Musings of a West Texas Business Venture

Outside Sales

We were recently contacted by a sales 'person' who sells telecom to clients on the east coast (in a specific region). We worked with this particular individual almost 4 years ago, once, and haven't heard from them, or seen them, since then. Needless to say, the phone call was a bit unexpected.

From what we could tell, after a few phone conversations, was that the company they are currently with, selling Telecom (cell phones, land lines), has decided to stop paying commissions on data services (T1 / T3 lines, remote leasing and hosting of equipment). So, this individual was losing a lot of cash on one of their clients, who is a $15MM company, spending almost $40K / month in data and phone services. We analyzed the client for them, and it looks like we could perform the same set of services for more like $10K - $15K / month (one of the benefits of not being on the East Coast).

It sounds like a win-win, right? Client drops down to almost 1/3 or 1/4 of their monthly costs, we pick up some income, and we pay the sales-person some percentage to take the client. Wrong. A few sticking points:

• The sales person wanted their percentage (10%) forever. And when they died, they wanted their estate to get it.
• Even though our firm can provide a more reasonable pricing structure, as the cost of living is lower than on the East Coast, the reality is that this means less money for the sales person.
• The goal of the sales person became "Find the clients nose-bleed point, and bill them that", which means that the clients' best interest is never the most important.

The end result, after spending a week or two back and forth with the sales person, was that we weren't right for the job. Instead the sales person found a provider on the East Coast to provide services for the $15MM client. I had to ask, why were we not right for the job?

The answer was veiled, but the reality is this: The chosen service provider was going to charge more, and therefore, the sales person was going to make more. A lot more (double perhaps). Why? You have to remember, management of a system or network can be done from anywhere these days. The difference is the quality of the staff, and rate.

The provider and client are on the east coast. They charge east coast rates. We are in central Texas. We charge central Texas rates. The sales person wanted paid on a percentage of monthly sales. Therefore, what is good for the sales person (more money) is the opposite of what is good for their client (more money).

Makes you wonder what the definition, and ethics, of 'this is my client' are?

posted by Anthony Presley @ 3:12 PM