Success by Association

Posted: 07/1998

Success by Association
The Association Resource Group Is Powered by Superior Customer Service

When William H. Power and Gregory J. Praske met 20 years ago they
were two cocky college grads. That encounter turned into a friendship that would outlast
many marriages and evolved a mutually profitable independent telecommunications agency.

On the surface, they appear an unlikely pair. Not exactly Abercrombie and Fitch, but
not quite Laurel and Hardy, either. Praske, an accountant by training, is the analytical
one. He studies–perhaps too much–but always weighs his hard-thought findings with keen
intellectual skills. Power, on the other hand, is quick to his findings, the one who goes
with his gut if the situation feels right. According to Power, it is their
dissimilarities, not their similarities, that steady the equation and produce the right
results.

"In most situations, we balance each other," he explains. "Because on
the surface, we’re very different. Greg’s strengths are my weaknesses and vice
versa."

The pair met at the National Air Transporta-tion Association (NATA), a lobbying group
for small charter airlines. After more than 14 years there, in 1991, they left to fulfill
their own vision. They formed the Association Resource Group Inc. (ARG), a McLean,
Va.-based company that provides a wide variety of telecommunications services to the
headquarters of national trade and professional associations.

"We did a lot of research first," says Praske, who serves as ARG’s chief
executive officer. "We realized that associations had a great interest in producing
income from non-dues-related activity, things that would not further tax their membership.
Their problem was that associations had no ideas, time and, of course, money to deliver
these benefits."

From their years with NATA, Power, who serves as ARG president, and Praske knew they
understood how to provide associations with the service they needed while producing income
for ARG on the back-end. Telecom-munications was their ticket.

"We realized telecom had opportunities unseized," Power says. "The work
at the headquarters of most associations is very phone-intensive."

Switchless resale was in its early days, so ARG started an affinity program, putting
together a group long distance program for several associations. Since Power and Praske
were well-acquainted with the workings of the association world from their experience with
NATA, it wasn’t much of a stretch for them to approach these groups, most of which had
little or no telecom expertise. But, then again, neither did Power and Praske at the time.
So they hired a salesperson from one of the biggest long distance resellers of the time
and they started about learning their craft. While it took a long time to get comfortably
acquainted, says Power, they knew time was on their side.

"We knew we were in it for the long haul, and we made that very clear to every
association we talked to," he says.

The message got across. And it had substance at a time when long distance customers
were being assaulted by all sorts of hit-and-run tactics. Power and Praske preached
"hit-and-stick" as their pitch.

"It was simple: ‘Call us with any need you have whatsoever relating to
telephones.’ That’s what we tell people," Power says. "Phones, long distance,
broadcast fax, bills, teleconferencing. We’re here."

Today, the Association Resource Group represents 450 national associations, most of
which are headquartered in the Washington, D.C., area. Most are government contractors,
lobbyist groups or national associations. Counted among the members are the American
Petroleum Institute, American Pharmaceutical Association, Air Transportation Association,
Retired Officers Association, National Guard Association, American Occupational Therapy
Association, U.S. Energy Association and the Funeral Directors Association.

The Goal Remains the Same

The goal for Power and Praske remains steady: "Make telecommunications, which
offers more options today than ever, easy for our customers," Praske says. The key to
accomplishing this is in providing customer service like there is no tomorrow, he says.

Power and Praske say they learned a lot from the switchless resellers of the day. In
fact, they lured away key personnel from resellers and set about putting together a
customer care operation any company could be proud of.

"People are still so confused," Power says. "Every day they receive
offers promising to save them a ton of money. But the savings typically come at the cost
of customer service."

Customer service is what has made the Association Resource Group an enduring success,
according to Power.

"Churn is a huge issue in the long distance industry," he says. "Some
service providers lose 2 percent to 3 percent of their customer base every month, on
average. ARG, in stark contrast, has experienced less than 2 percent churn since forming
in 1991."

Bad debt also continues to riddle the industry, Power adds, yet ARG’s bad debt total
amounts to two accounts and $700 in its eight-year history.

