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Are Your Contracts Healthy?

QUICK CARRIER CONTRACT HEALTH CHECKLIST

Here’s three quick questions that will give you a good indication of whether or not your current carrier agreements are “healthy” or need help (HINT- if it takes you more than 5 minutes to answer these then you probably need help):

1.  Do your contracts have an Annual Spending/Volume Commitment such as a     MARC or AVC?

2.  Is there specific language protecting you against discontinued services?

        3.  Does any part of the agreement have Auto Renewal language?

If you answered “YES” to any of these questions then your contract is not leading edge and should, at minimum, be revisited and reevaluated. Here’s why:

• Annual Spending Commitments are carrier traps  to lock you into longer Terms and more spending then is necessary and they reduce your negotiation leverage. We routinely negotiate market leading edge rates, terms and conditions in contracts without having Annual Spending commitments

• Carriers want to move customers to IP, Fiber and Wireless technologies to improve profits and are pressuring customers by discontinuing services. Deregulation by the FCC, in most cases, allows this to happen with as little as 25 day notice. This can wreak havoc on networks and applications that have relied on TDM, wireline and related technologies. Unless you have specific and detailed language in your contract BEFORE this happens you are at the mercy of the carriers’ timeline to migrate services.

• When’s the last time you looked at all your carrier agreements to check on the expiration dates and notice provisions? If there’s Auto Renewal language and you’ve missed the requirement for notice you could be locked into another 1,2 or 3 years with no chance to bring rates, Terms and conditions in line with current market or current internal requirements. There should never be Auto Renewal language in your agreements, but if there is, don’t wait- check it now!

One of the most common fallacies out there is that you must wait until you’re nearing expiration in order to revisit or renegotiate these carrier agreements. Not true. In the same way that you don’t wait 15 or 30 years to refinance your mortgage agreement if current interest rates are more advantageous, you shouldn’t wait to take advantage of current/better telecom carrier rates. We regularly are successful in addressing contract deficiencies in contracts that are as recent as 6 months old.

There are many other factors that can also determine whether or not a contract is “healthy”. Certainly, Rates and Pricing are also an importatn component.  Part of our approach at Silver Lining Telecom is to provide a free detailed contract and spend analysis to let you know exactly where you stand relative to the current market. Feel free to reach out to us for this free analysis if you’d like to find out if your contracts are “healthy”.

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WHY SEE A DOCTOR?  ANNUAL PHYSICALS ARE A WASTE!
  • Why see a doctor when you’re feeling OK?
  • As the old saying goes, “if it ain’t broke, don’t fix it”.
  • You already have the best diagnostician “in-house” , after all, who knows your body and how you’re doing and feeling better than you? You’re the best “expert” and don’t need anyone poking, prodding, running tests and taking vital signs to tell you what you already know - that you’re OK!

If you agree with the above statements then stop reading right now.

However, if you think these statements are wrong and its best to recognize and treat health problems before they get worse, then my question for you is – “Why not apply the same approach to your business and, specifically, to the “health” of your company’s Telecom spending?” My firm, Silver Lining Telecom will perform a free, no obligation, detailed benchmarking analysis (i.e. a “health check”) of your Telecom (Wireless, Voice/Data Network, Conferencing etc.) activities, contracts and spending. We’ll share the results with you and either give you a “clean bill of health” or suggest areas that could be improved to generate cost savings, recover billing errors and optimize services. Again, at no cost or obligation.

Remember, virtually every client we have also has in-house people managing their Telecom activities. But relying solely on them to spot problems and achieve optimal results is like doing a self-diagnosis instead of seeing a doctor because we have real-time market knowledge and experience that they do not, and cannot have.

Why? The genesis of this article came from a newspaper article I read about why men avoid health care services like going to the doctor or getting health check-ups and it occurred to me that many of the same issues could be applied to why so many of us are reluctant to get help in our business lives.

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The article stated that " Sometimes men avoid getting checkups, an annual physical or recommended screeining tests for other reasons.  They fear finding out something is wrong.  they think admitting illness or discomfort makes them weak.  They worry that a problem may cause them to be passed over for job performance."

By the same token, how many of us have avoided asking for help with a problem in our jobs or refused to get outside help for the very same reasons i.e. we fear that admitting there might be something wrong may make us look weak, less knoweledgeable or less competent?  If my own experience is any indication, the answer is that a lot of us (me included) have been in this exact situation.

