WTG Agents Say Cloud Drastically Changing Their Customer Relationships

The hottest topic by far at last week's WTG gathering of agents and vendors was the cloud, with nearly every presentation and demonstration focused on integrating the technology that is remaking the landscape of the telecom and IT business.

The 125 agents and resellers attending WTG’s 12th annual Tee & Sea event at the Four Seasons Hotel in Westlake Village, Calif., were inundated over three days with instructions and advice on how to leverage cloud technologies, and secure the recurring revenues that those services provide.

The agents heard presentations by the event's telecom sponsors, most touting their cloud-based service offerings, and the event culminated with a State of the Cloud panel on Friday.

[Related: Six Takeaways From Enterprise IT Survey About The Cloud ]

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WTG CEO Vince Bradley repeatedly told partner agents they needed to start adapting to the new way of doing business, and that WTG, as their master agent, would help them evolve.

"Cloud is much more than a buzzword du jour," Bradley told CRN.

WTG put so much emphasis this year on educating its partner agents to the rapidly changing service and revenue models because they need to understand "it's the future of our industry and technology as we know it," he said.

The shift to a residual revenue model, and away from a one-time spiff, is rooted in the "growth and maturity of the indirect channel, in general," Bradley said.

Business-savvy VARS and solution providers "have opened their minds to the fact that a balance of the one-time payments on products is perfectly married to the steady cash of the residual model," Bradley said, adding, "the real quantum leap in mindset has been the embracing of the annuity-style payments."

WTG, as a master agent, has seen 10 percent growth in its recurring revenue in 2014, which now constitutes 90 percent of total revenue.

Driving that growth is the cloud, Bradley said, specifically hosted voice services, as well as infrastructure-, software- and data recovery-as-a-service.

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Many of the WTG partner agents attending the Southern California event told CRN they are well ahead of the curve in fully embracing the cloud. They said the shift to selling cloud services, and earning recurring revenue, is drastically reshaping their customer relationships into stronger, longer-lasting business connections.

Howard Eigenberg, director of sales in the Western region for Cory Communications, a telecommunications and cloud-services provider, told CRN that "cloud is the future and the future is today."

The cloud subscription model fosters more trusting relationships between his agents and their customers, Eigenberg said.

"Customers are tired of dealing directly with a company and their salespeople who are just looking for a one-time commission check. Some companies have a lot of churn in their sales force. When something goes wrong, the original salesperson is no longer with the company,’ Eigenberg said.

And the benefit goes both ways.

"Recurring revenue is much more lucrative than a one-time spiff," Eigenberg said.

The most significant cloud service Eigenberg has seen driving that growth is hosted voice, followed by backup and recovery, and storage.

Safe Haven Solutions, an IT consultant based in Pasadena, Calif., introduced cloud services into the company portfolio two years ago, and has seen growth of about 50 percent each year since.

Managing Partner Alaine Fulton said that thanks to the adoption of that technology, 72 percent of Safe Haven’s recent sales have resulted in recurring revenue.

"We have seen a large flux in consulting services and fees that can go hand in hand when talking about the company's overall cloud strategy, which has been a large growth area for us," Fulton said.

Fulton said she is seeing tremendous demand for disaster recovery, hosted VoIP, hosted exchange and some desktop virtualization. Those core services "all can fit very nicely into the small to medium business space as well as the enterprise," Fulton said.

The recurring revenue model not only provides a long-term lucrative pay structure for the industry, but it also holds agents and system integrators responsible for making retention and service a key part of their business, Fulton told CRN.

Ralph Chacon, a consultant with Athens, Ga.-based Agape Communications, said he is expecting great growth in the hosted and cloud applications space. More than half of Agape's monthly recurring revenue is now coming from that sector of the business, he said.

Chacon echoed the sentiment that the cloud resale model improves business relations with customers. An agent getting a percentage of ongoing revenue from customer billings "will naturally have more sustained skin in the game," he said.

Bradley said it's important for all WTG partners to understand what those businesses have already figured out: Adopting the cloud is more than just selling a new technology; it's a new way of doing business.

"Because our partners know that they will be paid to sell and support their customers for many, many years into the future, not only do they have a better relationship with their customers but also with WTG," he said.

Stephen Murray, CEO of DataTel1 in Orange County, Calif., told CRN his company has seen a potential for growth in recurring revenue of more than 40 percent this year.

Murray sees data recovery, hosted voice and hosted firewalls driving that growth. And the model is one that serves his business well.

"The more sticky we can be with our clients the better," Murray said.