Posted: 9/2003

Master Agents 2.0
Premiere Partners Reload for New Mission

As emphasis on indirect sales has increased,
the
role of the master agent has evolved from being the signer on a high-volume
contract to an outsourced channel manager. PHONE+ Editor Khali Henderson
consulted some of the countrys leading master agents (see dossiers below) about this evolution. The following is an edited transcript of several
asynchronous conversations via phone and e-mail. While surprisingly candid, the
executives took ownership for their opinions with one exception that has been
attributed to the ubiquitous Agent Smith.

PHONE+: There seems to be a transformation of some sort,
perhaps a stratification, wherein certain master agencies are changing their
role in the value chain. Can you identify some specific things you are doing
really differently from five or 10 years ago?

Ted Schuman: Weve gone from
mailing in new orders to faxing to online submission. We saw this happening
several years ago and it became obvious to us there were going to be a small
handful of elite master agents who would drive how the entire channel operates
and is supported. Weve come along way from being just another means of
distribution to a dominant channel.

Mark Solomon: Weve had to take on
more responsibility as master agents. In the old days, if you did X amount of
dollars, you were a master agent. Today, it takes on a whole new level of
responsibility.

Brad Miehl: The master agent model
has become much more complex resulting in greater barriers to entry than in the
past. In order for us to accomplish our objectives we have to hire very talented
people in support, accounting, sales and IT. In fact, internally, we no longer
consider MicroCorp as a master agency, but rather a Progressive Managed Channel
or PMC. Therefore, as a PMC, we have to provide considerable value to each
segment of our business our agents, VARs, customers and vendors.

One of the ways we are achieving this objective is by
developing a business model that caters to each segment, then bringing these
segments together. For example, Nautilus [our internal Intranet] enables total
collaborations between segments resulting in substantially greater productivity. Thereby increasing overall value to all aspects of our
channel.

PHONE+: Are there specific value propositions you are being
asked to provide or that you feel you have to provide to your vendor?

Miehl: We view our agents, end users
and vendors as MicroCorp customers. Therefore, we have to provide value to the
vendor that goes beyond the sale and support of their products. I feel part of
this value lies in our ability to deliver timely information back to the vendor
as well as providing enhanced value to their customers.

Rick Dellar: I would concur with
Brads comments about how vendor relationships have changed in the last few
years in particular. Carriers large and small are pushing cost out of the
business wherever possible be it canceling contracts of smaller agents that
might have made the cut in previous years to asking us to handle more of
the heavy lifting so they can reduce G&A (general and administrative)
costs.

An interesting thing is occurring in just the last year,
however. Where supplier meetings in years past typically focused on
quota achievement, commitments and service performance, today we rarely talk
about that. Our company is focused on executing a crisp strategic plan and our
carriers seem a lot more interested in looking for strategic parallels than
talking about prices and commissions. The biggest proof of that is one of the
industrys household names is developing a contract with us that is nearly
devoid of revenue commitments but instead focuses on mind share with executives,
commitments to regular meetings and disclosure of business practices and
strategy. Thats proof things are changing.

Rob Goble: Many of our carriers are
asking us to take agents under our program who are not meeting the volume
commitments to continue on their own. This has been a powerful aspect of the
relationship as it clearly benefits the carrier from a resource perspective
without losing the potential revenue, no matter how small it may have been, and
it contributes to our overall revenue model. The most important value that
Venicom can bring to the carrier, besides the obvious revenue, is the ability to
support subs and client opportunities internally. We have invested a large part
of our revenue into building up a competent back office and sales support
organization. These are mostly ex-carrier personnel some with as many as 30
years of carrier experience but it guarantees that we know the carrier
products, procedures and systems as well, if not better, than they do
themselves.

Schuman: Historically, we were
looked upon to collect LOAs and anything else we performed for the vendor was a
bonus. Our vendors today work directly with our internal IT folks to develop
applications for online order submission and account statuses. In many cases, weve
written code to augment what the vendor has in place to allow our systems to
communicate and, ultimately, extend these support services to our agents.
Clearly, the future of our channel is technology-dependent, and our scalable
technical infrastructure and expertise is one of our core differentiators.

