QBPP Changes Rile Agents

By Khali Henderson

Agents for Qwest Communications International Inc. are experiencing a bit of cognitive dissonance. On the one hand, they told PHONE+, they have been told by the Denver-based carrier that the Qwest Business Partner Program (QBPP) had record sales in 2008. On the other, the QBPP compensation plan and policies have been changed in ways they say will discourage them from delivering a repeat performance in 2009.

“They have taken a terrific program and cut the knees out from under it,” said one QBPP agent, speaking on condition of anonymity. Qwest agents are under nondisclosure restrictions regarding their contracts, so it’s rare for them to go on record about contractual changes. But several QBPP agents reached out to PHONE+ in an effort to shed light on what they perceive as an unfortunate situation they’d like to see changed.

One agent PHONE+ proactively contacted provided this statement on the record: “I made my disappointment very clear to the executive team at Qwest when I got wind of the upcoming changes for 2009,” said Ted Schuman, CEO of master agency PlanetOne Communications. “Qwest is certainly entitled to do whatever they feel is necessary to keep their channel solvent and liquid, but that doesn’t mean we have to continue to support it or agree with it. And, I don’t agree with their changes for the 2009 calendar year.”

Qwest did not respond to PHONE+’s specific questions about the nature and drivers behind the contract changes, but provided the following statements:

“The Qwest Business Partner Program is Qwest’s industry-leading business partner program that is designed to reward partners that offer Qwest services to end-user business customers,” said Tom McGrath, vice president of alternate channels. “We continue to evaluate how we work with partners to bring value-added business solutions to businesses nationwide, and that includes the appropriate mix of compensation to run a smart, effective program.

“Qwest continues to evaluate operations across all business units, including QBPP, to ensure both resources and costs are aligned to meet customer expectations, company objectives and return to shareholders.”

Teresa Taylor, executive vice president of Qwest Business, added: “The Qwest Business Partner Program is important to Qwest, and an important piece of Qwest’s overall goal to perfect the customer experience. We give careful, thoughtful consideration — especially in today’s economic climate — to how the compensation plans, both on the direct and channel side, drive the right behavior and bring the right technology solutions to businesses nationwide.”

Compensation Changes. According to confidential Qwest documents obtained by PHONE+, Qwest made several key changes to its QBPP compensation plan, effective Jan. 1, 2009. One of these was to lower the compensation percentage on renewal and conversion orders by 2 percentage points. So, if a Premier Business Partner is making 14 percent commissions, he now makes 12 percent on renewals and conversions, for example.

On top of these cuts, all renewal and conversion orders for local services are ineligible for commissions if the partner is not currently being compensated for existing services being renewed or converted. Since nearly all in-region prospects subscribe to Qwest local services, this directive effectively prevents agents from soliciting in-region customers, agents claimed.

“Qwest is shooting themselves in the foot by not letting us talk to these customers,” said one subagent — again speaking anonymously. He explained that many Qwest subscribers are not under contract and are vulnerable to poaching. “Now, I might as well take them to a reseller,” he added.

The Western U.S.-based agent conceded that some partners were abusing the opportunity to get paid on accounts that are already on the Qwest network. But, the agent added, it’s hard to avoid.

“Almost every company has some Qwest,” the partner said.

These scenarios are further complicated by orders that fit multiple categories, such as new and renewal, the agent said, claiming polices on compensation eligibility seem to have been implemented arbitrarily in the first few months under the new plan.

Another change to the 2009 QBPP program is that sales made through a Channel Integration Engagement (CIE) are now subject to a 10 percent reduction in commissions.

Finally, Qwest is no longer paying spiffs on deals sent to the Qwest Referral Program to be worked and provisioned.

These changes are not the first for the program. In 2007, for example, Qwest cut in-region commissions from 15 to 14 percent and it also set up a new quota program requiring agents to meet $18,000 on a three-month rolling basis or risk a 2 point commission reduction until quota is met.

However, agents told PHONE+ this new round of amendments might send agents packing. “Previously, they gave back to you in performance bonuses to offset the cuts,” said the Western U.S. agent. “Now, it’s just cutting.”

Agents claim the situation is even worse than what’s on paper, alleging internal policy changes that pit direct and indirect sales against one another.

Agents’ Response. “The only form of reciprocity and the only way for agents to get the attention of the carriers is to simply stop selling for them. Remove them from your portfolio — period,” said one large QBPP partner on condition of anonymity. “You can complain, you can write letters, you can send e-mails, you can voice your dissatisfaction to channel managers. I encourage all agents to do that, but at the end of the day if you do all that and continue to sell for them, you have no credibility.”

The partner added the agency is reviewing every account that’s coming up for renewal and evaluating its options for moving accounts to carriers where the revenue is “safer.”

The Western U.S.-based agent also admitted: “I don’t send them near the business I used to.”

This is great news for other carriers, particularly Denver-based Level 3 Communications Inc., which this year decided to put the pedal to the metal driving its CLEC products. In the West region Level 3 likely will be a primary benefactor of the fallout from QBPP policy changes.

For agents, moving accounts isn’t what they had in mind, but given the Qwest contract restrictions, they said it’s their only option. Qwest’s agreement gives Qwest the right to “modify services, the prices of services and associated commissions” upon posting to the Q. Partner Web site, or essentially whenever they want.

“Qwest has always had a good channel, but a lopsided contract. Now they are using it to their advantage,” said the Western U.S. agent.

QBPP leaders — Tom McGrath and Sandy Spencer, regional vice president of sales for QBPP, specifically — were complimented by partners as channel advocates. (McGrath was a finalist for the Channel Executive of the Year two years running.) “It’s the people above them that don’t get it,” the Western U.S. agent said. The subagent added: “There’s a disconnect between the channel managers and the executives. They know the problems, but the messages up the chain are getting cut off.”

Specifically, some partners are pointing a finger at Teresa Taylor, the new executive vice president of the business markets group. Taylor replaced Tom Richards, now COO, in August 2008. Whether she originated the policies or is simply a convenient target is unclear. Qwest declined to comment on the specific circumstances surrounding the compensation plan changes.