Downturn Prompts Diversification of Agent Business

Written by Channel
November 23, 2009

The challenging economy is prompting telephony agents toward diversifying their businesses, according to the results of the first-ever Telephony Agent Key Issues Survey conducted by Gartner Inc. and PHONE+.

The survey found the vast majority of telephony agent respondents are taking action to represent other carriers, carry different products and services, or sell to different types of customers (see chart 1).

The study was solicited responses from PHONE+ readers during the month of September 2009. Respondents confirmed that the telephony agent landscape is dominated by small companies. Nearly half of respondents have less than 10 employees, and another 20 percent have between 10-19 employees. In addition, nearly 60 percent of respondents have less than $5 million in telecom services under contract (see chart 2).

Telephony agents make the vast majority of their revenue (more than 63 percent) from commission on services from network service providers (see chart 3). Margins on hardware and software only make about 10 percent of their budget, and another 20 percent of the budget comes from services, in the form of consulting and professional services, fees for managed services or maintenance contracts.

When their customers are evaluating carriers and service providers, telephony agents believe that they value service and reliability and price first, with customer support a close third (see chart 4). Innovative products and a full suite of products don’t rank as high to our respondents’ customers. This demonstrates the primarily transactional nature of the telecom services business.

In addition, the challenge that telecom agents anticipate over the next year highlight this transactional and highly competitive environment as well, with more agents anticipating challenges in retaining and acquiring customers, heightened competition from competitors and carriers engaging directly with customers (see chart 5).

Not surprisingly, respondents indicated their top priorities for 2010 are new customer acquisition, increasing average revenue per customer and optimizing customer renewals (see chart 6).