Got a call from the owner of a master agency Sunday morning. As soon as I saw the call, I knew he was telling me he sold. GCN sold to Upstack – and Chris Palermo is now President of Upstack. Now 3 of my 4 brokers have sold. That makes me uneasy. It feels like my income streams are in more jeopardy than ever before.
At the same time, a West Coast broker went to AppSmart – and a midwestern broker is eyeing PE money.
Everyone thinks I lean toward pessimism, but the truth is I am a Realist. Read the tea leaves people!
The actual sellers are being acquired under exclusive deals. These sellers previously procured services via at least three – and up to five master agencies. (On the name change). This has a ripple effect.
The West Coast broker lost two of its top performers to AppSmart. This crippled them so that they too had to sell. GCN was a top performer for at least 3 master agencies. These 3 will now have to scramble to cover that lost production.
AppSmart, Upstack, Intelysis, Avant, Telarus are not producers. They are brokerages, handling the vendor contracts and commissions. The only thing they distribute are checks to the partners who are actually interfacing with customers.
We are at a crossroads here. There is price compression in UCaaS, SIP, Bandwidth and other silos. That equates to more deals needed to be inked to maintain the level of income. However, you can only close so many deals in a month. At the same time, vendor quotas are the same or increasing. This is resulting in some partners holding direct contracts to sell.
The pundits will be in Vegas next week yakking about the changing channel. I am certain one of the usual suspects will say the channel is dying as they always do. This time they might be right but for the wrong reasons. Jay says Shadow Channel. JS & TB say Partners need to re-invent their businesses to keep up. The channel is ready to retire.
When most of us got in the channel, there were numerous CLECs competing with the ILECs. Now the CLECs are gone. There has been significant consolidation in the vendor space (e.g., Comcast buying Masergy.) Several of the resellers suck at actually delivering services. What is a partner to do?
The channel has been selling replacement products for 20+ years. Vendors forgot two important pieces to the channel: Partners Supply Demand; not create it. Vendors push technology, not solutions. These 2 things oppose each other, because vendors want partners to create demand and sell solutions. Vendors don’t really market to the customers like Microsoft or Dell or AT&T. That marketing to the buyer is what creates demand. All boats rise with the ocean is about demand and awareness. Partners supply demand.
Master Agencies and Distributors do not create demand either. VADs distribute software and hardware not to end users but to partners. Master Agencies are at least two spaces removed from the Buyer. All the Buyer interaction is still with the producing partners, who are tiring.
A recession, a pandemic, reduced commissions, vendor consolidation, brokerage consolidation, technology changes – it is a lot to absorb, adapt to and stay in the game.
I have seen several partners become realtors!
Think about the technology changes from switched LD, T1s, DSL, routers, T3s, OC-x to VoIP, SIP, Ethernet, FTTx, 4G/5G/LTE, SD-WAN, Cyber-Security, UCaaS, CPaaS, CCaaS, CXaaS and so on and so forth. All in one career – unless you work at a reseller in which case you are still tackling POTS lines.
Selling UCaaS started as a replacement service for POTS, PRI and PBX. Now to solution sell you have to understand all the AAS’s – CPaaS, UCaaS, CCaaS and SIP trunking (Direct Routing to MS Teams). Vendors still treat it like technology product instead of solutions because they want to reach a wide audience. That’s why there is price compression – $5 for a UCaaS seat!
Who wants to continue on this ride when your commissions are looking jiggy?
After all the problems with CenturyLink, Nitel, Granite, et al, I am running out of vendors who can deliver service. I am also saddled with disgruntled customers that these vendors screwed up. All for less money.
I can see the writing on the wall. Unfortunately, the channel argues over a stupid term – Master Agency – while the industry is twisting to private money and the number of partners is declining. Way to keep your eye on the shiny, noisy object instead of the hard truths.
This week I saw a PM on LinkedIn post about all the fun he is having at events. I have another CM who is giddy over the events coming. Last year with no events was it that difficult for the vendors and masters? Did all that MDF burn a hole? Events aren’t what matter. Service Delivery, follow through, Use Cases, Verticalization, Differentiation — these things matter. Too bad no one gets that.
Other articles: The Channel Will Look Different; and Where do Partners Fit?;