XO Unveils New Partner Program with 'No-Commit' Contract

By Khali Henderson

XO Communications Inc. finally is launching its revamped partner program July 1 with many of the elements the carrier’s new channel chief Shane McNamara previewed last winter as part of his “Your Business is Safe with XO” initiative, including contract protection for partners with $50,000 or more in billed revenue, performance-based tiers and a no-commitment contract.

“This is a brand new program. We are trying to remove the fear and uncertainty. We are trying to remove the metaphorical gun from the partners’ heads to sell or else,” McNamara, vice president — partner channel for XO, told Channel Partners.

The second objective is to create a program that is more fair, provides benefits for partners of all sizes, not just the largest ones, and provides the framework for partners to gain more benefits based on their performance.  The program is based on lessons learned from the Platinum Partner Program pilot in 2011.

” I would love every partner to do a half a million dollars a year in sales, but that’s not realistic,” McNamara said. “I don’t want the partner that does $50,000 a year to feel that we don’t appreciate it . …We are opening this up so all partners have a place to feel appreciated and welcomed within XO. Part of that is a commission change,” he said. “The new contract is a non-commit contract. It’s all based on performance and you get paid accordingly. The better you perform, the more you make.”

XO did not disclose the new commission rates, but some partners are likely to experience reductions as part of their assignment to a performance tier.

The new program includes five tiers: Silver, Gold, Platinum, Platinum Elite and Diamond. The qualifications and benefits vary for distribution partners (e.g. master agents) and direct partners in each tier.  All will be eligible for Club MVP, XO’s incentive program for top-performers,  based on their tiers plus additional benefits as they move up the stack.

Partners will be assigned to their tiers for 2013 by July 31. XO expects all partners to be on the new contract Oct. 1, which will begin the new year for the program. Qualifications for the 2014 program tiers will include revenue and sales for 15 months, from Oct. 1, 2012, to Dec. 31, 2013. Thereafter, performance will be reviewed annually for the following calendar year.  Commission rates will apply on new business for that year and will not impact business sold in the previous year, McNamara said.

Silver is the entry level and includes no revenue or sales expectations. Partners that have $50,000 in billed revenue fall into the Gold tier; these agents also don’t have sales goals to maintain their status and are offered a new contract protecting their status as an XO agent.

Tom Gorey, XO’s vice president channel sales and strategic alliances, told Channel Partners that the new contracts protecting Gold-level partners will be available July 1, but XO has been operating as if they were in place since the beginning of the year.

Both Silver and Gold tiers have access to basic support functions like pre- and post-sale tech support, customer-retention support, commission resolution, training,  market intelligence tools, and access to “designated” support.

Platinum, Platinum Elite and Diamond tiers have revenue and sales expectations attached to them. They have progressively greater benefits, including greater levels of support and eligibility for marketing funds and bonus programs.

“XO traditional had more aggressive rates than other providers out there,” said Gorey. “To continue to offer the commissions with the higher rates, there is a sales expectation at the highest tiers.”

“Basically what we built is a program that rewards longevity and productivity, and everyone has the ability to enhance their position over time,” Gorey added, likening the program to those in the IT sector as opposed to the “commission sheets” commonly found in telecom channel programs.

To support it revamped program, McNamara said XO is beefing up its systems and human resources (see related story.)  “We have invested heavily in resources,” he said. “We really wanted to get the … structure in place so that we can enable these partners and help these partners grow. … As a partnership, we have to do our part to ensure the partners are doing their part.”