Masters Gripe About Their Agents
So I finished watching the CPZ video (see below) from the Spring 2012 Channel Partners Conference & Expo in Las Vegas. Or should I call it, Lets listen to master agents tell us what they dont like about their agents”?
Let me start by saying this. There are two types of people who work for master agents: the ones who work there and the ones who own them. The ones who own them I will leave out of this conversation (for now). Being an agent is not the easiest thing in the world. We control our own destiny. We work for ourselves, pay ourselves, pay our own insurance, rent/mortgage, benefits, etc. The last thing we want to hear from people who work at a master agency is how to run our business. Most of us have been doing it for a long time and we make a pretty good living at it. Getting advice from someone who gets a paycheck directly from an employer and doesnt have to concern themselves with everything that it actually takes to run a successful business usually makes us pretty upset. If those people knew how to run a business so well, they would be doing it and making a hell of a lot more money.
One thing that stuck out to me was the gentleman who said, If they wont sign an exclusive with us, we dont want them.” Exclusivity is just bad business for an agent. Some time ago, I wrote a blog about the octopus effect. The first thing I teach every new agent is to have a good blend of contracts with masters and with vendors directly. First, if you can handle a commitment with a particular vendor, then sign your own contract. If you cant handle the commitment, then pick a master that pays you the most on that particular vendor. I believe that you have to have multiple streams of revenue in case something happens to a particular vendor/master.
We have all seen that certain vendors make decisions to stop paying the indirect side. It happens. Companies get bought, they go out of business, or maybe a new CEO comes in. Anything can happen. An agent that wants to protect their business and their employees is taking a HUGE risk if they have all their eggs in one basket.
Lets take a look at it from another angle. Lets say that you have all of your business with one master agency. You are told by said master that you are completely covered by an evergreen in the contract. Two years later a contract comes up for renewal and goes month to month. Suddenly, you stop getting paid because said master really didnt have that evergreen they told you they had. Another example is that your checks start showing up on the 10th instead of the 2nd or 3rd like they usually do. Is it a cash-flow situation or is it a case of the master is in trouble? Having many different sources of income to protect your company from the inherent risks that come with this business is critical.
Another good example of why it is important to work with multiple masters and vendors is the avoidance of conflict of interest. For example, what if you are bidding on a huge MPLS deal and you need help from the master to bring the deal home, but the master has another agent working the same deal? They dont want to get in the middle of it because they are going to make one agent happy and possibly lose the other one because they helped you.
My advice is to work with three or four good solid masters. You should figure out who pays you the most on each and every vendor you use. Then put an equal amount of business with each one of them. This is not “shopping.” This is being a good businessman. You have diversity in your stock portfolio, dont you?
I have even had situations where I moved my business from one master to another for less percentage because I wanted to work with a specific rep. Sure, getting the most bang for your buck is important, but the rep from the vendor can make all the difference in the world. If you are a good, experienced agent, you are really just using the master to cut you a check every month. Take a step back and think about how much you actually use their back office. I know that I work directly with the reps from each vendor and just inform the master when a contract comes in. I think I deserve the highest percentage possible in that situation as I only use them for their power when a situation hits the proverbial fan, or if I need them to lean on a particular vendor for better pricing on a large bid, or a teaming situation.
Finally, agents make sure you work with many different masters. Make sure you get the highest points possible for each vendor you use. They all have similar agreements, but some just do more with certain vendors and might get you that extra point or two. If you sell a $30,000 deal and one master pays you 14 percent and the other pays you 16 percent, that is a difference of $600 per month, $7,200 per year and $21,600 over the course of a three-year contract. Is that shopping or is that good business? It seems to me that the master agencies that use the term “shopping” to put a negative connotation on what is just good business, are probably the master agencies that cant compete from a service and compensation basis, so they hope to lock in an agent before they realize that they should be working with a master that can compete.
Bill Leutzinger is president of Chicago-based
TelecomMedic , an agency providing voice, data and video services to business customers. He is a past member of the Channel Partners Conference & Expo Advisory Board.
Looking for more?
Bill posted some initial thoughts on CPZ in our comments section last month. You can read those
here
.
