Silence Broken: AT&T's Bob Sloan

By Tara Seals

They came. They merged. They became Americas largest phone company (again). And then the new AT&T Inc., the amalgamation of SBC, BellSouth and a number of smaller transactions, fell silent on its channel strategy for two years.

After months of promises, dealing with apologetic PR people and a half-serious threat to put AT&T on the cover with nothing but an empty chair at a table as the cover photo, PHONE+ was able to chat with Bob Sloan, AT&Ts channel head, in November. Its clear the sprawling RBOC-ish, cellco-ish operator is still working through some kinks, but what emerged in the conversation was a company deeply committed to serving its 800 some-odd partners, with a prismatic strategy thats tough to label.

Our strategy is to meet the needs of more businesses in the way that the customers want to do business, says Sloan, vice president of indirect and select segment marketing. We dont have a cookie-cutter model because that doesnt meet the needs of anyone be it customers, solution providers or us. People want to buy from us different ways, and we work to accommodate those needs through solution providers.

Doug Turpin, CEO at Venture Group Enterprises Inc. and an AT&T agent, says while the company has done a good job integrating, it still feels like AT&T is a collection of independent companies under common ownership. Each region still has their own unique components of the commission plan, their own provisioning group to work with and separate sales management structures, he explains. Its more like dealing with six separate companies, in that you work separately with BellSouth, all four former SBC regions, and then AT&T for data services.

That multifaceted reality is unsurprising considering the sheer scope of creating an integrated channel. AT&Ts program, fittingly dubbed the Alliance channel, combines former AT&T, SBC, BellSouth and Cingular partners and gives them a portfolio of wireless, IP and legacy products to sell. Meanwhile AT&T as a company continues to expand and roll out new services. The carriers channel partners, not surprisingly, vary widely in expertise and focus; there are geographically based generalists, local wireless dealers, IP-specialized VARs, nationwide master agents, former LEC-only reps and variations in between. There was no wholesale cutting or reassigning of partners during the mergers, explains Sloan, who would not disclose how many agents did get cut. AT&T reviewed where solutions providers were in overlapping programs, and evaluated each to ensure they were in the best segment to reach optimum performance for both their firm and AT&T.

With so many disparate elements in the mix, the company still is working to match sales approaches and portfolio expertise to client expectations, and that will translate into ongoing tweaking of the program structure. Were still looking for the best way to develop the markets, says Sloan. As customers expectations continue to evolve, we evolve the program.

Common Ground

The new AT&T bears little resemblance to the nowacquired companies that went before, Sloan says, and its bringing a fresh attitude to the channel. We see the Alliance channel as an enormous opportunity, says Sloan. We see it as an integral part of our strategy going forward.

The carrier has started by streamlining. Despite the complexity within the new AT&T, there are some generalities across the Alliance channel; partners all have the same core contract, for instance. Agents also say that while some sticking points remain, internal processes and account management largely have been improved vis a vis what the pre-merged companies had on offer. The remaining issues have to do with compensation and a general feeling among agents that AT&T needs to really prove its commitment to the channel.

One great stride is that the basic structure of the channel has been solidified. AT&T has a national partner program with centralized sales leadership that focuses on the midmarket and larger businesses. It also deploys field workers to work with partners when necessary. For instance, sales engineers and salespeople can help an agent put together an offer.

On the SMB side, the approach is regional, and partners must sign up in each area to be eligible for spifs and promotions. Distributed geographically, channel managers (Sloan declined to say how many) are scattered throughout the United States to support partners serving businesses with fewer than 250 employees within AT&Ts 22-state service area, and there is local staff dedicated to the channel to support those managers.

When it comes to support, the feedback from solution providers is generally positive. One of the things that surprises people is that they have been delivering on their action items, says Denis Raue, president at master agency Telegration Inc. They have really streamlined the order entry and provisioning process and theyre really doing a good job, except possibly in the global products area.

AT&T has implemented the Partner Relationship Model, or PRM, which contains documentation for all of the AT&T solutions, and eliminates the need for different regional databases or extranets. It also provides other tools, such as the ability to run reports on account activity, that streamline overall partner communication and make it more efficient.

It also has rolled out its Future Mode of Operations (FMO) initiative to nationalize the tools partners need to be more self-sufficient with design, pricing, proposals and contracting. It includes greater access to an enhanced training curriculum.

Normally during a merger you see a decrease in support, says Jay Bradley, president at master agency Intelisys Corp. In this case its gotten much better.

