Success By Association

By Khali Henderson

BILL POWER AND GREG PRASKE have worked together for 30 years. They spent 15 years building a professional association and 15 years nurturing their own brainchild, which has grown into one of the countrys largest indirect sales agencies.

Power and Praske worked together as key staff members at the National Air Transportation Association, a public policy group representing the interests of aviation businesses. As Praske put it, they caught the entrepreneurial bug, and in 1991, decided to go out on their own. Like many entrepreneurs, they stuck to what they knew and developed a business around affinity programs for trade associations located in and around their stomping grounds in Washington, D.C., Maryland and Virginia. Long-distance was just one among a range of services, such as insurance, marketing and credit card processing, offered by the newly formed Association Resource Group.

A few big contracts for association management services sustained company coffers for the first few years while its founders were developing their business strategy. Praske says he and Power soon decided they needed to narrow ARGs focus and chose telecom services as the platform on which to base their fortunes. ARG became an agent for Allnet in 1992 with the intent of selling the services to members of associations and providing a kick-back to the organizations. The plan quickly ran into trouble, says Power, when Allnet, a long-distance reseller, could not originate service for two-thirds of their first accounts board members locations. That was the first of many hard lessons, says Power.

Undeterred, Praske says ARGs focus shifted to providing service to the associations headquarters. The first sale was an AT&T SDN service to the Anxiety Disorders Association. It never quite got provisioned, and they got a little anxious and canceled, says Praske. Thats a true story, adds Power.

Despite the false start, the model turned out to be a good one and today ARG provides telecom services to about 1,100 of the 2,500 national associations located in the D.C. area.

We realized nobody cares about our ANIs more than we do, so we better do something to make sure this stuff gets provisioned, so that we get paid, says Power, recalling the challenges of 1992-1993. It was really from that genesis that we began a serious focus on our backroom operations.

This meant hiring professionals to help manage accounts through provisioning, including on-site supervision of the cutover.

What was missing in the market was somebody who was really advocating for the customer all the way from getting the account provisioned to watching over billing, explains Praske. Even back then, there was a pretty big hole in the market.

Identifying and filling that service gap remains the underpinning of ARGs business model, and its founders say its only become more relevant with the addition of telecom products. As we have evolved and the marketplace has evolved, we have added other products to the mix, says Power. For two or three years, he says, ARG focused on the then-lucrative switched long-distance market before moving into dedicated long-distance. Other services followed over the years, including conference calling, broadcast fax, Internet access, local dial tone, WAN and cellular.

ARG also expanded beyond its association clientele, and formally changed its name from Association Resource Group to ARG. It counts about 2,500 clients averaging 20-500 employees and operating in 6,000 locations. Revenue, says Praske, has grown more than 20 percent every year.

At the same time ARG was moving beyond its association roots, it also took a cue from that experience in its desire to organize other agents. Borrowing from the airline industrys 20 Groups, which assembled noncompeting dealers to discuss best practices, Power and Praske were instrumental in founding the Agent Alliance. The group now includes more than a dozen agencies that not only discuss how to run their businesses but engage in collective buying.

ARGs growth trajectory also includes a merger with Paladin Solutions Group in May 2005, to bring in greater telecom management expertise. Paladin was owned by CEO Steve Praske, who also is Gregs brother, and COO Jeff Jackson. The 6-year-old company had seven additional employees and provided PBX consulting and outsourced telecom management services to businesses. It also had been the top-selling of a select few subagents working under ARG. Over the past 18 months, the two organizations have integrated their processes. Praske and Power remain CEO and president while new co-owners Steve Praske and Jackson are executive vice president of business development and executive vice president of services, respectively. Our main job is to solicit our strategic business partners for leads, says Jackson. We are feeding the machine.

With the merger and more services has come more employees, the company is up to 34 a seven-fold increase over a decade ago. We have the same approach to business that we did in 1994, we just have a lot more smart people working for us now than we did back then and we are doing a lot more complicated implementations for customers, says Power.

Uniquely, ARG breaks down the sales/support cycle into functions that include separate practitioners or work groups for prospecting, selling new accounts, upselling existing accounts, bill analysis, proposal generation, technical design, provisioning, cutover and account management.

For any and all of these processes, its really our job to anticipate the needs of our customers, says Steve Praske. For example, ARG built a custom application to ping customer IP circuits every minute to monitor for trouble.

Another way ARG anticipates customer needs is through account managers, who own the customer relationship and are tasked with understanding the customers strategic objectives to make recommendations on how the company can support them.

Despite offering a consultative approach to account acquisition and maintenance, ARG remains funded almost exclusively by commissions. Only roughly 5 percent of revenue comes from outsourcing contracts. Company executives have no plans to charge customers for the agencys professional services.

ARG has grown steadily using this approach, and it expects a spike next year. 2007 will be a major growth year for ARG, says Greg Praske. We honestly believe now is just a golden opportunity for us. The major companies that previously were marketing heavily in the telecom space Verizon, AT&T, Sprint they are not nearly as present in the small-to-medium-sized business market. They seem to put their energies both up-market [enterprise] and down-market [consumer]. … So we see a huge opportunity right now to really go after it.

Specifically, he says ARG will double its sales force, which now numbers 10, by early next year. The company has a decidedly direct sales bias, maintaining only a handful of subagents that take advantage of ARGs back office. We have tried it to varying degrees, says Greg Praske, noting that ARGs focus on the back office and subagents focus on maximum commissions typically are incompatible. And besides, he says, the companys systems are not set up to handle hundreds of subs.

The officers of the company also have stepped away from day-to-day operations in order to focus more closely on strategy. Kathy Held, a five-year employee at ARG, has taken over operations as COO, and former MCI executive Laura Giadoni joined ARG in summer as vice president of sales operations. At press time, an offer had been made to bring in a wireless product manager.

What differentiates us is an incredible team of people that are passionate about exceeding expectations, says Steve Praske.

To me, and I felt this way before the merger, whats unique about ARG is its dedication. ARG has put together an excellent operation. It comes down to the people. They always want to do whats right for the customer and for ARG, says Jackson.

Nurturing that culture is a combination of hiring well and giving employees a voice, ARG execs say. We want input from these topperforming people, adds Greg Praske, noting monthly staff meetings and quarterly off-site retreats encourage such feedback. If you have people who are predisposed to performing at a high level and create an environment where they have a say, great things just happen.

We just get out of the way, Power adds. For ARGs founders, getting out of the way is perhaps their next challenge. Weve experienced what virtually every entrepreneur experiences watching their baby grow up and struggling with letting go, says Power. Im proud of the way weve handled that, and I think weve done as good a job as is possible.