer, and either the customer's own IT department will manage that technology or the reseller will. Agents/advisors, on the other hand, predominantly sell a solution or software that the vendor manages.
Thus, agents in many cases are seeking to convert the end user from do-it-yourself hardware to an as-a-service offering.
Whether customers need to switch from direct to indirect procurement or need to move from DIY to as-a-service management, agents see both areas as avenues to grow market share.
"In terms of the overall opportunity, we think there is a ton of opportunity for growth. We estimate the TA industry is touching less than 20% of the available spend to manage/influence," Amplix president Dan Gill told Channel Futures.
![Amplix's Dan Gill Amplix's Dan Gill](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltd500c36ab41b43cd/65ce2151fb8806040a1c6770/Gill_Dan_Amplix_2024.jpg?width=700&auto=webp&quality=80&disable=upscale)
Amplix's Dan Gill
That vast opportunity exists in part because agents have been gradually moving up the IT stack over the years after starting in voice and data.
"If you look at key growth areas like CX, AI, security and cloud, the penetration is probably lower. We expect that to grow significantly over the next few years as uptake of the TA model continues to accelerate with end users overall and in enterprise customers," Gill said. "We are also seeing more vendors in key growth solution areas turn to the channel more aggressively as a primary driver of revenue. Finally, the TA model tends to bring significant value in challenging economic times as we are a force multiplier for teams unable to fill spots or losing resources and are adept at right-sizing spend and finding cost efficiency through technology (i.e. AI use cases in CX)."
Most technology advisory firms are looking closely at how they can drive more wallet share with their existing customers.
However, account expansion can occur in many forms. Many firms plan to sell new product lines to established customers. Data from TSDs show that the majority of advisors have tended to only sell one type of technology.
Others are bringing in new revenue streams through services. Some partners are offering consulting modules to help businesses build technology road maps, others are engaging to manage tech inventory after procurement.
Still others are getting more at-bats with their enterprise customers as they earn trust.
Advantage Communications Group, for example, manages the life cycle of connectivity solutions for large, multinational businesses, in addition to sourcing those solutions. President and CEO David Gardner said Advantage expands those relationships incrementally.
![Advantage's David Gardner Advantage's David Gardner](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt06d75d40e13dd23f/65ce21c04ffff0040aeb9848/Gardner_David_Advantage_2024.jpg?width=700&auto=webp&quality=80&disable=upscale)
Advantage's David Gardner
“We see a lot of growth going on with our current customers as they trial us, test us, get to see what we're like, have a great experience and then broaden our relationship with more locations and service types," Gardner told Channel Futures. "We're dealing with very large organizations. Most large enterprises don't just hand you a $1 million-a-month global network across various technologies. There are contracts, carrier obligations and complexities as well as operating models to consider. They may say, 'Here are 100 locations of internet or voice or some other service. We'll give you a shot. Show us you do a great job and we’ll work with you more.'"
Going deeper with one's customer base is one thing, but technology advisors must also keep their accounts active in the face of contract renewals and M&A.
ATC CEO David Goodwin's consultancy applies a wider definition of customer churn. He said his team refers to customer attrition as the loss of revenue, rather than simply the loss of clients.
“Technology oftentimes gets less expensive over time, and as you re-term customers, sometimes you need to write that business down to keep them competitive with a new contract. So we count attrition as being renewals and write-downs and any lost business," Goodwin said.
Goodwin said the biggest threat of losing an entire account usually comes when the client undergoes an acquisition.
![ATC's David Goodwin ATC's David Goodwin](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt1bac22ff5d42b5ab/65ce22d7d96bb8040a8a4361/Goodwin_David_ATC_2024.jpg?width=700&auto=webp&quality=80&disable=upscale)
ATC's David Goodwin
"When they get acquired, right or wrong, the acquiring company frequently wants to assert themselves with their relationships and their way of doing things. Outside of that, I think we had one client go out of business, and maybe another file for bankruptcy," Goodwin said.
Nevertheless, he said total ATC's total year-to-year attrition – including lost revenue – numbers less than 2%.
Net-new logos are of high priority for many vendors that invest into the TSD/TA channel.