PHONE+: Is this something your carriers asked of you or was
this a need you identified?

Miehl: We felt it was a need. The
faster we can provide quality information back to the vendors, all the better.
This works the other way as well. The faster we can provide information back to the field, all
the better.

Goble: For us it was a need that
stemmed originally from the old US West program where agents were required to do
substantially more project management than under the traditional IXC agent
program. As we expanded our carrier portfolio, it became a differentiator for us
when compared to our competition. We liked being less dependent on the carriers
to ensure our installs went in without as many potential problems. I am sure anyone in the agent community can relate to that
statement.

Schuman: Honestly, what drove
PlanetOne were the carriers inabilities to adequately service and support our
volume of new business. We had a choice to make and it was clear to us that, in
order to outperform the competition, we had to take these critical and necessary
steps to deliver this information to our channel as accurately and timely as
possible.

PHONE+: So, master agents need to provide more value to the
vendors instead of just aggregating subs. Anyone else have an opinion?

Goble: The sub [aggregation] role is
important, but the responsibility to the sub and execution of those
responsibilities are what becomes the key. We take on the role of training, not
only product training but procedural as well as constantly updating them on
current promos, regulatory changes and issues within the industry in general.
Educated subs and sales people with the tools they need to succeed and a single
point of contact to run all these opportunities through is exactly what the
smarter carriers should be looking for in this time and economy.

Solomon: What we have done in our
evolution is we have put in the software and we have managers who manage each
one of the products in our office. Each one of our people might have three or
four carriers they are specialized in. On the other side, we take some of the
agents and encourage them and educate them as we move into the data fields. We
have brought on people who are experts in that arena so we can take our agents
to a new level the ones who want to go to a new level.

Schuman: I think vendors today are
looking for a balance between internal systems, strong management, professional
support and marketing expertise. Having cool toys for agents to use is
only one part of the equation, but if it ultimately doesnt materialize in
newly acquired business, whats the point?

Geoff Shepstone: TBI has seen the
carriers realizing the alternate channel is the outsourcing of sales and the
carriers have to make a decision as to what level they going to outsource the
sales responsibility. In the past, a big carrier may have over 1,000 distributor
contracts. And, now, they are realizing that having 1,000-plus contracts means
having X number of channel managers. Today that same carrier has 300
distributors and is even tightening it up further, adding additional management
responsibilities onto the distributor.

Miehl: You also are seeing carriers
starting to embrace alternate channels from the small and medium business
marketplace. The larger carriers are starting to gravitate toward subcontracting
out the sale and support of that business to us.

Shepstone: Its been interesting
to see the level of respect the channel has gotten from the carriers over the
years. The entire division of alternate channels within a company would be
viewed and often referred to as the dark side, whereas now the carriers are
embracing alternate channels as an integral part of their sales force. The
carriers are at different stages in the transition from a direct force to an
alternate force. One of the things that I would see in a company that is farther
along is channel neutrality, which is where the carriers are letting the direct
force work with alternate channels. At the other end of the spectrum, some
companies are still treating alternate channel as a necessary evil.

Gene Foster: I can most certainly
agree with Geoff on that point. There are some carriers of size that do not realize this
channel is as fully developed as it is. Let me rephrase this: There are some
individuals within these carriers who have no understanding of the indirect
channel, yet they are making decisions that adversely affect the indirect,
master agent community. This, in turn, affects the business decisions we have to
make in order to remain profitable and, ultimately, affects our customers who
are looking for intelligent, customer-friendly and cost-efficient strategies
when deciding on the best overall solution.

Doug Boyce: Weve had a number of
changes with one of our carriers in the way they run their compensation. If you
would have looked at their original compensation model you would have thought
that they were trying to get a lot of little agents, because they were putting
the squeeze on the master agents. Well, after two years of doing battle, they
are coming back and realizing they cannot squeeze the master agents out because
we do a lot of work for them. We do a lot of the training. We are the first
groomers on the orders when they come in. We provide level-one customer service
to the majority of the customer base. With another carrier, we provide both the customer support as well
as the level-one sales support.

PHONE+: A lot of these changes seem fairly onerous.

