Long Distance Peddlers No More–Part Two

Posted: 04/1999

Long Distance Peddlers No More–Part Two
By Kieren McCobb

Survival of long distance sales agents hinges on the incorporation of local and data
services into the product mix. Agents must be network service providers, not peddlers of
long distance. So how does one start and operate an agency with a broadened focus on
network services? Last month’s column focused on preparation and planning phases. This
month we will look at marketing, and in May, we’ll discuss day-to-day operations for a
network services agency.

So at this point, you’ve thought, planned, set up and perhaps prayed about your brand
new networks services agency. You’ve negotiated at least one contract, and hopefully
several, with carrier/suppliers. Perhaps you’ve covered the local component as well by
forming relationships with regional Bell operating companies (RBOCs), competitive local
ex-change carriers (CLECs) or their authorized agents. What’s next?

In the Crosshairs

You need to define your target market. Will you pursue residential customers or
commercial accounts, or both? The way you market to each is very different, as is the
pricing, risk and profit potential.

Residential Customers

As a rule, residential customers are small-volume accounts. Average monthly long
distance bills for residential users are about $20. Larger invoices can be generated from
this customer segment by capturing their intraLATA (local access and transport area) toll,
local dial tone and Internet access business. Additionally, monthly recurring fees often
are applicable. One school of thought says that agents can charge residential consumers
higher rates than commercial accounts and, therefore, reap greater profit margins.
Moreover, residential users may be less likely to switch suppliers, thus churning less.

Commercial and Other Large Accounts

Commercial accounts as well as other large accounts–government agencies, nonprofit
organizations and educational institutions–generate larger bills than their residential
counterparts. Usage ranges from hundreds of dollars to tens of thousands of dollars per
month. You, therefore, need to sell fewer customers to reach your revenue/commission goal.

Commercial accounts also are candidates for a larger list of commissionable network
services, such as frame relay, local dial tone and data circuits, dedicated long distance
access and dedicated Internet access. Additionally, they may be good prospects for
consulting
services, telecommunications systems, local area networks (LANs), cabling, etc. With these
extra moneymaking opportunities, however, come extra requirements. Agencies that deal with
savvy commercial users must be more knowledgeable about voice and data communications than
those that service only residential accounts.

Even with all the extras, margins are lower on commercial accounts, and the risks are
higher. Follow credit policies, and anticipate nonpayers. Even if your agency does not get
charged for the bad debt, your carrier will terminate your agreement if you sell more than
your share of deadbeats.

Get the Word Out

Whether you decide to target commercial accounts, residential accounts or both, you
need to get used to the idea that you must sell. In the beginning, you may want to try out
your pitches and service-provisioning processing on some more approachable and forgiving
prospects such as friends and family. Properly filling out applications, removing
preferred interexchange carrier (PIC) freezes, studying automatic number identification
(ANI) reports and dealing with agency support departments all are part of the learning
process. As you gain a little experience and confidence, you can expand your efforts to
include prospects in your targeted geographic area.

That said, marketing to residential accounts and commercial accounts are a very
different art.

Residential Customers

Marketing to residential users is best done en masse. Because the revenue per
residential customer is relatively low, you need to achieve a high number of closed sales
to cover expenses and make a profit. Thus, marketing to residential users is best done by
targeting the group as a whole. This means advertising and/or interfacing with a large
community or interest group. Advertising can take many forms–television, radio, print,
Internet and direct mail, for example. Effective advertising depends on a number of
factors, not the least of which is repetition. Because of this, effective broadcast
advertising, particularly television, is beyond the means of most agents (and most
carriers, for that matter). Print advertising may be a better value and has the advantage
of including a written letter of agreement (LOA). For this reason, direct mail can be
effective too. Don’t forget the Internet–you can reach literally the entire world for a
nominal investment in a list server e-mail program and a website. A good website can be an
invaluable sales tool; if done professionally, it can position you well against much
larger companies and secure orders for you.

Aside from advertising, another avenue to consider is distribution through an affinity
group–organizations of people with common interests. Examples include church
congregations, alumni groups and political affiliations. Generally, the marketing of your
services is done through the organization’s regular mouthpiece, a newsletter or magazine.
In return, the organization is paid a commission on the sales generated from its members.
In this way, the organization is very much like a subagent. While it sounds relatively
simple, a well-planned campaign is essential. The organization will act quickly to sever
the relationship if there are even a small number of complaints. Take care to have plans,
procedure and personnel ready in case of a large response. A deluge of orders is a mixed
blessing when you cannot process the volumes efficiently. Poor response times, low quality
and billing errors are the deal breakers.

Much like affinity groups, multilevel marketing organizations are yet another marketing
route. While their sales representatives generate high phone bills themselves, they also
can resell your services. Uniquely, however, they may want to private-label the products
under their own brand.

In either of these latter scenarios, in which you are dealing with a subagent entity,
be mindful to follow credit procedures and collect on unpaid bills. After the enthusiasm
of the initial campaign wears and large telephone bills roll in, bad debt is often born.

Commercial and Other Large Accounts

Unlike marketing to consumers, marketing to commercial users can be tailored more
narrowly–to one customer at a time. The payoffs in breadth and volume and length of usage
afford this luxury.

While traditional marketing methods such as advertising also are effective, the smart
agent visits prospects personally or on the phone either by cold calling or referral.
Networking in your community can be extremely effective at generating qualified leads. A
place to start is your chamber of commerce. There you can not only meet prospects, but
also establish relationships with other business owners and salespeople with whom you
don’t compete and can share leads. For example, an excellent prospect for you is a company
that is relocating. Tap into the office furniture, carpeting, alarm and real estate
salespeople to find out about these companies. Make certain to return the favor. Users are
discovered and blackballed quickly.

On the flip side, there is nothing wrong with asking for reciprocal business. If you
patronize a vendor, you should make a sales presentation to that entity. Unless they are
in a contract with someone else, it is reasonable to expect to get some of their business
in return.

With commercial accounts, be sure not to leave any money on the table. Sell them their
dial tone, data services, integrated voice/data/Internet access and Internet services.
Don’t stop there. Sell or make referral sell arrangements for cellular and paging services
and business communications systems. Not only do you maximize your return on investment,
you entrench yourself with your customer.

Kieren McCobb is president of TeleConfusion Removal Inc., a consulting firm serving
telecommunications agents. He also is president of AIB Communication Inc., an authorized
Bell Atlantic Corp. agent in the Northeast region. He can be reached by phone at +1 732
249 2821 and by e-mail at [email protected].