Straight Talk – Part One

Posted: 04/1999

Straight Talk – Part One
Resellers on Building and Supporting Sales Channels
By Jennifer Knapp

PHONE+ recently hosted an editorial roundtable with several vocal telecommunications
resellers–switchless and facilities-based–covering issues of concern from selling to
billing and from products to personnel. Their candid discussion offers a glimpse into the
real challenges faced by resellers today. We will publish the transcript of their
conversation in segments, beginning with their thoughts on building and supporting sales
channels–direct and indirect. Next month, we’ll pick up the discussion with straight talk
about reselling local service. And, in June, we’ll hear what they really think
about carrier billing.

Bob Titsch: Agents say their No. 1 concern going forward is the lack of an
automated online product that can handle adds, moves and changes, provisioning and the
like. What are your thoughts on this and give me an update on the level of online service
you’re getting from your own carrier.

Skip Lane: I’ll take a shot at this one. What we get from our carriers, in our
case, is proprietary to us. Our arrangements with carriers don’t allow us to deploy that
straight through to agents. We can extrapolate from what they send us and send care
data–is it PIC’ed (assigned to their presubscribed interexchange carrier [PIC] code)? Is
it up? Is it billing traffic?–to agents, but that’s different.

We have to put it out there either on a BBS (bulletin board system) to lend agents a
more active role so they can work the PIC freezes or slams (unauthorized switches) on
their base almost near-real time, certainly within 24 hours. We’re not there yet, but
we’ve heard the agent community, so I can confirm that agents want to get more involved
with checking commissions, looking at usage–not only by count but by ANI (automatic
number identification), access line, etc.–as near-real time as they can, which helps us.
And they need reports over the Internet or BBS or however you want to send it to them.

I think that’s the way sophisticated agents and resellers are going, and it’s the way
that companies like ours have to go from an SG&A (sales, general and administrative)
standpoint. Simplifying the process for agents via the Internet is becoming critical,
including giving them the ability to do order entry electronically, which we’ve just
started to do.

Bob George: And you don’t pay them.

Lane: But they want to do it. They know that when we send it, we get the
confirmation code back, we have it, it’s complete, it’s out of credit, it’s being worked.
And that’s what agents need. They want to check status–see the account come up, that it
passed credit, was sent to the LEC (local exchange carrier), sent to the carrier, whether
the TCSI (transaction status code indicator) code is back–ANI by ANI. And then they start
seeing first-call date.

Rob Mocas: I agree with Skip. The billing system I use has an agent module that
they put on their site and they take files off of a BBS. They can enter their own orders,
get information on bad debt and TCSI. They can see all the information they want on their
account, including customer service calls. Getting agents easy access to information
quickly is imperative today and will actually grow in importance as a differentiator.

Jack Burk: I think we’re a little behind you guys, but we’re working on an
intranet where the agent places the order with our company, which we’ll look over before
it’s ported …

Mocas: That’s what we do as well …

Burk: That’s more important than some might think. We’ve found that when orders
are correct when they get to the Frontiers (Frontier Corp., Rochester, N.Y.) and WorldComs
(MCI WorldCom Inc.), they’re processed quickly. If the information is at all inaccurate,
forget it. It never gets healed.

Mocas: Like Skip said, we have to get a signed LOA (letter of agreement) first.
So there’s a hold period. But we’re not keypunching the order.

Phillip Bethune: Before we jumped into the agent arena a few months ago, we had
a website that our telemarketers could go into and pull down status and billing
information. We’re using that same system with our agent program. They can do queries,
adds and edits. They can’t do any data entry, although they could if we set it up that
way. And it all works very smoothly.

Mustad: Do you pay your agents based on billing or collected revenue?

Lane: Billing.

Mustad: Do you do any web-based billing at this point?

Lane: Not yet, but soon.

J. Erik Mustad: Anyone else?

George: We pay commission on billed.

Mocas: Do you reserve the right to bill back for bad debt?

George: Yes. I come from the 0+ business, so of course we include a clause that
allows us to come back and take a piece of bad debt reserve on individual customers. But
the agents we work with are running great companies. They’re not sending me crap. If they
send me customers, they’re solid customers.

Titsch: They know the providers who will take those kinds of customers. But
what about a customer that an agent sold two years ago that suddenly turns bad? Is it fair
to charge them back for a situation that clearly was out of their control?

Mocas: I take responsibility for the end-user bad debt, but I don’t want to pay
commission for that usage on top of the bad debt. I’m not going to pay the sales
commission on somebody who doesn’t pay their bill.

