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TEM: Agency Friend or Foe?

Channel Partners

August 3, 2007

9 Min Read
TEM: Agency Friend or Foe?

By Dan Baldwin, director of sales ATEL Communications Inc.

When did managing telecom expenses for our clients become a new thing? From 1990 through 2002 I worked both as a telecom account executive and as an independent telecom agent. For 12 years I pretty much did the same thing promised small business owners that I’d help them make sense of their phone bills if they purchased their telecom services through me. I took a break from telecom agency for five years and when I returned this year I discovered that what I used to do for customers has a new name telecom expense management or TEM.

When I asked around about the new name I was quickly informed that telecom had changed quite a bit in my absence. Many telecom sages I knew shared the same tale. “No one can make money selling telecom to small businesses any more. Everything’s upscale now. You gotta sell TEM to enterprise businesses to make any money at all!” I was awestruck. I was amazed. I was a little worried. All I could think was, “What’s an enterprise business?” (I searched Google when no one was looking and learned that enterprise businesses are businesses with 250 or more employees. Why don’t they just call them “large businesses?) “Who cares?” I thought to myself. I figured I’d just go back to doing what I was doing before.

I Can’t Do This For Free

What I learned first as a “start over” telecom agent is that I could still do what I used to do help call center customers manage their telecom expenses. What I learned second is that the margin in helping call center customers manage their telecom expenses as an agent had all but disappeared in five short years.

I was fortunate to win two old call center customers back right away when I became an agent again. But while my call center customers were still making the same number of calls as they used to, four-digit billing, six-second minimums and severe price erosion had removed 90 percent of the commissions I used to make. Where I used to bust my butt for my customers and earn $10,000 a month in commissions I was now able to make just $1,000 in commissions.

Telecom agency used to be so cool. “Who screwed all this up?” I wondered. I can’t give my call center customers the same amount of consulting I used to and earn just 10 percent of what I used to earn. I can’t do this for free.

Dude, You Gotta Charge ‘Em!

One of the “old sages” I consulted as I re-entered telecom agency was Noel Huelsenbeck (who is actually younger than me.) Noel is the president of Vocio, a San Diego-based telecom agency that has fully embraced TEM but only for those businesses who understand the value of having their voice and data network service invoices professionally managed. To manage the telecom invoices of Vocio’s enterprise customers Noel actually developed his own TEM software in-house so he and his employees could graduate from tracking customer invoices on Excel speadsheets to something more manageable.

In studying the evolution of telecom expense management himself over the past several years, Noel determined that telecom agents could not expend unlimited management resources tracking customer telecom invoices unless it was guaranteed that the margin earned from a TEM customer covered all the TEM costs the telecom agent incurred to managing the customer’s bills. “Dude, (Noel does say ‘dude’ quite a bit) back when we were all making more money than we could spend it didn’t matter but those days are gone forever. Now you gotta charge ’em for managing their bills every month!”

The Top Secret Formula for TEM

There are three types of TEM agents those who make money at it, those who don’t make money at it and those who don’t TEM yet. I fall into the middle category I’m TEMing for my call center customers, but not at a profit that’s making me happy. Most of the agents I know don’t TEM yet the idea of charging for their bill reviewing duties instead of just being happy for the sales commission they’re earning is still quite foreign to them. I’ve met many happy TEMers though and they all share a similar vision they feel they’ve come up with a workable formula to charge their TEM clients enough to ensure a reasonable margin above and beyond the agent’s variable and fixed costs for performing the TEM work.

Of course none of the happy TEMers had the slightest interest in sharing their formula with me. Why would they? Everything you read about TEM suggests that the TEM software does all the hard work. Nothing could be further from the truth. Humans do all the hard work. It takes lots of humans and lots of brains to make sure the telecom bills are properly imported into the TEM software and analyzed to create actionable management reports for the TEM clients. TEM is nothing if not labor intensive, and nothing on the planet is as expensive to a business as human labor. Any entrepreneur that has come up with a TEM price formula that comes close to guaranteeing a reasonable margin after all the labor is covered has indeed invented a formula that needs to be kept “top secret.

