By Ted Schuman, Founder/CEO
Our industry’s race to zero has finally led to something I’ve expected for years – a master agent advertising a zero per-user cost. And now that it’s happened you have to ask, “What is the value we provide if the only way we can earn the business is to give the service away for free?”
If you give it away, you’re not selling it. When you drive the price down to zero, you are not attracting the right type of partner or customer. If all they care about is price, they don’t appreciate the value you deliver through support, customer experience, partnership and engagement.
Master Agent Value
When looking to partner with a master agent, if all an agent cares about is how much the master agent pays in commissions, that agent isn’t interested in value. And if a master agent offers 90 cents on the dollar, you have to wonder how much support that master agent provides. More importantly, you should be VERY concerned about a master agent who’s willing to give away almost all of their compensation.
I’ve been in this industry for more than two decades and can assure you there is NO profit for a master agent in a relationship when a sales partner gets 90%. At PlanetOne, we routinely turn partners away who call us shopping a deal or expecting to match what they are getting from our peers. We lose nothing by refusing to match these tire kickers because if our partnership is only based on being the highest bidder than we’ve done a miserable job of selling our engagement model. You aren’t likely to get access to the support, resources, experience and engagement model that a company offering a lower margin can afford to deliver.
Instead, you’ll get bad customer service and lack of support. You can’t expect white-glove treatment on top of 90 percent margin. You’ll have to take the extra margin to build your own support structure for your customers or just accept subpar support.
Support has a price. And our relationship with partners has value. That’s something we at PlanetOne immediately make clear to prospective partners. If your first question is, “How much will you pay me?” Our answer is, “You’re not the right partner for us.”
Plenty of channel partners – perhaps even some of ours – will find the zero-cost ad attractive. But most successful partners know there’s no value here.
Our best partners sell value. Before they spend any time on an account, they work to secure a retainer and charge hourly rates and project fees. These agents and MSPs place a high degree of value on their intellectual capital and have figured out how to charge for what most competitors give away for free. They’ve gotten customers to understand that nothing is ever really free – that there are unexpected costs and frustrations later when you can’t get the support you need.
Anybody can give away free stuff. But not everyone can sell a Mercedes. The Mercedes salesperson is more skilled than the guy selling a $10,000 car in the used lot. There is a vast difference in the implied value of each vehicle.
The Last Word
Despite our industry’s obsession with racing to zero, many of us continue to enjoy healthy margins. That’s great of course, but let’s not forget what’s important – selling value and building relationships. And you just can’t do that when you’re giving away the solution and your value for free.