Miehl: I think its required.
Before, the barrier to being a master agent was pretty much a signature on a
contract. I think that has changed. Now, you have to clearly demonstrate you
have a back office and you have the infrastructure to support a channel. I dont
take it as being negative. That is part of our responsibility; its part of
our value add. To ensure we remain part of the process, we need to continue
looking at ways that we add value back to our vendors, agents and customers.

Schuman: Its the cost of doing
business. This trend began years ago and those with the vision of where our
channel was developing have taken the initiative to grow their business
according to the changes our industry and channel in the last five to seven
years. Keep up or step aside; its that simple.

Paul Silicato: Its a natural
evolution when you look at the cost of a sale. In our channel initially, the
cost of a sale to the carrier is less. When we take on more support, its even
less and much more competitive to the direct side.

Dellar: I would agree with Paul in
that its a natural evolution. The bottom line is consistent and stable growth
requires expertise in more than just selling services. The carriers decisions
in many cases have forced competencies at Intelisys that in the short run were
onerous but in the long run are going to make us a more valuable company. The
traditional chatter for years was that the alternate channel was a less
expensive distribution option. While that is true in terms of initial
acquisition of accounts, it is not true over time. In fact, finding the crossover
where long-term residual payments outpace the cost of direct sales retention
strategies can be [determined by] a rather unsophisticated mathematical
equation. The fact is our own success at retaining customers may become one of
our biggest challenges and risks.

PHONE+: Any thoughts on working with carriers in a cooperative
way?

Dellar: One of our key initiatives
is understanding the carriers and their needs. Instead of just trying to guess
what is important to them, we are surveying them and using some very
sophisticated measurement disciplines to try to understand why they make certain
decisions. I expect them to make certain decisions because we fundamentally
understand where we are in the food chain. My goal is to learn and understand
their behaviors and either avoid or better prepare for the risks involved with
certain decision-making over which I have little or no control.

Agent Smith: There is not a
whole lot of loyalty from the carriers to the master agents even though it may
appear to be that way. With the stroke of a pen they can change their plans and
not take into account how it might impact the master agents out there. They
continue to do that as evidenced by things that Sprint has done and Qwest has
done and AT&T does all the time.

PHONE+: Wouldnt that make it difficult for you to manage
your business having made investments in systems and personnel to support their
product line?

Miehl: It can be very challenging,
which is why it is important to diversify your portfolio of vendors.

Shepstone: What weve seen in the
past is master agents typically would have one or two primary vendors known as
the regional expert for that carrier so agents would gravitate toward them. Now,
you are seeing master agents representing many more carriers; TBI represents 26.
You are having to manage risk of what that vendor may do to your comp plan by
spreading your business out into a broader area. Diversification is a classic
way to manage that risk.

Foster: Weve made the decision to
partner with the carriers our agents wanted us to do business with. After
working for so many years with Tier 1s such as Sprint, weve found we have
little impact on the direction theyve taken, which in our opinion is
counterproductive to the needs of the indirect channel. Were now aligned with
carriers that welcome the knowledge and expertise CMS and many other master
agents bring to the table.

Boyce: I think if you are looking at
newer carriers, they are much more streamlined, more in tuned to what the agent
is doing. They frontend the agent side of the business, rather than the customer
side. If we had to rely on the carriers whether you are talking about
Sprint, Qwest, MCI, any of the majors wed all be out of business. We have
to step up to the plate and do things they are not ready to do.

We work on a different scale than they do. They are working on
the $150,000 account and up. If you look at our bases, they are in the $5,000,
$10,000 up to $100,000 account range. Those accounts often dont have an IT
manager we become the IT manager. We have to be able to interface for the
customer to the carrier because they sometimes dont have any in-house
expertise. With the carrier, oftentimes you are calling into customer service
the same way you would call into the bank where they put the newest people as a
bank teller and they are not capable of handling the problems. So, if we had to
rely on the carriers to do what we do, I dont think any of us would be in
business.

DOWNLINE DEMANDS

PHONE+: We have
spent a lot of time talking about carrier expectations your upstream
responsibilities. Lets move the discussion toward changing expectations from
your downline. Has that added any pressure to invest in systems as well?