The article featured a 37 year old man who, despite various persistent symptoms, put off getting a check-up for several years. When he finally did go to the doctor he was diagnosed with Stage 3 colon cancer and faced long, painful, expensive and life-threatening treatment. Of course, the irony is that had he gone for a checkup a few years earlier the doctors would have likely found a small benign growth (polyp), removed it and sent him on his way with a clean bill of health.

Think about it - how many problems in our businesses go undetected because we take that same "fear of looking or finding out something bad" approach? Keep in mind, I'm not just talking about negative or crisis situations but also those things that could be made better i.e. process improvements, cost reductions and quality of product or service improvements that could be implemented if they were viewed with an unflinching eye or, better yet, several sets of eyes!

 

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The solution?  Stop trying to "tough it out" and don't be afraid to get a check-up now and then for both yourself and your business.  This could be through the use of independent 3rd party consultants like us  that have expertise and intellectual property that you don't have or it could be as simple as asking a colleague or co-worker for their input and "another set of eyes" on some aspect of your work.

The reward?  Much like medical problems, I've never seen a real business problem or opportunity that gets better by being ignored. So, the payoff for seeking help is a far less painful "treatment" and typically a better overall solution. In the case of our Telecom services, the results not only generate significant savings for our clients but also tend to make “heroes” of our contacts within those clients.  In the end, you'll be viewed not as weak or less competent but as a smart, pro-active problem solver who knows how to ensure a "clean bill of health" for your business.  Why not make an appointment with us for a check-up – what have you got to lose?

 

 

 

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Posted by on in Silver Lining Telecom
Doing the Budget Boogie?

Recently, I was talking to a friend and colleague who was stressed out because he was working on budgets for next year.He’s an IT/Telecom executive at a large corporation, and he was under pressure to reduce expenses but didn’t know where he could realistically make cuts without compromising vital services or projects.As we talked, it became clear that he felt he had no choice but to simply show projected reductions in hardware, software and ongoing telecom expenses that may or may not happen and then simply hope for the best outcome next year.

We joked about him doing the “Budget Boogie” as I told him that his approach reminded me of the lyric to a song by a band we both like named Little Feat.The song’s title is “Old Folks Boogie,” and the lyric goes like this, “And you know that you're over the hill when your mind makes a promise that your body can't fill.” 

Normally, I would have offered to help since my company specializes in reducing Telecom spending, but we had recently completed a project for his firm and knew there wasn't much room for further reductions. I did give him some “pointers” that would help to further manage the company's wireless expenses, but I knew these would result in relatively small additional savings.

Now, with this being that time of year for finalizing annual budgets, I'm wondering how many other managers and executives are out there dealing with the same type of concerns and pressures and doing their own version of the “Budget Boogie?”  I’d like to know if you or others you know have found yourselves in this situation.  Of course, my firm would be “Willin” to help in any way possible.

 

 

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Posted by on in Silver Lining Telecom
A Horror Story

THE PERFECT STORM

We recently worked on a Telecom Expense Management and cost reduction project for a client that was having significant problems with one of the major carriers.  The problems centered on billing and implementation issues that, frustratingly for the client, had been going on for over 2 years.  They were at their wits end and asked if we could help.  As we dug into the background of this situation here’s what we found:

  • The original contract was poorly written and even more poorly negotiated by someone inexperienced in the details and nuances of telecom carrier agreements.  As an example, it included a Minimum Annual Revenue Commitment that was almost 100% of the then current spending.  Also, the rates were significantly above market for that point in time.  While it looked like they would be saving money because the new rates were lower than their previous rates, they left a lot of money “on the table”.
  • Implementation of the contract required a migration of services from other carriers.  No ramp up provisions were included and there were no meaningful (i.e. with remedies) implementation SLA’s. 
  • The carrier Account Team was inexperienced and either inept, indifferent or both.  As a result, the client got little or no helpful support or problem resolution.
  • This “The Perfect Storm” of bad circumstances for the customer led to the following results:
  • Because the spending commitment was too high and the implementation took too long they were in underutilization default within the first 6 months of the agreement.  Rather than the carrier admitting that they had knowingly over-committed this customer, the carrier’s solution was to reduce the underutilization penalty and add a year to the contract term! This is almost never the right solution in this type of situation as it merely extends and compounds the problems.
  • The migration nightmare not only meant interruptions in service but also resulted in almost all of the services being put on the wrong contract rates or wrong billing platform i.e. rates were  higher than those that were agreed to in the new contract.  The client expended a great deal of time and resources to try and straighten out the billing mess but was having very little success.
  • After 12 months of problems, the only thing that changed on the account team was that a new (even less experienced) account rep was brought on board and she had to try and understand all that had happened previously.

