Reselling Business VoIP is for Suckers

When I introduce FracTEL to potential channel partners, one of the first things I tell them is “Reselling Business VoIP is for suckers”. I’m sure they usually think “What the heck? That’s not a very enticing way to recruit me into your program.” And maybe it isn’t – but it’s the truth, and it may be the industries dirtiest little secret. Let me tell you what I mean.

It begins with a story that many resellers can relate to.

Sometime in the 2004-2005 time frame, I was running a very successful business building and installing Asterisk-based PBX appliances for business customers. Many of those customers were aware of the emerging residential VoIP services and, recognizing the benefits of the technology, it was only natural that some of them would express an interest in connecting their systems through one of these VoIP services.

We began experimenting with ways of connecting multiple lines to one of the popular residential service providers using the typical analog adapters, but it wasn’t really a viable solution. We managed to get in contact with the right people at the provider and we pitched them on the idea of selling a “Business Class” service. With some persistence, we eventually connected with an ambitious product manager and together we convinced them to create a program. It was truly a pioneering product – one of the first “SIP Trunking” offerings on the market – and it proved to be very popular with our customers. We sold enough of it to become their leading reseller in all of North America.

All was great for a couple of years, but as it happens sometimes, circumstances beyond our control began to impact our success. First, the structure of our commissions began to change. I don’t honestly remember exactly how the policy was revised, but I know for sure that it was not to our benefit. What I do remember is the powerless feeling that came when, even as the biggest reseller in their channel, we were not able to exert any influence over the policy.

A few months later we received notice that our contact at the provider – our internal champion – was moving on, and that the future of the program was uncertain. Ultimately, they decided that it required too much support and that it wasn’t “consistent with their business model.”

At first, they stopped taking new customers, but continued to support existing customers. As the program declined, the accuracy and reliability of our commission payments declined as well. About a year later, it was discontinued.

I guess killing this small-potatoes program made sense at the time, at least from the corporate perspective. They had much bigger fish to fry. It still seems short sighted to me, but that’s not really the point. From our perspective, it was a disaster. Not only did we lose a significant revenue stream that we had worked very hard for, but we now had a substantial base of loyal clients that had come to depend on this service, and there was no real alternative out there to replace it for them.

As they say, when one door closes, another door opens. Being naturally ambitious, we took the lessons we learned from the experience and created our own service to replace the one we were losing. A couple of months of sleepless nights later, FracTEL was born.

“How hard can it be?” I remember thinking. Well, it turns out to be one of those things that is not that hard to do, but very hard to do well. We spent the next 10 years perfecting our network and service delivery systems, which is a longer story for another day.

And now you’re thinking, “OK. Cool story, Bro. What’s the point?”

Well, here it is: We were suckers.

Even when the program was going smoothly, we felt our commissions were unfair and inconsistent. We had no control over the way our customers were treated, and in the end the rug was pulled out from under us with little warning and no recourse.

Like many things, it was unpleasant at the time, but in retrospect it was one of the best things that ever happened to us. The experience taught us some very important lessons that we leveraged to achieve far greater success than we would have otherwise.

Lesson#1: IF YOU DON’T OWN THE END USER, YOU ARE A SUCKER.

Any arrangement where you rely on a partner to bill your customer and pay you a commission will not go well for your company. You will always end up on the short end of the deal. If you are acting as an agent or reseller for a product or service, you should always ask yourself these questions:

• How long do I have to wait before I start receiving my commissions?
• Do I receive a recurring commission as long as my customer is retained?
• How accurate are my commissions?
• How often do I have to dispute my commissions?
• Are my commissions evergreen?
• What will happen if my partner discontinues my program?
• What will happen if my partner is acquired or goes out of business?

If any of these questions cannot be answered to your satisfaction, you could be suffering from “Reseller Sucker Syndrome”, and you might want to think hard about whether you need to change your situation.

Of course, you may be saying to yourself “Yeah, I know it stinks but that’s just how it is.”

The truth is – There is a Better Way.

Visit FracTEL at Channel Partners 2017 (Booth#363), April 10-13 in Las Vegas or call us at (855)FRACTEL to learn more, and get the cure for “Reseller Sucker Syndrome”!

Read Part 2: How to Stop Being a Business VoIP Reseller Sucker.