Miehl: Nautilus has taken us ahead
of the curve from a systems perspective. It does everything an agent would want,
but the need to innovate, enhance our systems and the way we do business is an
ongoing process.

Schuman: Our approach has always
been hub and spoke with agents and vendors. In October, well offer agents our
highly intelligent Oracle Platform (Agency Logic), which will empower agents to
manage every facet of their agency. However, we recently surveyed all our agents
and found two distinct classes of subagents: those who wish to have access to
all our technology to manage their business with little intervention from
PlanetOne and others that need us to administer their clientele through test and
turn-up. In fourth quarter well introduce our Agent Concierge. These
agents will be paid slightly less residual but will be provided full-service
administrative assistance and CRM for their entire base of clientele. From
filling out LOAs, working rejects, trouble tickets and sending welcome packages,
these designated PlanetOne personnel will work only with these agents under this
program.

PHONE+: Are subagents also driving the transformation or has
it been mainly from the other side?

Silicato: Its mostly internally
driven. How do we provide a better value to the agents to remain with us because
our contracts are nonexclusive with the subagents? They can go work for any
master agent. How do we provide a better value to them and how do we provide a
better value to the vendor, the carrier? Its been internally driven to make
us more successful and more valuable to both entities.

Boyce: I agree with that definitely.
Our drive to better ourselves has been from internal means, wanting to make sure
that when you are sharing a good portion of the commission with an agent, that
we are making a good return on the portion we are keeping that means being
more efficient. [Also, we are] finding carriers that have more efficient front
ends. I think its more internally driven than from the bottom up.

Foster: We all bring a particular
value yet we do have to understand that we all compete with one another. Each of
us has to sell the agent on the unique value we bring to him or her both
internally and externally. If a carrier fails on their commitment and has a weak
delivery source, we cant continue to do business with that carrier. We have
found the same to be true in partnering with other masters for offerings that
dont quite make sense for us to be direct. We are an extension of the carrier
to our agents, if we fail or our partner fails, the agent looks to blame us.

Goble: Competition for the subs has
pressured us to invest more into our systems than I would have liked to, but it
drives us all to become more efficient as well. I am hoping that the heavy
investment in automation will pay off by allowing us to handle substantially
more business without necessarily adding more salaries to the back office.

Dellar: The realities are that we
try to recruit very bright successful salespeople who are capable of running a
successful small business. Thats a tough recipe in many cases and sometimes
our agents, especially the new ones, struggle through the learning curve and can
be very demanding. I expect the producers to demand integrity and an exceptional
experience and we try very hard to deliver that even though at times we fail. The key is to make sure you dont lose your own needs in
that equation. Its important that we provide good value to our agents, but
we also have to be profitable. We dont do anyone a service if we go out of
business. The good ones, though, are good in any environment and they
ultimately understand and respect this.

PHONE+: Is there anything you offer subagents that was
innovative at one point that is now an expectation?

Schuman: Online real-time quotes and
proposals used to be innovative but are quickly becoming the standard. Access to
rates, contracts and the latest carrier information are expected.

Goble: We have a real-time status
section that clients and subs are given access to 24/7 online. All of our
project managers are required to update that section with any and all changes,
carrier communications or status comments daily as it happens so our subs or
clients can see everything whenever they want. They also can post their own
comments and are guaranteed a response within two hours, I believe. It has been
one of the biggest assets for us for the last couple of years now.

Miehl: Agents are demanding timely
and accurate status of their accounts. If there are any rejections or issues on
an account, they dont want them lingering around on someones desk, it has
to be communicated to them immediately. We then have agents that want to work
all issues themselves while others want us to work their customer issues for
them. Yet many times agents do not disclose who we are to the customer and when
we contact them, it sometimes causes confusion. This is an interesting item for
all of us to evaluate.

PHONE+: Is anybody else working on that problem?

Shepstone: As far as taking
ownership of those problems, I see that as a core responsibility of a master
agent. The sales agent is really the sales force. They are like actors; they
should be out performing in front of the prospects. Thats really what they
should be doing. As a master agent, we should be following up with all the
billing tickets, getting credits applied, doing all of the things that keep the
agents from selling.