“The challenge for service providers is that we all have obligations to do net-new bookings of new customers,” a cableco channel leader said earlier this year. “We can’t just manage a base.”
Agents go after new logos with a variety of approaches. Some are doing aggressive sales prospecting. Some prefer to wait for referrals to come from their customer relationships. Others, like ATC, have built a steady drip of events to make prospective customers aware of its consulting abilities.
“We’re not salespeople with quotas. So it’s more of an educational type of seed we plant," Goodwin told Channel Futures.
That said, those efforts lay the groundwork for new projects, he said.
“We're working very diligently to get a greater wallet share by helping our clients in additional areas within our expertise. But we're also working equally hard, if not harder, on new logos," Goodwin said.
Gardner said the new clients are coming in as well for Advantage.
“We added a significant number of new, recognizable logos last year, and I'm quite confident we will do that again this year. So we're really growing in both ways," he said.
Net-new logos are of high priority for many vendors that invest into the TSD/TA channel.
“The challenge for service providers is that we all have obligations to do net-new bookings of new customers,” a cableco channel leader said earlier this year. “We can’t just manage a base.”
Agents go after new logos with a variety of approaches. Some are doing aggressive sales prospecting. Some prefer to wait for referrals to come from their customer relationships. Others, like ATC, have built a steady drip of events to make prospective customers aware of its consulting abilities.
“We’re not salespeople with quotas. So it’s more of an educational type of seed we plant," Goodwin told Channel Futures.
That said, those efforts lay the groundwork for new projects, he said.
“We're working very diligently to get a greater wallet share by helping our clients in additional areas within our expertise. But we're also working equally hard, if not harder, on new logos," Goodwin said.
Gardner said the new clients are coming in as well for Advantage.
“We added a significant number of new, recognizable logos last year, and I'm quite confident we will do that again this year. So we're really growing in both ways," he said.
Upstack is managing more than $550 million in annual technology spend, according to a recent report by the technology advisory firm.
New York-based Upstack on Tuesday published its 2023 Annual Report detailing the scale the company has reached. The vendors Upstack sources for its business customers are billing more than $550 million on an annual basis.
Last year it reported $400 million in tech spend that customers negotiated with Upstack vendors.
Moreover, the company said it possesses more than 6,500 active customers, up from 6,000 in 2022.
Upstack in its annual report pointed to process improvements, including a client portal, that led to faster installations and higher NPS scores. The company says it is developing a set of web services called Upstack OS to give customers access to more real-time vendor information.
Upstack also has been growing inorganically. As of last month, Upstack had announced 32 different acquisitions of agencies, leveraging funds from Berkshire Partners, MidCap Financial and Morgan Stanley Private Credit. Upstack has announced seven acquisitions of agent customer bases since the beginning of 2023.
Upstack CEO Chris Trapp called 2023 "transformative" for his company.
![Upstack's Chris Trapp Upstack's Chris Trapp](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt3c0a1ecaf1edb8a6/65ce1e9bd2f913040a58d45e/Trapp_Chris_Upstack_2024.jpg?width=700&auto=webp&quality=80&disable=upscale)
Upstack's Chris Trapp
"Amid a time of macro uncertainty in the financial markets, ongoing supply chain constraints and changes in end-user behavior, our customers turned to Upstack to optimize their digital infrastructure to create business opportunities and competitive advantage," Trapp said. "The rapidly growing Upstack team did what they do best – evolved their capabilities to tackle a myriad of challenges both big and small – while staying true to our mission and our unwavering commitment to customer excellence, all with the highest of integrity.”
The company has brought aboard more than 200 "Upstackers" via acquisitions and hires.
Upstack Annual Report: An Industry Benchmark?
Companies in the technology advisor/agent channel historically have stayed tight-lipped about their financial numbers. Agents operate a complex compensation model, in which the vendor pays a commission to the contract-holding services distributor, who then pays out the majority of that commission to the agent. As a result, the distributors have historically held key information about the size and scope of the agent market.
However, Upstack and other large, well-funded peers on the customer-facing side are sharing more data about their books of business, providing clues about the size of the market.
See the slideshow above for takeaways from Upstack's annual report and observations from other technology firms about how they are growing.
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