E-Channel: E-Markets Empower Buyers with RFQ Process

Posted: 11/2000

E-Markets Empower Buyers with RFQ Process
By Bruce Christian

Having the right to choosewithout being subject to high-pressure, faceless
telemarketers or one-on-one meetings with agents desperately seeking salesgives
power to the buyer.

Empowering buyers with choice is integral to the request for quotation (RFQ)
process now commonly used by multivendor e-marketplaces.

"RFQ is the process by which you define your needs in some detail, so
service providers can look at those needs and propose service that meet those
needs," says Mark Mansour, founder, president and CEO of Portland,
Ore.-based TelecomSmart (www.telecomsmart.com).

As Internet e-commerce grows in popularity, providing buyers options will be
more necessary to earning their business. That is where the RFQ process may
become vital.

Graphic: Example of TelecomSmart’s Screen

Mansour explains with the RFQ process, buyers choose the telecom products and
value-added services that custom fit their needs. Those needs are defined when
they fill out the RFQ, or a request for proposal (RFP).

Once the needs are known, the database of providers spits out all the
available options within the buyers’ parameters.

"What we try to do with the RFP process is understand the wants and
needs for existing service and future service," Mansour explains.
"From answers to five to 10 questions, we project out and plan out what
their needs are and what they may be in the near future. It is like a diagnosis
process."

But the diagnosis is only as good as the information provided. Just as a
doctor cannot prescribe medicine if you aren’t honest about your ills, e-channel
distributors using the RFQ process can’t offer the right service options if you
don’t explain what you need.

"If you get good answers, you can fit the customer into a certain type
of program and propose a solution," Mansour says.

TelecomSmart’s executive vice president of marketing and strategic
development Ed Heichemer explains, "The key thing is really giving people
the opportunity to explain what they need through the customer profile.

"In a more sales type of environment, you may be limiting the
messages," Heichemer says. "In small businesses, you don’t often get
the face-to-face meetings. You often get telemarketers who are calling with the
idea to sell you on a particular plan. We are about choice. We give the power to
the consumer. It is about full disclosure."

Creating good questions for the RFP/RFQ process requires an understanding of
who the customer may be in the first place. In TelecomSmart’s case, it is the
small business.

"By nature, their needs are a little less complex, Mansour says.
"That is the key to figuring out the right questions."

Company employees who have worked previously in product management for
service providers and have interfaced with the sales channels helped write the
questions.

Each question is surrounded with "really good, explanatory text,"
Heichemer adds. "We try to make it very clear. It’s a very simple
document."

Mansour says, "We do all the legwork. We do the presale and the due
diligence. When you answer the questions and we submit them, what happens
technically is a reverse auction in our system."

Once the database provides the appropriate options, "We come back to you
with a list of plans that meet those requirements," Mansour says. "We
will give you all the important features of the plans and a side-by-side
comparison. Now it is in your hands. You have to then figure out which is most
important to you."

The buyer sees the choiceswithin secondsin a simple-to-read matrix that lists
the companies, their services and pricing plans side by side, so the decision
can be based on comparing apples to apples, Heichemer says.

Once a decision is made, the "fulfillment" process begins. The
provider is contacted and provisioning can begin, unless the provider needs more
information from the buyer. This electronic process can reduce by weeks, even
months, the more traditional selling process the industry has followed.

While Mansour agrees the process could become a threat to direct and
alternative agent channels, he suggests more forward-thinking agents are
learning how to adapt their sales methods.

Heichemer adds, "But in some cases you can’t teach old dogs new tricks.
This is evolutionary. These types of tools are out there and available, but they
have to learn how to use them.

"We are on an education acumen curve. As time goes by, more and more
will become more comfortable with the technology, but there still is part of the
population out there that will want to engage in the face-to-face
meetings."

Heichemer also says he believes those meetings may be numbered because of
economics.

"There is tremendous cost associated with sales that involve
face-to-face meetings," he explains. "As costs continue to increase
and margins decrease, it will get more and more difficult to justify sales
forces."

Still, Mansour believes agents always will be needed.

"Some of them will go by the wayside, but I think a lot will hinge on
the way you do business. One of our business models is to engage the agents. We
want to embrace them and bring them under our umbrella. We want them to be part
of the party."

The fact that service providers have embraced the new channeleven if a
service or price may look bad next to a competitor’sis a testament to its
effectiveness, Mansour says.

"When we first started out, some of them did have concerns, but most
decided that if they were going to compete, they would have to compete on the
merits of their brand. They know they are not going to get every customer, but
it is important to compete."

Heichemer adds, "They realize the benefits far outweigh the negatives,
because they really get another distribution channel."

Telephone.com Inc. (www.telephone.com)
vice president of sales and marketing Patrick Horvath says the end user can save
anywhere from 25 percent to 50 percent by using the RFQ process.

"Anytime you are involved in an equipment auction, anything can
happen," says Horvath.

But he adds the buyer really becomes dependent on what the carriers offer.

"When you fill out the RFP/RFQ, they are bidding back on your
business," Horvath says. "But if you are serious about making a quick
buy, we can call it in and give you information you need within minutes. Now not
everyone responds immediately."

Not everyone in the industry or in the e-channel agrees the RFQ process is
the way to go. TeleBright.com vice president of marketing Kristie Hughes simply
says, "We don’t think it will work. With RFP/RFQ, customers don’t know what
providers will respond. We believe that telecom services are natural for being
displayed online."

TeleBright represents more than 70 service providers online and can show
2,700 different telecom plans to potential buyers.