Peer-to-Peer Blog: The Cost of Channel Conflict

J.R. Cook, Vice President Agent Channel, New Edge Networks

First I want to say how excited I am about being selected to the Channel Partners Advisory Board. This years board has some big shoes to fill, but we are committed to doing the best job we can. For my first blog, I want to raise the issue of channel neutrality.

Ive been on the carrier side of the telecom industry for 15 years, and the majority of that time has been with the agent channel. Before joining New Edge Networks, if I were asked who my biggest competition was, my response was always “the direct channel.” While accurate, this concept always bothered me.

Rather than getting bogged down in channel conflict, time and energy should be focused more on ensuring our value proposition positioned us as the leader against our true competition.

Often times, when raising the issue of channel neutrality to senior management, a typical response was that it was an expensive way to do business. My response to that was that allowing a direct rep and an agent to compete for the same business drives down margins and puts the customer in the middle. We all know the story.

Often, it is the customer who actually is the instigator in this situation. The customer gives a direct rep a copy of an agents proposal, which the agent has communicated is the best offer” so as to maximize the carriers earnings and as a result their commission. Thats where the battle begins! Both sides get trapped in a bidding war, resulting in every promotion and special pricing being offered to the customer to win their business, and at the same time quickly chipping away every penny of margin from the carrier.

Worst of all in this scenario is the customer experience. The customer gets caught in the middle of this battle, where both channels take turns telling him why he should not do business with the other channel. A customer will hear everything from, “That rep will not be with the company six months from now,” to Agents have no power to assist you when you have issues.” The situation damages agent relationships, the direct rep still does not make quota, and I have to be escorted to my car to protect me from being attacked by the direct sales manager!

Can’t we all just get along?

New Edge has found a creative solution to this issue with our channel-neutral philosophy in which our direct reps and agents partner to win a customers business. This approach protects the customer relationships and the companys margins.

J.R. Cook joined New Edge Networks in August 2009 as the first vice president with sole responsibility for the companys agent channel. With more than 13 years of experience managing agent channel partner relationships, Cook leads the formation of a dedicated agent channel by fostering relationships and placing importance on growth from agent partnerships. Previously, Cook was vice president of premier accounts for TelePacific Communications after working as a director in its Telepartner channel. He was also key in building the agent channel for Mpower Communications, which was acquired by TelePacific in 2006. He also is a member of the 2010-11 PHONE+ /Channel Partners Conference & Expo Advisory Board.