Meanwhile, to minimize channel conflict, Sloan says the direct sales team has responsibility for a customers total billing, whether that comes from the indirect or direct side. So the Alliance partners actually help direct reps reach their goal. We of course have some conflict, like anyone does, but Ive seen a better relationship here than most places, and a more collaborative and teaming approach, Sloan says.

In fact, conflict is more likely to come from AT&Ts approach to the master agent model and tiering, which is inconsistent depending on which former entity an agent is dealing with. This is one area that partners identify as needing work. There were no specific actions to roll solution providers under masters [during the integration], says Sloan. In some regions we leverage the master agent model more than in others, and other regions manage the model as a regular course of business to support the needs of AT&T and of our solution providers.

For instance, the SBC regions have a relatively flat commission structure, with performance bonuses, and Turpin says the model is not necessarily friendly to master agents, i.e., there is no master agent contract. The behavior they drive with their commission plan and operating structure is to [have smaller agents] go direct vs. be with a master, he notes.

Its a sentiment echoed by a former SBC agent who requested anonymity for this article. The problem with paying everyone the same amount is that theres that incentive for the smaller guys to circumvent the masters and go direct, he says. We can make 20 percent and pay subs 15 percent, and the subs see that as losing money, even though we streamline everything for them and save them time.

There are some areas where AT&T is doing everything right, agents say, and the former BellSouth organization is a standout. It has a tiered structure based on performance, so agents with larger volumes get a higher commission. They will let very high-volume agents like us develop our own in-house, Web-based platform to process orders from, says Turpin. This helps dramatically to ensure a smooth process. Their management structure from the top down is very solid, and they are open to new ideas on how to work together to create a better and more productive environment.

All regional programs also have the Circle of Excellence Program to recognize top performers with extra perks. The national program has no specific tiering, but does recognize top performers as AT&T Solution Provider Champions who receive added benefits. Weve developed compensation programs appropriate to the market to ensure what weve put in place is competitive, says Sloan, and weve worked to streamline the umbrella, core part of the contract so there is consistency.

He adds, There is flexibility to deal with the solutions providers that bring value by offering better compensation and contract terms.

Sloan is involved in AT&T-sponsored advisory councils of solution providers across the various segments of AT&Ts business, and the operator is continuing to tweak the programs structure based on the feedback the partners give. For instance, in a closed call for partners in the Midwest territory on Nov. 30, AT&T representatives said that a new contract for agents will feature a continued transition to upfront payment, with residuals offered only on certain legacy services. AT&T also has altered its performance rewards structure, agents say; rather than paying bonuses on an annual basis, the company will now pay quarterly. If a partner makes his or her quota for the first quarter and is paid a bonus, but misses the target for subsequent quarters, AT&T will not implement any chargebacks. Conversely, if an agent doesnt make, but reaches an annual target in the last quarter, he or she is paid the bonus for the entire year.

The quarterly bonus is huge, says Raue. It was never this lucrative, with AT&T paying bonuses for only 100 percent attainment [before], with quotas raised a nominal amount from 2007 numbers. Now, the commission budget for bonuses is uncapped for 2008 a first and that will allow companies that grow their business to be rewarded.

Work to Be Done

Despite advances in support and many good-faith efforts on the part of Sloan and his team, there are areas that still need work, ranging from compensation to account access.

For instance, AT&T still has protected accounts. An agent on the West Coast tells the story of a subagent that sold an account three years ago, only to return and find that it has been placed on the protected list. She cant sell this account anymore, even though she was the one that opened it up for AT&T to begin with, he says.

Meanwhile, Turpin says such policies are nonstarters in the long-run. In our opinion, it a strategic error that costs them a lot of business, says Turpin. It also makes it far more difficult to quote and order from them, as so many systems they have created are designed to check to see if an account is protected before an agent can even quote the service that this creates challenges that make quoting and ordering unnecessarily difficult for the agent and AT&T.

By way of explanation, Sloan says that everything is negotiable. In a few cases we have limited AT&T-only accounts, but we have a process in place to review available resources, both direct and indirect, and select the most effective model based on customer and business requirements, he says.

Renewal and evergreen policies (on which AT&T declined to comment) are another issue. One agent, who requested his name not be used in reporting this story, says evergreen commissions are non-existent, while renewals are hit and miss, and impacted by AT&Ts policy of giving upfront commission. The agent says that while the upfront commissions total a good sum of money, AT&T pays less on renewals than it would have had there been a residual relationship in place where the agent stays part of the account relationship. The rationale at AT&T is, they already have the customer when its time to renew, so they dont really need an agent to help them, he notes. You cant renew DSL at allthey say, Internet circuits dont usually get disconnected, so we dont need help there at all. He says such a policy is pretty typical of all the LECs, although Verizon pays both upfront and residual commissions (albeit substantially lower) on renewals (a result of pressure from former MCI agents, he hypothesizes), and Qwest pays the same for renewals as the original commission sum.

