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January 05, 2006

When Everyone Wants to Be Your 'Partner' � Be Careful Who You Walk Down the Aisle With.

By John McDonald, Kayote Networks
[The first in a series of articles.]
Partner.  We have all gotten the phone call from carriers, manufacturers and “Master Agents” extolling the virtues of partnering your business with theirs to maximize core revenue. Partner.  That’s a very powerful word when a Tier I carrier reaches out to your business and presents that word.  Yes, mega-carrier, publicly traded and internationally recognized and YOU.  Partners.  Isn’t that special.

Before you commit to walk down this aisle you need to get a firm understanding of what you are getting the life of your business into, what the honeymoon looks like, what life looks like after the honeymoon, what the future holds and what the pre-nup might look like.  A little harsh, maybe, but lets be very clear here… this is a full time commitment to a relationship and, yes, dare I say it, not a monogamous one.
There are numerous types of partners to choose form.  Do you want a provider who supplies an end-to-end hosted solution? This is fine in a pure Agent model.  A hosted solution?  You may have your own connectivity solution. A turnkey private label solution?  Your present and future customer base will be agreeable to have you as the provider of choice.  The answer could be all of the above.  Know your business, know your existing base of customers.  Ask them prior to committing to a relationship.  Evaluate your business plan and play the field!
Playing the Field
The Agent Manager (VAR Manager, Business Development Manager, etc.) is your entrée to your partner.  Interview them.  They will want to know the following from you:  How many customers are in your base? What marketing do you intend to do to promote the new partnership? How do you intend to manage front-end customer service?  What existing relationships do you have?  It is only fair that you have your list ready as well. 
  • What is your quota?-Each Agent Manager is held to a monthly quota. You need to understand this quota and then relate it to the expectation that the partner is placing on you. See Month End Craziness below
  • How are you doing year-to-date? It is important to understand how successful they are at helping you close business.
  • Is the Agent Manager presentable? Is the person across the desk presentable to your customer base?
  • How many partners are they currently managing? Agent Managers keep a stable of 10-20 partners in a given region with no more than 2-4 being highly productive.  If your Agent Manager is promising you 2 visits per week, multiple training sessions and real time dedication…do the math.
  • What do the commission structure and table look like?  Typically your Monthly Recurring Revenue (MRR) is commissionable in a sliding scale based on volume.  As an example, $10,000 in MRR could pay 13% and $100,000 could pay 18%.  Honestly answer where your company can be in six months and determine the MRR payout….ask for that percentage from day one with an out-clause.
If you are pursuing an end-to-end partner or hosted partner, be sure to ask:
Who installs?  Basic question, right?  WRONG!!!  A large percentage of providers will not let you install or sell directly the end points on your customer’s desks.  This is crazy.  Your customer can sign an agreement for VoIP services and you cannot do the install.  You may even get a competitor of yours doing the install.  Additionally, some providers are actually under-cutting your CPE sales in the market.  Do your homework.
What does the Month End Craziness look like?  As mentioned above, each Agent Manager has a monthly quota; if one of their deals belongs to you…understand that at the end of the month they will be trying to squeeze the deal.  Expect your phone to be ringing and ringing and ringing. To avoid this, be very clear with your Agent Manager about the status of your deals at the beginning of the month with an update mid-month.  
Does the provider supply any leads? The Agent Manager finds you useful to make quota!!! Find out if they supply leads for you.  Some of the more aggressive providers do telemarketing and provide leads to the local market through the Agent Manager.
What online tools are they providing to help you manage this aspect of your business?
How long have you been in this space?  Some providers have the name and can talk the talk and will get you credibility in your client’s eyes.  A big name in local and long distance does not guarantee core competency in VoIP.  There are also a number of start-ups who have the core competency, but may not have the legs to stand up for the long haul.  Do your homework!!!
What do the support structure and environment look like?  Get a clear understanding of the support team, both pre-sale and post sale support and contact numbers.  What is the process for after hours support? This is not a negotiable point.  Get the process in writing.  Get on the phone and introduce yourself to each member of the team.  This is no different than meeting the in-laws!!!
What is the pricing model?  Again, get a clear understanding of the entire model, pricing structure and variations prior to signing an agreement.  Talk to your established customers and get feedback.
If you are looking at a white label solution you should also find out the options for choosing termination partners.  Most white label solution tie you into one terminating partner…the underlying carrier.  Check the rates! Can you choose other terminating partners…will they let you manage your own profit center?
Finally, the Master-Agent.  The master agent traditionally has a long history in the partnering space and has 20-50 different partnerships for you to choose from.  This could be a great choice as they typically do not require a minimum performance on your part and in some case pay as much, if not more, than the same partner can offer you.  The questions above are still relevant. 
Once you are done playing the field and are ready to settle down with a few well chosen partners you need to understand the agreement and how to nurture and flourish in your new  relationship. We will answer these questions in the next installment.  We will also address some examples of companies that are worth reviewing.
John McDonald is VP of Sales and Marketing at Kayote Networks.  John has had many successful years managing third party distribution.  If you are interested in presenting your agent/distribution program please email him at with a short synopsis.
When Everyone Wants to Be Your 'Partner' � Be Care.....

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