We dug into the billing and the contract in great detail while also establishing communications with the account team.  We advised the client of the “good news/bad news” scenario. 

The bad news was that they had hit the “trifecta” (bad contract, bad implementation and bad account team) of carrier service elements resulting in their own “Perfect Storm” of troubles.  In our experience, if any one of these items is a problem they can usually be overcome by the other two.  For example, a bad contract can be overcome by a strong account team that works to ensure a smooth implementation.  But when all three aspects go bad, the customer is in for a rough ride!

The good news is that we knew how to address and fix their problems.  Here’s what we did:

  • We set up weekly calls with the account team to track issues, progress and resolution.In addition, because of our carrier contacts, we were able to escalate the issues to a Senior Executive at the carrier to cut through red tape and get things done quickly.

  • We migrated all of the accounts (over 1100 voice accounts alone!) to a new account on the proper billing platform.

  • Our detailed audit found over $126,000 in both one-time and monthly recurring billing errors that are being credited and corrected.

  • We’ve positioned the customer to conduct a sourcing RFP for these services in the near future.With our sourcing and negotiation help, they’ll be assured of getting market leading edge rates terms and conditions.

The moral of the story is that customers can avoid the danger, disaster and drama of their own “Perfect Storm” by making sure they do the following:

Be well prepared for contract negotiations by fully understanding your detailed demand set and having an in-depth understanding of the current market.It is almost impossible to have this knowledge in-house.Third-party consulting firms like Silver Lining Telecom will perform a current market benchmarking analysis for you at no cost and with no obligation. Why not take advantage of them?

  • Perform periodic billing audits to ensure accuracy and contract compliance.Carrier billing systems are extremely complex and even if billing starts out correctly new orders, software updates and human error can all contribute to incorrect invoices.
  • Demand accountability from you carrier account teams.Also, establish and maintain communications not just with your Account Manager but also with Senior Execs several levels above the account team. There’s typically a lot of management involvement when the carrier is trying to win your business but it frequently disappears once the contract is signed.Don’t let this happen.

If you take these steps before there are problems, you will avoid a lot of headaches and have a better chance to ensure “smooth sailing”

Tagged in: telecome expense
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Lead Generation - Partners or Pests?

Like many executives and business owners, several lead generation businesses approach me on a weekly basis. It seems they run the gamut from those simply selling data lists to those who provide a complete marketing automation approach.  Recently, as part of our expanded marketing efforts, I’ve responded to some of these overtures.  I always start the dialogue by asking the following questions:

1.     How confident are you that your efforts will provide us with results, i.e. at least some demographically qualified leads? (They always respond that they are very confident in their services)

Then the acid test…..

2.     Are you willing to share in the risks as well as the rewards?

I should explain that in our business, telecom cost reduction, we are paid on a contingency fee basis for results.  If we don’t deliver, we don’t get paid.  Based on our track record of success, we are highly confident that once given the opportunity to address a client’s telecom spending, we can produce significant savings for them.  At no cost to the prospective client, we will travel to meet with them, gather data from their service providers’ bills and contracts and then perform a detailed current market benchmarking analysis, which we share with the prospective customer.  Nearly 70% of the time, if we are given the initial opportunity to speak with a prospect and analyze their situation, the effort results in an engagement.  In other words, we take the up-front risk to invest the time, money and resources because we are highly confident in the rewards to our customers and us.

Silver Lining Telecom is looking for a quality lead generation company that is just as confident in their abilities and is willing to truly partner with us to share the in those risks and rewards.  Time and again when I bring up this concept, the response is that they have internal expenses such as the costs to buy/develop contact information as well as personnel costs.  Guess what?  So do we!  Call it “putting you money where your mouth is.”  That’s our business model, and we do it every day!

I’ve even tried to get creative and offer a significantly higher fee than originally proposed, with no success.  In fact, in one recent call with a lead generation company that had impressed me, I offered to literally double their fixed fee and to give them a share of our contingency fee as well, but they would not accept.  Makes me wonder just how good or sure of their service they really are?

So, unless or until we find a lead generation firm that is as confident in what they do as we are and willing to truly be a partner, I guess they’ll continue to be pests.

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