Boyce: I agree wholeheartedly. The
last thing we want our agents doing is worrying about provisioning the order or
following the trouble ticket. They need to be on the street building the
relationship with the customer the prospect or existing customer. One thing
the agents do very well is build retention that often directs have problems
managing. We will do whatever it takes to take the workload off the agent. We do
some of their proposals. We do their RFPs. We want them to build the
relationship with the customer and not let the back room, the back-office stuff
get in the way of what they are trying to do.

Foster: I agree with Doug. We do all
the proposals, paperwork and manage the provisioning for the agent. There are,
of course, exceptions to this yet the agent is the owner of the relationship. We
pay the agent the majority of the commission for the life of the contract and we
do expect that the agent maintain the relationship as the primary point of
contact for his or her customer. We have had several new agents come on board
that believe they can sell an account and walk away from it, yet still receive
the majority of the commissions. My question would be who should service and
support that customer? This is a huge problem full of potential and long-term
conflict. As master agents we all do a lot of work for our agents and their
accounts, but as masters we must reach a consensus on the issue of
account-support responsibilities because paying full and competitive agent
commissions to an agent who walks away to close another deal only hurts the
indirect channel as a whole.

Dellar: I think there is a balance
that works here. It is incumbent upon us as master agents to constantly add
value and to materially differentiate to be successful. At Intelisys, we call it
the Earn Plan as opposed to the Term Plan. Like my peers I also want
our agents focused on selling but we also want them to have skin in the
customersatisfaction game. We feel it is important for them to know their
customers ongoing needs and not just their sales needs at the point of
acquisition. We employ a concierge type of service where we help them, empower
them and assist them but we also want them to own that end-user customer
experience. A delicate balance? Yes. Impossible? Never.

Schuman: Theres no definitive
answer or solution here. As I mentioned previously, some agents simply come to
us for higher commissions and access to multiple vendors under one agreement and
take offense if we get too actively involved in the administration of their
accounts and others who are less experienced desperately need us to manage the
entire process.

RISK MANAGEMENT

Solomon: The
only other thing I would add is a lot of carriers and CLECs have gone out of
business. Even with WorldCom, some companies got hurt with that. Thats a
determining factor in who you are going to deal with as an agent. Im sure
thats in the back of a lot of agents minds.

PHONE+: So they are looking at going with a master agent
because of that?

Solomon: A master with a diversified
portfolio. A lot of agents had all their eggs in one basket. Its been a
serious hit to them. With WorldCom, they honored our contract, but they didnt
honor several hundred and the agents got hurt by that.

Miehl: The expectation agents have
of their master agents is that they have negotiated favorable agreements with
the vendors that they represent. This is not limited to just compensation but the actual terms
and conditions in which the master agent/vendor relationship are governed. Due to the cost associated with bringing on a new vendor and
the commitment we make to them, we have a much better chance of getting a
balanced contract than an individual agent may not be able to negotiate on his
or her own.

Foster: I agree; however, what I
have found is the smaller carriers have a lot more respect for us today as
compared to just two to three years ago. It is much easier to get an agreement that is two-sided today.
Agents most certainly look up to master agents and expect that we have
negotiated a favorable contract that will protect them as their base grows.

Shepstone: The carriers are more
motivated when they are trying to go after a marquee master agent. They know the
volume that a master agent is capable of and they are more willing to make
concessions. In addition there are added resources, managements negotiation
experience and attorneys that a master agent can bring to bear. Absolutely one
of my key roles within TBI is to make sure that I can get the very best agent
contract and that means the most stable agent contract with the carriers.

PHONE+: Are there particular things that you always look for,
Geoff?

Shepstone: I would always try to get
evergreen in there if thats a possibility. We have an evergreen contract with our agents as long as
we are getting paid, they are going to get paid, period. If I can get that from
the carrier, that means a lot to the agent.

Dellar: We are extremely vigilant in
trying to get the most commercially reasonable terms available in all of our
contracts. In many cases we no longer have revenue commitments to make or upside
in terms of commissions so we simply focus on mitigating risk through a constant
negotiation of the terms and conditions of our carrier agreements. Its a huge
and expensive undertaking, but it is critical in terms of sustaining our model
and convincing agents to put their faith and trust in us.

