I was contacted by an agency about how Windstream Enterprise is using referral dollars (called renewal credits) to entice customers to renew their contracts. This is in lieu of paying the partner on the account.
On a $1K/mo Internet circuit the client was offered a $5K renewal credit.
When a Windstream VP said that sales were back on track, I figured there was a hole in the story somewhere. For one, partners HAD to sign the new contracts which required new sales (and quota) in order to continue collecting those evergreen commissions. This meant new sales were going to occur – and some customer churn would become retention.
Two, some partners were cut. Those commissions went to the bottom line for WIND. In bankruptcy, every penny counts.
Three, paying renewal credits amounts to paying the customer for a sale. It is one way to cut out the partner. No idea what WIND does at the next renewal.
Paying out $5K on a $1000 per month circuit – which would pay out a maximum of $250 per month to a master agency – is about a wash over two years. The Master Agency would have collected $6K, but WIND is giving $5K upfront. Basically, five months free. We are back to being underwater.
It’s just shady activity. This is probably tied to the $20.1M in bonuses for the management team. The only KPI must be revenue or contract value. So do everything to bring in revenue and all else be damned, so that the geniuses that got Windstream into this mess can exit with some change in their pockets. Got to love telecom, where mediocre people can have a lifetime career.