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What Are the Primary Agent Business Models?

March 9, 2009

6 Min Read
What Are the Primary Agent Business Models?

By Khali Henderson

There are several types of agents, including master agents, subagents, independent agents and referral agents — each one implies a business model in and of itself. However, there also are a number of different ways you might choose to deliver your services. Following are some of the more common of these, grouped into general categories and subcategories. In completing this exercise, we have chosen descriptive labels that may or may not be commonly used in the marketplace. Nevertheless, the basics are sound. Your business model most likely will be a mix of several of these approaches.

Contractual

The business model you select will be framed somewhat by the nature of the contract you have with your suppliers as follows:

Master Agents sign volume commitments with the service providers, usually in exchange for a more attractive compensation package. As a master agent, you also agree to manage sales and orders from subagents. This model typically requires an investment in a back-office system and staff to support a large subagent network and a large vendor pool.

Independent Agents sell under direct contract with a carrier or service provider. They may be a solo practitioner, but may be a fully staffed company. You are responsible for the sales and marketing and, often, customer service support for your clients. As a direct agent, you typically are required to meet quotas for your suppliers, so you may also become a subagent of a master agent in order to add more carriers to your vendor pool without the volume requirements associated with individual suppliers.

Subagents sell under agreement with a master agent and have access to all the suppliers with which the master agent is contracted. As a subagent, you do not need to manage your own carrier agreements, but you also will share the commission on your sales with the master agent. Depending on the master agent, you also may or may not have responsibility for customer support.

Exclusive Agents sell for only one carrier usually in exchange for preferential compensation and/or support. You might choose this model if you are selling carrier services along with another technology solution, but don’t want to be an agent as your primary business. This might work for you if you are a PBX dealer or are focused in a particular region. Some resellers and master agents, that represent multiple carriers, also offer exclusive contracts. Master agents can be exclusive to a carrier, but typically represent a large number of providers.

Non-exclusive Agents, then, sell for multiple carriers, resellers and/or master agents. The upside of being non-exclusive is that you can provide multivendor quotes; the downside is that there may be volume commitments for each supplier with which you have a contract.

Referral Agents hand over leads to carriers, master agents or other agents in exchange for a one-time bounty. They are loosely affiliated with the vendor and sometimes are called affiliates. They have no sales or support responsibilities.

Authorized Agents, or registered agents, are those that are formally recognized by the vendor they are representing. Not all vendors use this terminology. There may or may not be formal training or vetting required to earn this designation.

Certified Agents are agents that have passed certification testing to provide services on behalf of the vendor. Usually they receive some preferred level of support and/or compensation. Not all vendors use this terminology and not all of them have a certification program.

Transactional

At their core, agents are salespeople, so some of the basic business models can be classified as transactional.

Marketers spend most of their time marketing and selling and virtually no time managing the customer environment, a task they leave to the customer, master agent or carrier. Subagents tend to fall into this category. They are paid the agreed commission for the transaction when closed or installed, depending on the contract.

Lead Generators typically set up Web sites where potential customers can get multivendor quotes on services. Unless the service is easily ordered and provisioned over the Web, these leads are then followed up by the agent, or in the case of a master agent, distributed to a subagent. They are paid the agreed commission for the transaction when closed or installed, depending on the contract.

Referrers/Affiliates simply refer business to vendors either by word of mouth or through banner ads on their Web sites. Closing the sale is left to the vendor. They are paid a one-time bounty on the transaction if it closes. This model is employed most often by companies that don’t want to learn to sell a new service, e.g. a PBX dealer that doesn’t want to sell carrier services, or by someone who is not in the industry at all but comes into contact with potential customers.

Consultative

The business model also will be impacted by the method of service delivery. Here are some common ones that employ a consultative approach.

Telecom Consultants, as the name implies, provide an analysis of a telecom environment or problem and make recommendations for products and services that will address the client’s needs. They often will be instrumental in preparing RFPs and in securing quotes from suppliers. While the term “consultant” normally implies a vendor-agnostic party, many commissioned agents also provide consulting services. These may be paid for by the client or underwritten by commissions from services booked with the agent. Agents claim a degree of agnosticism by virtue of quoting multiple providers or even a multivendor solution.

Solutions Providers is another term for agents that specify and recommend multivendor, multiservice solutions to clients. Again, this advice might be paid for by the client or underwritten by commissions from services booked with the agent. Note: The term solutions provider also is used in the hardware/software market by VARs and systems integrators to describe someone who similarly provides multivendor, multiproduct solution. Increasingly, it is viewed as someone that provides solutions that combine services, hardware and software.

Auditors approach each account with the proposal to audit the telecom environment. This generally is a reconciliation of the inventory (lines/circuits) and the rate plans contracted against the monthly billing. This service can be performed for a fee, a portion of the savings or underwritten by commissions from services booked with the agent. Auditors also are known as consultants.

Managerial

Other business models employ an ongoing or “managed” services approach.

Telecom Expense Managers, similarly to auditors, propose an audit as well as ongoing expense management. Usually, this process is automated to some degree through telecom expense management software. This ensures that charges are correct and allocated to the correct departments.

Telecom Lifecycle Managers go beyond reconciling billing statements to managing procurement, rate plans and devices down to the individual user level. This is particularly suited to wireless services.

Project Managers are engaged to manage a specific implementation, e.g. setting up a colocation facility or data center. They can be paid by the client or from commissions from services booked with the agent.

Telecom Managers perform the same services as a corporate telecom manager, but on an outsourced basis. This typically involves ongoing and proactive monitoring of the facilities, and troubleshooting and help desk services for the customer’s end users. They can be paid by the client or from commissions from services booked with the agent.

Looking for more information on getting started in the telephony business? This article is from the PHONE+ Fact Book, The Telecom Agent’s Go-To Guide. This compilation of advice, tutorials, glossaries and best practices from the editors of PHONE+ and other contributors provides basic information on how to become an agent and how to build a business. To download your free copy, click here.

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