Solomon: We will walk away from
contracts that dont have certain aspects of evergreen or other things that
are important. Well just walk away from them. Its tougher if you are an
independent agent to do that.

PHONE+: How difficult is it to get evergreen these days?

Goble: Evergreen was very easy to
get five years ago and then there seemed to be a concerted effort among the
carriers to avoid them at all costs for a few years. I have noticed that they
are becoming easier to get recently and I believe it is motivated by the economy
and all the additional competition struggling for market share today. It is
extremely important to us, and I have made the decision to walk from carriers
based on the contract terms, and others that we need in our portfolio become the
last choice as we prefer not to build up too much revenue on a lessthan-
favorable contract. It becomes a liability rather than an asset, and we openly
communicate this with our subs so they can steer their revenue in a safer
direction when possible without compromising integrity with the end user.

Shepstone: It depends on the
carrier. The bigger they are, the harder it is.

Boyce: It depends on how badly you
want to add the carrier. I dont have a contract that doesnt have an
evergreen in it right now. But there have been several carriers that have pursued us that have not
had the evergreen and we ended up refusing to sign.

Solomon: Some of the carriers today
will give you a version of their socalled evergreen that doesnt necessarily
meet our criteria. They will limit the payout for X number of years. Our true
definition of evergreen is that we will be paid as long as the customer remains
a customer of that carrier. An AT&T or Sprint will come back and say, well
pay you X amount of years after your contract is terminated or you terminate it.
I dont think we do business with one [provider] that we dont have a
complete evergreen with.

COMPETITIVE COMPENSATION

PHONE+: What
kind of pressure are you under from the down line regarding compensation and how
difficult is it to maintain that competitiveness with the kind of contracts you
are securing now? Boyce: Compensation is something we
are all dealing with all the time. What it takes to sell a given carriers
products? What it will take to give an agent the incentive to sell it? The other
part of compensation as a master we have to deal with is we have to support our
agent base. We have to be consistent in what we do. There are a lot of
individual agents that can go out there, take any of the resellers out there,
sell the lowest rate they offer and be happy walking away with 6 percent. Well,
as a master agent, I couldnt. No one is going to make a lot of money selling
a lot of stuff at 6 percent. So, we also are driven not just by the commission
but the ability to have rate stabilization in the marketplace. If the rates keep
slipping, the commissions slip with them and the master agent wont have
enough to work on.

Solomon: From my perspective, I will
shy away from a carrier who will mess with my pay plan just like an agent will
shy away from me if I mess with his pay plan. So, if companies, i.e. Sprint,
Qwest to a certain degree, AT&T that have a reputation for tinkering with
their pay plans, that doesnt sit well in the agent community at all. We like
to align ourselves with companies that will have a consistent plan and remain
committed to that and we can all have conversations with the carrier. Paul and I
sit on the advisory committees for several carriers and we talk about how we can
increase profitability for everybody. With the carriers that are not committed to the long haul in
their pay scales and in commissions to us, there is no loyalty there.

Shepstone: He mentions Qwest. Of the
big carriers, they have been very active in alternate channels. Just recently,
they made a change in the comp plan. Im on the advisory board for Qwest, so I had some input
during the transition. There was an alternate channel management team that is no
longer there that made a change a year and a half ago. Qwests current
management within alternate channels saw the plan wasnt working as well as it
was capable of and they took the steps necessary to make it successful again. So
change isnt always necessarily negative. In this case, some aspects of the
comp plan actually went up. Overall, Im very bullish on the Qwest program and
I think that program will gain momentum with this change.

Dellar: I would have to agree with
Geoff that change is not always bad. We are Qwests biggest agent and the
changes they made a year ago just didnt make sense to us and leveled the
playing field between performers and nonperformers to the point that we were
actually losing money on Qwest sales. We actually pushed a lot of business
elsewhere that previously may have gone to Qwest. We were looking to make some very tough decisions when Qwest
made changes that are allowing Intelisys and many other successful masters to be
profitable again.

