Master Agent and Reseller: Negotiating Both Sides of the Fence

Master Agent and Reseller: Negotiating Both Sides of the Fence
In a preview to an article in the December issue of PHONE+, T@G spoke with John Cunningham, who know what its like to be a master agent and a reseller/CLEC. Cunningham helped found Business Communications Management (BCM) in 1992, starting the master agency as an outsourced telecom department for SMBs. The company grew into a virtual voice and data department, and when 1996 and the TRO rolled around, BCMs owners opened CLEC McGraw Communications. This month, Cunningham, CEO of BCM and president of McGraw, talks about what it takes to take control.
T@G: How many years have you been in the industry?Cunningham: Ive been in the industry since 1989. I startedwith a company called Centex Telemanagement. They provided a similar service that we provide under BCM, its just how they deployed it was through Centrex From the management side, I managed the New York branch; I managed the Boston branch, the New Jersey branch and then the Baltimore-Washington corridor district, at points in my career. The Centex sell was more difficult than our model under BCM, so we knew that if we could sell it and deploy it under Centex, then it would be a relatively easy transition to do this as our own business.T@G: What advice can you give to agents looking to become resellers?Cunningham: The first thing they need to do is take a hard look at where they want to be in five years. They need to identify their personal goals and then, secondly, they need to reach out to their distribution sources, their subagents, and see how those subagents are going to play into the model of them becoming a [reseller]. Who else are they dealing with? How tight are they with them? Again, once you become a reseller, now youre not a master agent, and those subagents may say, You know what? Why would I work with a new reseller when I can work with all these other existing companies So you need to make sure that your distribution doesnt disappear while youre worrying about your back-end issues.T@G:How do you keep that from happening?Cunningham:You reach out to these people and make them a part of it. You interview them and say, Okay, this is what were looking to do. Where do you see yourself fitting in? If you have 100 agents, you need to lock down your 20 best agents and in building your business plan, make sure [to] plug those revenue figures into your business plan.[Then] you need to research all the back-end functions. The customer service aspect will probably be the easiest one to overcome because these master agents are used to dealing with customer service issues with carriers, but they need to take the portals they presently use to track orders and make them true CRM packages. They should be able to do that relatively easily.Then they need to move to the billing functionality. They need to research [whether] theyre going to outsource the billing or do it in-house and the costs associated with it. Then they need to move toward the business side of it and get a very strong financial person who understands cash flow and collections. The average carrier collects close to 60 days out. Now, if youre a new business and youre contracting with the underlying provider, theyre going to want payment within 30 days. So youve got to be able to bridge that gap where your customers going to pay at 60 days, and the carrier wants its money in 30 days. In theory, you could sell yourself out of business if you dont have enough flow to cover that.T@G:What are the benefits of subagents being their own resellers? Is that goingto help the end user? How is it beneficial to both the agent and the end user?Cunningham: The benefit is in the personal relationship, and thats why its very important for the master agent to sit down with the subagents and find out what theyre selling. Right now, what all the large carriers are doing is pulling back their support. It used to beif you were a $5,000 account, you had an account manager and a retention person. Then it became $10,000, then it became $20,000. And now AT&T just let go of all their global people. And Qwest has let go of [some] of their sales consultants. That personal relationship is going to be critical. The big play now is everybodys interested in convergence and putting voice over their IP networks. If youre going into it as an agent you need to understand that space. [and position your company as one thats ] going to provide a lot of support for the agents who historically have sold on price.T@G:What are BCM and McGraws growth plans?Cunningham:We just took an additional 6,000 feet to make a big push into the convergence/VoIP space. Were filling that up with sales engineers and salespeople. We recently signed a large deal with Level 3 on the McGraw side. And were going to advertise more.