The Secret that Nobody Wants to Tell You about Telecom & Cloud Pricing

December 10, 2014 Aerocom

As an IT Buyer, you will interact with telecom and cloud providers several times per year. I want to let you in on a secret to help those interactions.

Caution: If you enjoy shopping for a new car by walking onto the lot and haggling to get your price down to invoice, (rather than just going to the fleet or Internet department to get that same price), then stop reading right now.

For those of you like myself, who despise haggling with salespeople – this blog is for you.

I am going to let you in on a secret that I’ve been educating IT Decision makers on for many years. Here it is.

Agencies are a Secret Weapon for IT Buyers

When you are shopping for cloud and telecom service, asking for pricing from a salesperson who works for that provider is not only unnecessary, it’s just not logical. Actually purchasing from anyone other than an agent is even worse.

Why is this being kept a secret? Because if everyone knew the truth, every salesperson working for a provider would be out of a job. But in all honesty, the secret is out and already spreading fast among IT buyers. Many providers are scaling back their direct sales teams as agency sales are increasing and in many cases, account for over 50% of total sales.

How do I know? Before founding AeroCom, I WAS a direct salesperson for a large provider, for four years. I’ve had a large dose of both sides of the equation.

If you don’t know what an agent is, then welcome to a great world! An authorized agent/agency (a.k.a. broker/indirect salesperson), is an independent salesperson who, can sell every major cloud and telecom service provider. A good agent can sell over 200 service providers (including all the big names and lots of small names), their service has no fees to the customer and they help you sign up directly with the provider of your choice. Agencies are nothing new… think about real estate and insurance. Same general concept.

If you know about agents but you are still choosing to use a direct salesperson, FOR THE LOVE OF FIBER! What the HDSL?!

Can you handle the truth?

Seriously, since 2003, I’ve heard a lot of misinformation so I wanted to put a few things in writing for you to see. Here are all of the things that I’ve heard that are flat-out, not true.

“A direct salesperson can get better pricing.” No, they can’t. Both direct and indirect (a.k.a. agents), have access to the same pricing, promotions, special pricing, etc. and I can get the CEO from any of the providers to tell you the same. Call me and I’d be happy to oblige.

“A direct salesperson can get better support because they sit next to the engineers, install peeps, etc.” Again – no, this is absolutely false. You are a valued customer of the provider you choose, with access to the same support, regardless of whether you originally signed up with a direct or indirect salesperson.

If customer service isn’t cutting it and you need some additional help… and call your sales agent to rally for you… Agencies technically have the same access (as direct salespeople), to support resources but in my experience, I actually got access to BETTER support when I started AeroCom… I remember being shocked at how everyone at the provider was bending over backwards for me when AeroCom had our first customer calling us for additional help. Why? Because the provider that we sold to the client had to EARN our future sales and knew that otherwise, our sales would shift to one of their competitors.

As an agency, we have lists for every provider, with every escalation email and phone number possible (up to their CEO), and regularly meet with the providers’ management teams so they can get our feedback on how they’re doing. Heck, providers even conduct “agent advisory panels,” where the provider’s CEO and executive management team pays for us to come hang out for a day and tell them how they can improve.

When I was a direct rep, the CEO never wanted to meet with me… and I was one of their best salespeople. Did they ever ask me how they could do better with support or engineering? No. Direct salespeople simply have no leverage.

“I don’t want to work with a middleman.” Me neither! Good news – You’re not. You sign up directly with the provider you choose and you call that provider, directly, for support, just as you always have. Except now you have an additional customer advocate… your agency.

“I’ve had a bad experience using an agent/broker.” Ummmm …and you haven’t had a bad experience with an on-staff salesperson from a provider? EVER?! Yeah… right [sarcasm]. Did you swear to never use a direct rep again, either?

“You are just going to recommend the provider who pays you the most.” You can say that to any salesperson selling any product. Direct reps might try to sell you the product that has the most incentives. Don’t over-think it. Go with your gut and if you can’t trust the person in front of you, direct or agent, walk away.

“I don’t get it. What’s the catch? How can you give me the same pricing as a direct salesperson and not charge the client? How do you make money? Easy… the provider doesn’t have to pay the direct salesperson. Instead, they take that money and pay the agency. In fact, providers LOVE agents, because it costs them less, overall. With agents, they get the sales without all the drama… no salary, no benefits, no turnover, no manager for every 10 salespeople, no payroll tax, no worker’s comp, no liability insurance, no expense account… They just pay when a sale is made.