No One-Call Closes

Part of the reason for this stellar record comes from the duo’s careful and concerned
courting of new customers.

"We do not believe in one-call closes," says Power of ARG’s customer
acquisition process. "It doesn’t fit our philosophy." Adds Praske, "If it
did, we would be like everyone else. That isn’t us."

ARG prides itself in its exhaustive approach to the market. This includes offering
prospective customers extensive options from various service providers. A full proposal
from ARG typically spells out several long distance provider options, including AT&T
Corp., Sprint Communications Co. and Frontier Corp., Power says. ARG closes business on 60
percent of all its meetings, he says.

Yet, no matter what option the association chooses, ARG responds with a single point of
contact for all business needs, whether or not it makes money for ARG, according to Power.

ARG is there for all sorts of customer questions. "If you need to know whether
your association would benefit from ISDN (integrated services digital network), how to
fulfill your Internet access needs, questions about modems, billing inquiries–we are
there to assist," explains Praske.

Aside from its 450 associations, ARG also represents hundreds of small businesses. This
has helped the company maintain 50 percent annual growth since 1991, Praske says.

Yet this remains a difficult time for agents.

"We’re sweating bullets from suppliers who sell out and leave us no
benefits," Power says. "It’s time for agents to get their fair share."

Toward this end, Power and Praske hosted a meeting of 12 successful agent
organizations, with a total of $7 million in monthly billing, earlier this year.

Their idea is to form a "20 Group" of telecom agents. According to Power, the
name and concept of their idea comes from the automotive dealer industry, where for years
owners and managers of 20 non-competing car dealerships have gathered regularly to share
information on resources, problem-solving and prospects. While involved in the aircraft
industry, Power and Praske implemented 20 Groups for aircraft dealers, so they knew the
concept could be transferred to another industry.

"We know that spending a couple of days every three or four months discussing our
business with other knowledgeable, experienced, successful telecom agents should increase
our profitability," Power says. "The small cost of meeting vs. the huge return
on ideas gathered makes this one of the most appealing business opportunities we have come
across."

Like the Marines in search for a few good men, Power and Praske are focusing their
sights on individuals who hold an equity position in an independent agency or who operate
an agency on a full-time basis as their primary enterprise.

Their inner circle must have at least $100,000 a month in billing and remain highly
involved with their customers after the sale.

"The work only begins when an order is turned in," says Praske.
"Now is an exciting time for top-quality agents. We believe there will be an ongoing
demand in the market for agents who can assist companies with the confusing array of
change that is occurring every day."

In September, Power and Praske will host a second meeting in Chicago. At least a dozen
parties are expected to attend, Power says.

"Opportunities are developing for realizing equity from the relationships we’ve
worked so hard to build over the years," Power says. "Our suppliers are likely
to come and go. With a little luck and some strategic planning, we can benefit in the
process. We believe our mutual success will be enhanced if we can leverage each other’s
knowledge and experience through participation in a 20 Group."

Two possible directions are ahead for the group, Power says.

"Either are wonderful," he says. "We’ll either continue as a traditional
20 Group, meeting and sharing information, or we’ll expand into a formal consortium banded
together to negotiate with suppliers."

Eye on the Customers

Whatever may happen with their proposed group, Power says things will remain status quo
at the Association Research Group. "We’re going to keep doing what we’re doing, but
doing it better," he says. "[Customers] would be lost without people like us who
deliver good service."

ARG makes a point of seeing all its customers at least twice a year, some as many as
four times, Power says. All accounts are reviewed twice a year, with an additional time
for larger customers. At these times, ARG suggests changes in the customer’s current
telecom plan that could benefit service and/or save money. This may entail moving to
another carrier or mixing carriers according to usage patterns, Power says.

With eight employees and perhaps a few more on the way, ARG’s future includes staying
very involved, according to Power. "Our challenge as we grow is to continue our high
standard of customer attention while broadening our service offerings," he says.
"We don’t want to become AT&T. We want to stay on top of changes in the local
service market, until the moment is right to add it to our mix."