Lane: He bills back the commission …

Mocas: I basically pay commission on a 45-day cycle. If it becomes bad debt in
90 days, I’ll charge back the commission I paid to that agent, not any of the bad debt. I
think that’s fair.

George: Very fair.

Titsch: We’ve talked a lot about the agent channel in the past but not much
about direct sales. Most people say it’s difficult to find direct sales talent. Are you
having difficulty finding direct salespeople? And what do they cost these days?

George: As I said earlier, we have a few agents, but the bulk of our business is
sold through direct sales. That’s how we’ve built the company. Wanting people and getting
people are two different things. You get these resumes, look them over, find out the
candidate was let go or embezzled from his former employer. You say, "God
almighty!" Then again, I’ll run ads for five months and nothing happens. And
suddenly, out of the blue, they just hit, and you get some good ones.

Sometimes you’ll sit down with someone who thinks he or she knows everything about
telecom and wants a $45,000 base plus commission. In those cases, I say, "thank you
very much" and see them to the door. Generally, though, I’m hiring entry-level
salespeople at an $18,000 to $25,000 base. Now that’s in Knoxville, Tenn., which is
different than going to Atlanta or New York or something.

If the candidate has sales experience–even if it’s outside of telecom–you have to pay
more because everyone and their mother wants good salespeople. But it helps if you have
several people in your company who are making really good money because then you can paint
a picture of the job’s potential.

Titsch: Skip, where are you finding people and what are you doing to attract
them?

Lane: It depends upon the level of the person you’re searching for. You can hire
people with copier or fax sales experience for reasonable salaries. General business
telecom people in a major market like [Washington] D.C., Boston or Atlanta cost a
significant amount of money.

It’s a budget issue. Can you afford to pay major account people? The market might be
$50,000-a-month base salary with a quota of $7,000 or $8,000 a month. A general business
telecom base might be $28,000. Obviously, you’ve got to consider your product line. Are
these people going to sell Internet? Frame relay? Web hosting? Long distance, T1s,
point-to-point data, yada yada, yada … There’s not many people out there who can sell it
all. So you might have to home-grow ’em.

What are we doing to find them? Everything. Recruiters. Word of mouth. The best thing
that we’re doing is paying recruitment fees to our own employees, instead of paying
headhunters. We’ll pay recruitment fees to people in the industry. People outside of our
company but in the industry are sending us recommendations for carrier salespeople because
they know we’ll pay them $3,000 and even $5,000, depending on the level of the job.

We do the same thing with agents. When we’re at a show, we post a sign that says we’ve
got a check in the amount of $12,500 for people who bring us agents who produce.

George: I’ve got that sign right here and I’m ready to do business. (LAUGHTER)

Lane: I guess what I’m trying to tell you is that there are no limits when it
comes to finding good people. But you have to work it.

Burk: I think we’re talking about one of the biggest challenges we all face
right now: getting people who aren’t necessarily salespeople, but who can sell to the end
user with a consultative approach. And I think these guys should also sell hardware. You
want to hook that customer with everything.

Lane: That’s tough, though. It’s difficult enough to find someone with even a
little experience in telecom, and then training them on just the network services side. If
we had to go and train them on equipment, too … on the different types of routers, phone
systems, etc. …

We’re finding that it’s better off to partner with interconnects because they’re great
strategic partners. The problem is that people who sell the boxes and hardware have a
different mentality and a different mindset than people selling service.

Titsch:It’s a different sell, but can you have different account teams that
can go in separately and together?

Lane: Yes.

George: Well you’re talking about a tangible and an intangible product, too.
When they’ve sold equipment, they lay it down on the table, sell you the bells and
whistles …

Lane: The best example of that is … Executone [Information Systems, Milford,
Conn.]. They have a team selling hardware and phone systems, and they have a network
services team that comes in and follows it up with that portion. It’s a tag-team approach
under the same corporate umbrella. But it’s a challenge.

Mocas: It’s hard enough to get the network sale with a single salesperson
dealing one-on-one with a customer.

Mustad: I do business primarily with interconnect companies, and I’ve found over
time that with good service and follow-through–to both the interconnect and the end
user–you develop a partnership that’s difficult to breach in terms of a competitor coming
in and taking the business away.

Interconnects are great partners because they’re already out there talking telecom and
their customers pay their bills. So you have a bundled package with less attrition and
less bad debt.

Titsch:Not a bad thing.

Mustad: Not bad at all.