TEM: Agency Friend or Foe?
When did managing telecom expenses for our clients become a
new thing? From 1990 through 2002 I worked both as a telecom account
executive and as an independent telecom agent. For twelve years I pretty
much did the same thing - promised small business owners that I'd help them
make sense of their phone bills if they purchased their telecom services
through me. I took a break from telecom agency for five years and when I
returned this year I discovered that what I used to do for customers has a
new name - Telecom Expense Management or TEM.
When I asked around about the new name I was quickly informed
that telecom had changed quite a bit in my five year absence. Many telecom
sages I knew shared the same tale. "No one can make money selling telecom to
small businesses any more. Everything's upscale now. You gotta sell TEM to
enterprise businesses to make any money at all!" I was awestruck. I was
amazed. I was a little worried. All I could think was, "What's an enterprise
business?" (I searched Google when no one was looking and learned that
enterprise businesses are businesses with 250 or more employees. Why don't
they just call them "large businesses"?) "Who cares?", I thought to myself.
I figured I'd just go back to doing what I was doing before.
I
Can't Do This For Free
What I learned first as a "start over" telecom agent is that
I could still do what I used to do - help call center customers manage their
telecom expenses. What I learned second is that the margin in helping call
center customers manage their telecom expenses as an agent had all but
disappeared in five short years.
I was fortunate to win two old call center customers back
right away when I became an agent again. But while my call center
customers were still making the same number of calls as they used to,
in five short years, 4-digit billing, 6-second minimums and severe price
erosion had removed 90% of the commissions I used to make. Where I used to
bust my butt for my customers and earn $10,000 a month in commissions I was
now able to make just $1,000 in commissions.
Telecom agency used to be so cool. "Who screwed all this up?"
I wondered. I can't give my call center customers the same amount of
consulting I used to and earn just 10% of what I used to earn. I can't do
this for free!
Dude, You Gotta Charge 'Em!
One of the "old sages" I consulted as I re-entered telecom
agency was Noel Huelsenbeck (who is actually younger than me.) Noel is the
president of Vocio, a San Diego based telecom agency that has fully embraced
TEM - but only for those businesses who understand the value of having their
voice and data network service invoices professionally managed. To manage
the telecom invoices of Vocio's enterprise customers Noel actually developed
his own TEM software in-house so he and his employees could graduate from
tracking customer invoices on Excel speadsheets to something more
manageable.
In studying the evolution of telecom expense management
himself over the past several years, Noel determined that telecom agents
could not expend unlimited management resources tracking customer telecom
invoices unless it was guaranteed that the margin earned from a TEM customer
covered all the TEM costs the telecom agent incurred to managing the
customer's bills. "Dude, (Noel does say 'dude' quite a bit) back when we
were all making more money than we could spend it didn't matter - but those
days are gone forever. Now you gotta charge 'em for managing their bills
every month!"
The Top Secret Formula for TEM
There are three types of TEM agents - those who make money at
it, those who don't make money at it and those who don't TEM yet. I fall
into the middle category - I'm TEMing for my call center customers, but not
at a profit that's making me happy. Most of the agents I know don't TEM yet
- the idea of charging for their bill reviewing duties instead of just being
happy for the sales commission they're earning is still quite foreign to
them. I've met many happy TEMers though and they all share a similar vision
- they feel they've come up with a workable formula to charge their TEM
clients enough to ensure a reasonable margin above and beyond the agent's
variable and fixed costs for performing the TEM work.
Of course none of the happy TEMers had the slightest interest
in sharing their formula with me. Why would they? Everything you read about
TEM suggests that the TEM software does all the hard work. Nothing could be
further from the truth. Humans do all the hard work. It takes lots of humans
and lots of brains to make sure the telecom bills are properly imported into
the TEM software and analyzed to create actionable management reports for
the TEM clients. TEM is nothing if not labor intensive - and nothing on the
planet is as expensive to a business as human labor. Any entreprenuer that
has come up with a TEM price formula that comes close to guaranteeing a
reasonable margin after all the labor is covered has indeed invented a
formula that needs to be kept "top secret".
(All I have been able to divine of the top secret formula is
that it takes the total number of invoices and multiplies it by the total
monthly dollar amount of all the customer's invoices and then divides that
number by the number of black cats owned by the TEM client's owner - or
something like that.)
