“You sell. We pay!”
I’ll never forget one of the first meetings Patrick Oborn, my business partner, and I had with the VP of XO Communications back in 2003. The executive put it simply, “You sell, we pay.” Not being from the telecom industry, it was an eye-opening conversation that helped me understand one thing: Maximizing earnings is the number one goal of agents.
A master agent (and individual agents) must produce significant sales volumes to unlock the highest commission rates with providers. We learned this the hard way when starting out in 2002. Our commission rates were “entry level.” To attract agents and maximize their earnings, we had to get creative. Our idea was to leverage our SEO expertise and generate leads for partners willing to bring us business. Thus, we found incremental revenue for our partners and helped them maximize their earnings. Eventually, our sales revenue increased and we now receive the top commission from our providers.
Today, there are a handful of national master agents that earn top commission rates, creating a pretty level playing field in which the competition for subagent loyalty is fierce. With all the national master agents earning the same amount, one of the few levers masters are left with is the amount they pass through to their partners. Recently we’ve seen our competitors cutting their margins slimmer and slimmer to attract new sales needed to maintain their production quotas with the suppliers.
With margins slimming, many master agents are scrambling to find other ways to attract partners. We’ve continued all these years to be creative in the ways we help partners maximize earnings. Here are a few of the ways we help a partner double their commissions.
It’s Just Math
In this business, most providers pay a master agent between 15 – 25 percent commission. When we began Telarus, the average payout to a subagent was 60 – 70 percent. Now we see that in the ballpark of 75 – 80 percent, again, based on the individual production level of that agent.
Joe Agent sells a UCaaS deal for $1,000 in MRR. The carrier pays Telarus 20 percent of that per month. Joe is on our top commission tier at 80 percent pass-through. Joe’s monthly commission will be: $1,000 x 0.2 x 0.8 = $160/month.
Somehow, a rival master agent finds out about this deal seconds before it closes, and offers Joe 85 percent of the commission. This would earn Joe: $1000 x 0.2 x 0.85, or $170/month. Effectively, the rival master would take a 25 percent margin haircut, and Joe would earn 6.25 percent more per month or $10.
The Points Game is Changing
All things being equal (i.e., “You sell, we pay!”), Joe would be wise to take the extra $10 per month and run the deal through the Telarus competitor. But, after $5M of software development, millions in acquisitions, and 15 years of innovation, there are programs Telarus has created for Joe that will double his commissions from $160 to $320 per month.
Here is how we do it. (Joe, pay attention!)
1. Commission Advances
When Joe earns $160 in commission from Telarus, he will unlock $1,600 in pre-approved commission advance dollars. This money will allow Joe to expand his business, hire new personnel, and/or engage in new marketing strategies to find more clients.
This is one thing most partners don’t realize about this business: Banks don’t understand us. We don’t bill the end-user. We don’t carry physical hardware as inventory. Without invoices or physical collateral, banks make it almost impossible for agents to acquire lines of credit needed to grow a business. With Telarus, the commission you earn IS the collateral.
If Joe doesn’t run the deal through Telarus, he’ll have to call the bank and hope for the best if he needs capital. This turnkey advance can put more money in Joe’s pocket allowing him to reinvest quickly.
2. Account Management / Customer Retention
Telarus has an account management team of white-labelled customer service-focused staff who manage accounts on behalf of our partners. Our customer service team can perform renewals, upsells (think Cloud computing and SD-WAN), and “moves/adds/changes” for much less than it costs Joe to hire, train, and manage his own staff, putting more money in Joe’s pocket. More impactful than the savings of having an on-demand staff is extending the life of a customer and upselling the customer. A three-year contract renewed for three years doubles the expected commission. Upselling the customer increases commission earnings as well.
3. Easy Access to Information
One thing Joe may not have put a dollar amount on is his time. If Joe will document the time he spends on various tasks throughout the day, he’ll find that only a small fraction of his day is spent on the one activity that helps his business grow: finding and selling to new customers.
Some of the tasks that are a “time tax” on Joe include: checking for fiber availability, getting price quotes from suppliers, researching the status of the orders he’s already placed, taking phone calls from angry customers experiencing an outage, and auditing his commissions for errors, to name a few.
Telarus has created a mobile app that will tell Joe these things, in real-time, without him having to make a single phone call, or wait on a single email. With a few swipes, Joe will be able to tell a new client which fiber provider can connect them to Amazon Web Services, how much a 100 MB cable circuit will cost in Sunnyvale, CA, and when the circuit he sold 3 weeks ago will be turned up.
Assuming Joe can save at least 30 percent of his time each week by having all this information at his fingertips, he stands to gain 40 x 0.3 = 12 hours of time (at a conservative rate of $100 per hour, that’s an additional $1,200 per week in Joe’s pocket). If Joe doesn’t put the sale through Telarus, he’s going to be doing things the “old” way, and lose the 30 percent productivity bonus.
4. Added Value / Increase Close Ratio
Good thing Joe came to our last Telarus Innovation Conference! There he learned that he can add complimentary circuit monitoring to every single one of his proposals, a service that retails for $10 per IP address per month, at no cost to him. Now his proposals look VERY different from those of other agents as well as the direct sales team who may be competing with him for a deal.
In this example, Joe would add that $10 back into his commission. Now, if Joe sells a 500-site prospect, the value he is going to add to that sale is $5,000 per month, none of which comes out of Joe’s commission with Telarus.
The reason we can do this is because we purchased VXSuite, a network monitoring company used by MSPs to monitor the health of LAN and WAN networks with an eye for voice quality. As the new owners of the company, we decided to give away the circuit monitoring service so that we could help our partners win more business, and put more money in Joe’s pocket.
5. Interest Rate Reduction
In the event that Joe does take an advance from Telarus, the rate that he pays is determined by his past 12 months sales totals. That means the more business he puts with Telarus, the less interest he will pay, putting even more money in Joe’s pocket each month.
This is such an exciting time to be in the cloud and connectivity business. According to Gartner, cloud, connectivity, UCaaS, and cybersecurity are ALL expected to grow over 90 percent from now until the year 2023. Couple that with the increasing number of companies that are consuming their technology products through the partner channel, and you have every reason to be excited!
Telarus is likewise excited about you, and our unique ability to become a part of your business, to partner with you to ensure you have the human and financial resources you need to take advantage of this wave of opportunity headed your way. Next time you hear a master throw an extra $10/month at you, just remember that there is a much bigger picture, with bigger profits, in play with Telarus.
Give us a call and let’s surround you with our team, technology, and financing today.