“Our VAR handles that for us.” Well, at least you’re using an agent but typically, this is still not going to be your best choice. Just like you probably don’t have your accountant as your life insurance agent. Use an expert for each thing you buy… not someone who’s doing it “on the side” for an extra income stream. Since a VAR is busy with their primary expertise, they typically work with one or two providers that they’ve had a good experience with… then recommend that same provider to every client, without digging too deep on whether or not a little better option might be out there, based on that client’s unique requirements. They enjoy the commissions but quoting providers isn’t something they like to spend a lot of time on. Don’t allow your company to settle for a telecom or cloud service that’s just “good enough.” Not on your watch. Use your VAR for their awesome primary expertise and use a full-time agency to shop for your company’s telecom, Internet and cloud service providers.

How Agents Make Your Life Easier

…Now that I’ve dispelled the myths, I’ll go even further and tell you the hefty benefits of using an agency.

Your company gets a better solution. Whether you’re shopping for MPLS, Fiber, VoIP, DRaaS or any other telecom or cloud service… On your own, you’ll probably find about 10 (of the 100+) service providers that you should be shopping. No, that wasn’t a typo… ABC Communications is not the only game in town, despite what you’ve been told. There are hundreds of providers for telecom and cloud… most of which you’ve never heard of but do a fantastic job. That means you have a 90+% chance of getting your provider selection wrong. Agencies know all 100+ and will narrow the field based on your company’s size, location and requirements.
You typically get someone with more experience. Working as an on-staff provider salesperson is the first sales job you get in this industry. And it pretty-much stinks (see below). Then you either quit, go to management or become an agent.
You get someone who will try and solve your challenges across all providers and products… not just try and fit a square peg in a round hole with one provider’s product line and footprint.
You save a ton of time not calling providers that you should NEVER be calling, based on your requirements.
You gain a more long-term advocate. Agents make a small residual commission every month you have the service. Agencies care just as much about your account on month 60 as they did on month 1. On the contrary, 99% of direct reps make the vast majority of their commissions in a one-time, up-front commission. Long-term, they do not make any commission unless you do a significant upgrade in monthly expenditure. Good luck getting help on month 36 if you are just wanting to renew and save a couple bucks.
Along with the commission model explained above, direct salespeople are taught to start “high” on pricing and installation charges until the customer asks for lower pricing. Agencies are much less likely to play those games because agencies are always fearful that if they don’t show the customer great pricing, the customer may try and call the provider for a better deal. We just offer the promo pricing immediately and always waive all installation charges possible.
Agency salespeople are typically not under the ultra-heavy pressure of making monthly sales quotas. Direct reps are under a lot of pressure to hit their sales numbers, which often leads to desperate sales tactics that annoy clients. Remember that sales guy who called your boss when you didn’t call him back? I bet he wasn’t an agent.

In Conclusion

Direct reps are totally going to hate reading this because they are, like all good salespeople SUPER competitive but I’m just being honest. It’s not their fault… Agents are not better people. Both groups are good people, trying very hard to make a living but agencies just tend to have many more advantages to clients. Again, I’ve personally had both jobs and chose to start this company back in 2003 because the benefits to the client were so obvious that I KNEW that agency sales were the future of our industry.

I can go on and on but this has already gone too long so I’ll stop. I’m passionate on this topic, however, because one of our company’s long-term goals is to be the leader in educating clients on agencies and how great it is to use one.

Don’t know a good agency? If you found this blog helpful, please pay me back by trying AeroCom the next time your company’s telecom or cloud service is out of contract or EoL. Fiber, VoIP, SD-WAN, Cloud VM’s… we know hundreds of providers that do all this stuff. We’ve been doing this successfully since 2003 and have a great reputation for being very thorough and easy to work with.

Let me know your questions? What have you heard or experienced that’s different than the things I’ve said?

About the Author
Mike Smith is the Founder and President of AeroCom and has been immersed in the business telecom and cloud industry since 1999. He has been the recipient of numerous industry awards and in 2011, he was honored as one of the top 40 business people in Orange County, CA., under 40 years old. Mike is passionate about simplifying the way IT buyers shop and select telecom and cloud solutions for their company. Follow Mike on LinkedIn, Twitter or SpiceWorks.