November 10, 2008 Does Master Agency Size Matter?When selecting a master agency, do you need to know their sales volumes?
TA says "yes" if the claim is part of a larger "trending picture" and objectively help agents fairly differentiate master agencies from one another. To help TA members evaluate anything a master agent might publicly say about itself, TA offers the following thoughts on the matter.
Consistent New Monthly Revenue Matters Most They say that "in the world of the blind, the one-eyed man is king." Similarly, in the world of master agency, "consistent new monthly revenue makes you bullet proof". The primary reason most agents go under a master agent to access a service provider in the first place is to make sure they get paid. Larger service providers are notorious for canceling commissions on low producing agents. By going under a master agent that is producing new revenue every month for a service provider, an agent can expect that service provider to keep paying the master who should then keep paying the agent. In their press release, Telarus states that the $ 3 million in monthly recurring revenue has been built up steadily over the last 6 years from zero. A quick calculation of that claim shows that with zero attrition and 100% provisioning, Telarus would have to put on over $42,000 of new business every month to reach $3 million a month. To get $42,000 in new business to bill every month, most any sales manager knows you have to sell over $50,000 if not more. For them to sell through attrition over six years the necessary new monthly revenue figure might have to be closer to $75,000 or more. When a master agency is consistently bringing in $75,000 or more in new monthly revenue for their service providers, the master agent's subs can be reasonably assured that the service providers are going to keep paying the master agent their commission so as to not get cut off from the master agent's "fire hose" of new revenue each month.
How the New Monthly Revenue is Generated Matters Too
For all practical purposes, the agreement a service provider gives to a master agent is the same from one master agent to another. So how is it that one master agent produces twice as much new monthly revenue as another master agent with a similar contract? That's what service providers ask themselves when signing up new master agents and it's what sub-agents need to ask as well when they are thinking about signing up under a new master agent. Since it's new monthly revenue that keeps commission checks coming, what's the likelihood that the new monthly revenue will consistently continue? Does the master agent have a key competitive advantage, and if so, what's to prevent another master agency from developing the same advantage? Is the master agent's monthly revenue growth through acquisition or is it from some organic marketplace differentiator that competitors will have difficulty replicating? These are key questions that a sub-agent must understand the answers for in order to be able to predict whether a master agent will maintain the new monthly revenue that makes them "bullet proof". Turning back to Telarus, let's see what they say about how they're generating all their new monthly revenue. Their press release states: "by focusing on new opportunities uncovered through our lead programs, upselling services to existing clients, bringing in larger ticket sales through complex solution selling, and by retaining existing customers and initiatives that attract new partners to Telarus including:
When considering working with any vendor, make sure you understand and care about what makes that vendor different and better then the next vendor. What makes them special to you will likely make them special to the vendors they're sending business to.
Fearlessly Living in a "Glass House" The main quality shared by most successful master agencies is confidence. And while it's fairly easy to be confident in private, it takes an extra helping of confidence to publicly tell everyone who will listen just why one is so confident. Untrue public claims are quickly extinguished by an onslaught of ridicule and the TA audience has little tolerance for unsupported braggadocio. By "fearlessly living in a glass house", by publicly sharing information about sales volumes and long term sales trends, master agencies make it much easier for agents to find the master agency that best suits them.
The Bottom Line: They say, "it ain't braggin' if it's true!" But how do you tell if a marketing claim is true? Primarily by staying in touch with what's going on. By reading the trade magazines, going to the trade shows and reading the information that comes out from TA. TA strongly encourages all TA vendor members to publicly share what makes them better or just differentiates them from their competitors so TA members can make intelligent decisions when choosing who to work with. Does size matter? Yes, but only so much as size constitutes one of many potential differentiators. TA members are advised that the right vendor to work with may not be the largest or the smallest or any size in between. Educate yourselves as to which differentiators are the most important to you and then challenge the vendors you are considering to share with you how they measure up to your important differentiators.
If you feel you have information that should be included in future TA blog postings please forward printable information to Dan@TelecomAssociation.com. |
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With great
fanfare, master agent Telarus recently announced