Is TEM a Friend or Foe of Telecom Agency? It's Both . . .
Noel's right when he said, "Those days are gone forever." I
can want the old days to return but all my wanting is in vain. As much as my
call center clients love my consulting, what they want trumps what I want.
And what they want is to know they're getting VERY competitive telecom
rates. So did TEM create the price compression that stole all the
commissions or is it the other way around. It really doesn't matter. What
does matter is that larger telecom customers still want and need someone to
manage their telecom expenses for them - they just want to do it at what
they see as a fair and reasonable price.
The value proposition from telecom agency in the early 90's
was pretty easy for a business owner to understand. They were paying Ma Bell
20 cent a minute for long distance and a telecom agent would give them the
same minute for 15 cents. Twenty five percent savings is value that's easy
to understand. The easy savings though are long gone. So what's the value
that a telecom agent brings to the table today? In the absense of other
clear value propositions it appears that telecom agents are down to TEM.
(There are a few other clear value propositions agents can bring, like
original telecom application development or partnering with equipment
providers during their equipment sale but those opportunities are hard to
come by for most agents without existing connections.)
My prediction is that telecom agents without another "value
trick" will find themselves adapting TEM into their business model or
competing against the TEM business model adapted by other agents. So what's
a non-TEM agent to do once they decide to start down the TEM trail?
Follow the Leader
There's really no point (and likely very little profit) in
going out into the telecom marketplace with the intention of building your
own TEM business model. A thousand TEM entreprenuers have already withered
the TEM marketing storm before us - and several dozen TEMers have actually
survived the storm to show the rest of us how it can be done profitably. All
successfull TEMers seem to agree that the starting point in selling TEM as a
service is to start with a prospect list of large businesses, businesses
with 1,000 or more employees, businesses that spend $25,000 a month or more
on telecom services.
Since these large TEM business prospects are bigger than the
prospects most agents are used to pursuing, it makes sense to start out by
working with a TEMing business that's been TEMing successfully for a while
until you learn the ropes. (Especially since TEMing large businesses is
going to take a lot of labor and some sophisticated software to hold the
telecom invoice information that the TEM customers want tracked.)
Most agents are not in a position to hire a bunch of telecom
bill crunchers or license expensive software unless we already have a couple
large clients who want their invoices tracked better. What most agents are
in the position to do is learn a TEM sales pitch and go TEM prospect
hunting. If you're serious about giving TEM a chance to make you some
serious money then you need to interview the successful TEM practitioners
who are taking on agents and then do what they say you need to do. "Call
these types of prospects with this sales pitch and try & get a phone
appointment with this job title."
Free TEM Prospect Leads & TEM Resource Page
To help TA members and TA TEM vendors, TA will provide TA
members with pretty much all the free TEM prospect leads they can call on.
TA subscribes to several lead sources and will happily provide TA members
with leads of businesses in the TA member's marketing area that have 1,000
employees or more (or any other lead list that the TA member needs). The
only catch is that the free lead request has to be routed through one of
TA's paid vendor members. So to get the free TEM prospect lead list from TA,
simply pick one of TA's paid TEM vendors, talk to the vendor's agent manager
about how you want to work their program and then have the agent manager
request a list of TEM prospect leads for you.
In addition to free TEM prospect leads TA is creating and
will maintain a TEM resource page that TA members can access from the TA
home page at
www.TelecomAssociation.com . In addition to listing all the TA TEM
vendors with TEM programs for agents, TA will list TEM links and TEM sales
stories as they are submitted to TA by TA members.
Dan Baldwin is founder of
TelecomAssociation and director of sales at
ATEL Communications Inc. Founded in 1985, ATEL is the largest NEC
telephone equipment dealer in Southern California. Baldwin works with ATEL's
carrier services division that acts as an in-house telecom master agency to
sell network services to ATEL's embedded base of 2,000 phone equipment
customers. For more information about ATEL's carrier services division
please visit
www.ATELcc.com .
TelecomAssociation
is a membership organization founded in 1995 that serves the
information & communication needs of its 2,500 members who distribute
telecom & related services to businesses.
Got an experience that complements this blog posting?
E-mail printable submissions to
Dan@ATELcc.com .
Want to respond or add
to this blog? Send printable replies to
Dan@TelecomAssociation.com |
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