One last aspect of the program that some identify as needing work is the message of support for the channel. For instance, AT&T will be running background checks on all agents, in an attempt to minimize its risk exposure, and any agent with access to AT&T systems will be required to comply. What has rankled many, however, is the plan to have the agents pay for their own background checks. Its one thing to say they want to do this, its another to make us pay for it, says one agent. The checks cost about $50 per person, which for large sales organizations with plenty of turnover can translate into a sizable expense.

One agent said that the perceived commitment problem lies in the companys history. Because of constant compensation cuts during the SBC era, he is used to worrying about new changes and distrusting the company. They have a lot of work to do to get over that legacy of not working with the channel, when they were really trying to drive us all out, he says. Its a perception thing.

In contrast to the old days, the new AT&T is looking to grow its channel year over year, although Sloan declined to quantify the goal, either in revenue or in percentage of business. He did say that AT&T is looking to bring on more partners in the process. We are very interested in a solution provider that is interested in working with AT&T and enhancing the experience with customers, he says. We are actively looking and working to build those relationships with those with an ability to have good account management, processes, stability, so they can deliver on the customers expectations. We are fully committed to this channel and to increasing the value of it for partners.

Your Portfolio, Delivered

Beyond structure, the AT&T global portfolio is a key to making the Alliance channel work, Sloan says. Meeting customer expectations is a bit of a preoccupation for AT&T, so Sloan is making sure that partners are adequately conveying the brand message (think: Your World Delivered, a.k.a. a global, full-service provider with solutions for the smallest to the largest businesses).

To put its money where its mouth is, we are looking to expand the scope of the solution providers, Sloan says. As AT&T grows and we bring expanded VPN, expanded IP and other services to the table, we can differentiate from our competitors by having world-class solutions providers that can offer a full suite of offerings. That means local products from the SBC and BellSouth days, inter-LATA, long-distance, international and nationwide IP services from the AT&T arm, and wireless.

However, transitioning partners to an integrated portfolio is not without its challenges. There are products that are new to legacy program participants, and those products require education and learning from solution providers, Sloan says. Meanwhile, the industry itself has gotten more complicated. I see a much more professional channel than it was 10 years ago, adds Sloan. When you think about the portfolio, its much more complex. Ten years ago, IP was out there, but it wasnt the key component that customers were focused on, and now it is.

Sloan says customers still need local, long-distance and other basic services, but there also had been immense growth in optical products and Ethernet.

Other in-demand products include VPNs, VoIP and mobility. Integrated wired/wireline services, like cellular access to VPN data, are on the rise, says Sloan, who adds that AT&T has seen increased interest from VARs in its program of late. If you think about where middle-market customers have been focusing, its about the use of more IP and mobility. Those are critically important, and I would like to see solution providers get involved more so than they are today.

Wireless is, by Sloans own admission, one area where the integration is going slowly. While partners are allowed to sell the wireless portfolio, there is much work to be done in terms of surrounding support services for the channel. Turpin agrees. AT&T/Cingular has not yet understood the agent channel and how it can help them, he notes. Political turf battles about who gets credit for what services have prevented progress in selling the services through agents. Bell-division agents cant sell the cellular services through their existing contracts because the wireless arm will support only their existing commission levels. There is no margin for the Bell operating units to make in giving agents the service, and they are hobbled by internal rules about customer size agents can sell, he says.

Agents do say the merger has been a boon for those previously restricted to selling local services. Vince Bradley, president, founder and CEO at master agency World Telecom Group (WTG) says that AT&Ts new breadth of portfolio has rewarded legacy LEC partners.

To help the integration along, AT&T offers Webinars, ongoing training and product support specialists to focus partners on selling the full portfolio. The company has poured new investment into other services, as well. The AT&T Business Direct portal offers end users a guide to feature functionality, management tools, electronic ordering capability, and maintenance and billing options. Channel partners are able to roll out the portal for their customers as an added value.

We hope weve taken the best products from both sides and are moving forward, says Sloan. We moved fairly quickly to integrate, but still have more to do, and well continue to work with the mobility arm. But this is really exciting, the breadth and depth of the portfolio, and were excited about what the Alliance channel will be doing with it going forward.

All things considered, partners say that AT&T is evolving and represents a positive force in indirect sales. AT&T offers an immense opportunity, says Intelisys Bradley. This is a brand that sells itself, and as long as you as a partner provide an experience to the customer that matches that customers idea and expectations of AT&T, you will be successful.