(All I have been able to divine of the top secret formula is that it takes the total number of invoices and multiplies it by the total monthly dollar amount of all the customer’s invoices and then divides that number by the number of black cats owned by the TEM client’s owner or something like that.)

Is TEM a Friend or Foe of Telecom Agency? It’s Both …

Noel’s right when he said, “Those days are gone forever.” I can want the old days to return but all my wanting is in vain. As much as my call center clients love my consulting, what they want trumps what I want. And what they want is to know they’re getting VERY competitive telecom rates. So did TEM create the price compression that stole all the commissions or is it the other way around. It really doesn’t matter. What does matter is that larger telecom customers still want and need someone to manage their telecom expenses for them – they just want to do it at what they see as a fair and reasonable price.

The value proposition from telecom agency in the early 90s was pretty easy for a business owner to understand. They were paying Ma Bell 20 cents a minute for long-distance and a telecom agent would give them the same minute for 15 cents. Twenty-five percent savings is value that’s easy to understand. The easy savings, though, are long gone. So what’s the value that a telecom agent brings to the table today? In the absence of other clear value propositions it appears that telecom agents are down to TEM. (There are a few other clear value propositions agents can bring, like original telecom application development or partnering with equipment providers during their equipment sale, but those opportunities are hard to come by for most agents without existing connections.)

My prediction is that telecom agents without another “value trick” will find themselves adapting TEM into their business model or competing against the TEM business model adapted by other agents. So what’s a non-TEM agent to do once they decide to start down the TEM trail?

Follow the Leader

There’s really no point (and likely very little profit) in going out into the telecom marketplace with the intention of building your own TEM business model. A thousand TEM entrepreneurs have already weathered the TEM marketing storm before us, and several dozen TEMers have actually survived the storm to show the rest of us how it can be done profitably. All successful TEMers seem to agree that the starting point in selling TEM as a service is to start with a prospect list of large businesses, businesses with 1,000 or more employees, businesses that spend $25,000 a month or more on telecom services.

Since these large TEM business prospects are bigger than the prospects most agents are used to pursuing, it makes sense to start out by working with a TEMing business that’s been TEMing successfully for a while until you learn the ropes. (Especially since TEMing large businesses is going to take a lot of labor and some sophisticated software to hold the telecom invoice information that the TEM customers want tracked.)

Most agents are not in a position to hire a bunch of telecom bill crunchers or license expensive software unless we already have a couple large clients who want their invoices tracked better. What most agents are in the position to do is learn a TEM sales pitch and go TEM prospect hunting. If you’re serious about giving TEM a chance to make you some serious money then you need to interview the successful TEM practitioners who are taking on agents and then do what they say you need to do. “Call these types of prospects with this sales pitch and try and get a phone appointment with this job title.”

Free TEM Prospect Leads & TEM Resource Page

To help TelecomAssociation members and TA TEM vendors, TA will provide TA members with pretty much all the free TEM prospect leads they can call on. TA subscribes to several lead sources and will happily provide TA members with leads of businesses in the TA member’s marketing area that have 1,000 employees or more (or any other lead list that the TA member needs). The only catch is that the free lead request has to be routed through one of TA’s paid vendor members. So to get the free TEM prospect lead list from TA, simply pick one of TA’s paid TEM vendors, talk to the vendor’s agent manager about how you want to work their program and then have the agent manager request a list of TEM prospect leads for you.

In addition to free TEM prospect leads TA is creating and will maintain a TEM resource page that TA members can access from the TA home page at www.TelecomAssociation.com. In addition to listing all the TA TEM vendors with TEM programs for agents, TA will list TEM links and TEM sales stories as they are submitted to TA by TA members.

Dan Baldwin is founder of TelecomAssociation and director of sales at ATEL Communications Inc. Founded in 1985, ATEL is the largest NEC telephone equipment dealer in Southern California. Baldwin works with ATEL’s carrier services division that acts as an in-house telecom master agency to sell network services to ATEL’s embedded base of 2,000 phone equipment customers. For more information about ATEL’s carrier services division please visit www.ATELcc.com. TelecomAssociation is a membership organization founded in 1995 that serves the information & communication needs of its 2,500 members who distribute telecom and related services to businesses.

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