Opportunities in the reseller/aggregator long-distance market

Telemarketing, Nov 1995 by Bornstein, Jeffrey

In the past few years, the discount long-distance market has virtually erupted. A host of national and regional long-distance carriers and service-providers (often referred to as the "non-big three"--Wiltel/LDDS, Frontier/ Allnet, LCI to name a few), anxious to build their market share, are now aggressively courting resellers and aggregators as cost-effective bulk-distributors of their products and services. (Although there are distinctions between resellers and aggregators, for the purpose of this article the term reseller will be used to designate both.) Even the "big three" are developing programs for resale because of the prohibitive costs involved in hiring additional direct employees/salespeople, and the much anticipated competition that is just around the corner as the local telephone companies (LECs, or local exchange carriers) and cable companies enter the long-distance arena. In addition, resellers have been instrumental in the development of such sophisticated concepts as international callback, debit cards and other product enhancements. However, the commercial customer (end user) is the real beneficiary of the symbiotic relationship between carrier and reseller as the cost of long-distance service and ancillary products becomes even more competitive. Many business owners are becoming aware of the advantages of purchasing their long-distance from a reseller. Through a reseller, long-distance customers can now purchase the services of their preferred carrier at rates discounted by as much as 40 percent.

The Opportunity

The marketing opportunities in long-distance are enormous. Resellers need quality sales organizations to market their products and services. The most attractive aspect of selling discount long-distance is the ability to earn a residual commission from every sale. Some resellers are paying their agents monthly residual commissions of up to 30 percent. Just one account billing $500 per month can generate a residual commission of up to $150 every month, for as long as that account remains with the reseller. The "pitch" can be as simple as, "Mr./Ms. Business Owner, I am calling to see if you qualify for our company's group discount program. If you do, you can stay with your present long distance carrier and nothing will change, except the amount you pay for your long-distance service]" Of course, this analogy is simplistic, but it illustrates the point: Discount long-distance is easy to market, and since there are normally no fees associated with reselling, no money has to be collected]

Some sales organizations have a natural affinity for long-distance. Interconnects and telemarketing firms are examples of related industries that are seeking additional revenues by marketing long-distance services for resellers. Many quality resellers are offering telemarketers "advance commissions" to help cash-flow their efforts. In addition, verbal acceptance of orders and LEC billing are making it easier to market long-distance. However, it is important to note that on August 18, 1995, the FCC issued notices of apparent liability for forfeiture (i.e., significant monetary fines) to two long-distance marketing organizations for "slamming" (changing customers' presubscribed carriers without the customers' consent). The issue of slamming has received considerable media and Congressional scrutiny, much of which has been directed at the FCC for not doing enough. Thus, the FCC is beginning to take a hard-line stance on slamming complaints. Telemarketers need to be cognizant of the FCC regulations, particularly Subpart K--Changing Long Distance Service (64.1100--Verification of orders for long-distance service generated by telemarketing). Most reputable telemarketers have no problem complying with the FCC. In fact, the most essential aspect of successfully marketing long-distance is choosing the right reseller for which you will market the long-distance services.

How To Choose A Reseller

The Telecommunications Resellers Association (TRA) suggests you ask the following questions of prospective resellers:

(1) How will the long-distance service be tailored to my customers' needs?

(2) Does the reseller offer customized billing?

(3) Is there 24-hour customer support?

(4) Is the reseller financially stable?

(5) Is the reseller certified by the state regulatory body?

(6) Is the reseller a member of the TRA? (The TRA has a stringent code of ethics that its members must follow. The organization will expel companies working outside the code. Choosing a company within the organization ensures a degree of trustworthiness.)

Remember, the discount long-distance industry is only a few years old. It's still the "wild west" out there. Therefore, in an attempt to weed out "reseller wannabes" and unsavory characters, I recommend you ascertain the following:

(1) Make certain your reseller has a direct relationship with a carrier. The further you are from your commissions, the more you are at risk.

(2) History: How long has the reseller been in business?