Miehl: When you come right down to
it, if you want to have a relatively comprehensive portfolio, you are going to
need to have Tier 1 carriers in the mix like an AT&T, Sprint or Qwest. With
that said, it doesnt mean you are going to put all your wood behind that
particular arrow in your marketing or business plan. But, its important to
have some of these vendors in place because customers demand it and we have
agents who require it as well. However, you need to be upfront with agents when you are
dealing with these carriers by identifying the contractual risk factors. Is
there evergreen in the contract? If not, then the agent has the opportunity to
evaluate this type of risk for themselves. However, as a master agent, we do
provide the products as an option.

AGENT ADVOCACY

PHONE+: A couple of
you mentioned being on advisory boards at the carrier level. How influential are
master agents as a group in the decisionmaking process?

Miehl: Thats what led to the
change at Qwest. Their model did not work for master agents.

Goble: I have sat on boards that
were just lip service, but then there are other carriers that really take it
seriously. Verio is one that I sit on today, and I genuinely feel that our input
matters and they seriously want to improve the program.

Dellar: I have sat on the advisory
boards of Cable & Wireless, AT&T and Qwest and feel that, in general,
they fail to take advantage of the collective knowledge of these partners. Yes,
we influence their decision-making, but only in marginal ways with very little
structure or follow up. I think influence is one thing, but, if they really
wanted to enjoy the nectar of what we have to offer, they should get masters
involved at much earlier stages at planning and strategic meetings that deal
with leading indicators of a successful business and not just rely on us to try
to work around the lagging indicators that surface when it is often too late to
make a difference in that particular fiscal year.

Schuman: The vendors that have
included us in their high-level decisions [are those] we have done the best with
in the past. It still amazes me how many times a program is rolled out and the
carrier claims it will be an amazing success only to see it flop later because
they didnt involve us in the process. Even the largest carriers today still
make these mistakes.

Shepstone: It varies by vendor. Some
of the biggest vendors out there, we have very little influence over,
unfortunately. As you get further down the food chain, we exert more pressure
and have more influence.

PARTING THOUGHTS & SHOTS

PHONE+:
Are there any other points critical to the changing model of the master agent?

Miehl: We are trying to utilize
other sources of revenue and added value for the agents, vendors and customers
by incorporating ASP applications. The bottom line is, we are focusing on
business process applications that provide value while driving up the need and
use of the network services that we sell. In some cases, we are bundling ASP
applications with network services and selling as a complete package. The more
applications we bundle, the greater retention rate we will have of that
customer.

Boyce: We are doing the same thing.
We havet a couple ASP packages. Weve gotten into more accounts via our ASP product than we
would have in bringing in a traditional telecom product and then turned that
into a telecom sale. Like Brad was saying, a lot of things are based on the
Internet, and thats where a lot of things over time are going to be. If we can drive product there, we can sell bandwidth too.

Shepstone: We understand the reps
are not ASP-centric. What we are trying to do in the beginning is utilize the
relationship they have with the customer base to, at the least, say, Mr.
Customer from what I know about your business, I think this product could help
you. Then we either give them a hand off to a rep from the ASP or, in one
case, we give them a multimedia CD the prospect can plug in to view the
presentation on their PC.

Solomon: We are really focusing
internally. We have tried to market a few other products to our existing base
some more successful than others. Overall, we are trying to do what we are
doing the best way we possibly can. Thats where our focus is.

Foster: We are continuing to invest
in our conference center product line that incorporates seven vendors and
full-time dedicated management directly focusing on agent training, support,
paperwork and commissions. I also have another company that was recently started that is
focused on the marketing and build out of Wi-Fi hotspots within the hotel
marketplace. This is most definitely a focus; this is the future of our
industry.

Dellar: We are focusing on
diversified-revenue strategies that complement our core business. To that end we
have brought on colleagues that are employed by Intelisys to make sure that
everything from ASPs to market segmentation and differentiation are addressed
consistently but in concert with what our customers need.

Schuman: I have yet to hear anyone
mention integrity, business acumen, trust, reputation, stability or
relationships. We realize a significant amount of our agents do business with
our firm because they believe in what were doing, our approach to the
business and, ultimately, preservation of their income. If we dont send out
checks timely and accurately each and every month . . . everything else is
meaningless.