Cloud, Next-Gen Services Help Master Agents Grow Quickly And Beat 'The Squeeze' As Connectivity Commissions Decline

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Five years ago, Intelisys had to buy its way into selling cloud services. But thanks to its efforts, today's master agents and partners may not have to do the same.

Back then, Intelisys bought Cloud Services Coalition, a cloud services solution provider and integrator founded by Andrew Pryfogle. He went on to become the senior vice president of cloud transformation at the now 24-year-old master agent.

Intelisys saw the major pivot to cloud coming and knew it needed to acquire the right expertise to lead the transition and offer the level of education that its sales partners deserved to help them stay ahead of the curve. Sales partners needed to be educated on the benefits of cloud and told how to pitch and close cloud deals. Intelisys identified Cloud Services Coalition as a leader in cloud selling and education, and the best organization for the job.

[Related: Telecom Consolidation Sets Aggressive Growth Agenda For Master Agents, Partners]

"This is when we really started adding more value to our partners and helping them make the pivot to different kinds of services, away from the more traditional connectivity providers," recalled Jay Bradley, president of Intelisys.

Today, the Petaluma, Calif.-based master agent offers various cloud education tracks for its partners and is seeing high single-digit growth in cloud sales from its partner community each year as part of its overall business mix. Cloud services, in particular, Bradley said, represent a whole new opportunity for both master agents and channel partners. 

Partners are grappling with eroding broadband connectivity and legacy voice margins. Sales in the wireline segment for every major carrier – including AT&T, Verizon and CenturyLink – have been declining at a low-single-digit rate over the last several years, according to investment research firm CFRA. More users are moving from traditional wireline phones to high-speed internet and mobile services, where users expect to pay less for voice services.

As such, master agents must look beyond brokering connectivity to fill out their books of business with value-added services that offer higher commissions for sales partners. Master agent may be under pressure to grow quickly, but growing by way of mergers and acquisitions is not the only option for these companies.

The days of master agents acting as "clearing houses" are over, said Patrick Oborn, co-founder of Sandy, Utah-based master agent Telarus.

"Everyone is feeling the squeeze," Oborn said. "You are going to make less money doing more work until you can't afford to pay your people anymore. [Master agents and sales partners] have to transition to higher-margin services and products," he said.

Services like cloud, unified communications, and SD-WAN services, for example, are offering partners a way to "claw some margin back" from sinking connectivity commissions, Oborn said. Services like these have Telarus, and other master agents, placing their bets and the channel should take note, he said.

"We are focusing on UCaaS and cloud because the commissions there are still safely above 20 percent, in some cases 25 percent plus [sales performance incentive fund] SPIFs," he said. "That's where the money is."

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