The master agent model has been firmly established in the US Channel for a number of years yet, here in the UK, the approach has not become as widespread. So, what is a master agent? Steve Harrington, managing director for EMEA, Aryaka, explained, “The master agent model is similar to the usual vendor-distributor relationship in the UK.
“The main advantage for the channel being that master agents act as the go-between for sub-agents and the vendor, making them a pivotal piece of the puzzle in accelerating the adoption of the vendor’s technology.”
Harrington added master agents play a vital role in the feedback cycle for vendors. “They also act as a canary, listening feedback from agents and industry behaviour, helping vendors better understand the direction future development could take.
“This helps vendors solve the more nuanced challenges that master agents see in their local markets while also preventing solutions from being overpromised and underdelivered.
“For the sub-agent, having a relationship with a high-profile vendor – through the master agent – opens up a stack of new revenue opportunities and use-cases for their customers and the ability to expand into new markets, with no large investment needed.
“Yes, the relationship can become ‘transactional’, but that’s not necessarily a negative. Sub-agents can better scale and accelerate their delivery by leaning on the master agent’s technical support through consultation and design.
“That helps to form a closer relationship between the sub- and master agent, making the sale more repeatable in the future. And in turn, that commercial success delivered by the master agent is rewarded by the vendor which filters down to the sub agents too. It’s a win-win for all involved!”
Andy Horn, CEO, IntraLAN, pointed out the reality that, with the increasing globalisation of the channel and the end of significant Covid-19 restrictions, it is incredibly beneficial for businesses if they can increase their reach right now. That ability to quickly widen reach, Horn said, is one of “the biggest upsides to the master agents” as the “easy scalability of the model comes with a relatively low entry cost for partners”.
However, Horn cautioned that the master agent approach can lead to an unmanageable portfolio in terms of having adequate knowledge to guide customers through their options. He explained, “Despite some advocates for the model seeing the reduced expectation for technical expertise as a benefit for master agents, it can have an adverse effect.
“Focusing on such a diverse range of products limits a partner’s specialist knowledge, hindering their customer support system with inexperienced service.
The master agent model does not work for every vendor or every partner. Neal McMahon, regional sales leader for the UK and Ireland, Avaya, explained that the company uses the terms technology service distributor (TSD) and agent instead.
McMahon explained, “From a vendor point-of-view, being a cloud-focused SaaS company offering a recurring, subscription-based model suits cloud delivery due to the ability to easily scale up or down and manage, maintain, and upgrade the technology remotely.
“Customers like it because they only pay for what they use based on a fix recurring fee and get timely updates. They save time, resources, and money whilst maintaining the flexibility to add more features as their business grows.
“There is great value to agents in a SaaS model as they receive recurring revenue from licenses, which brings them predictability to the business plus services provided by the TSD and vendor. By adding cloud communications or other SaaS offering to their portfolio, channel partners can enhance their overall cloud offering and increase the opportunity to drive traction into public cloud at a time when it is vital to support the rapidly changing way people work.
“Partners need to have every option for appealing to new customers and retaining existing ones depending on what customers need as they progress through their digital transformation journeys at a pace that is right for them. With this in mind, we give our channel partners every solution option to retain and grow customers in the model that makes the most sense for their needs.
“By streamlining the cloud selling process and training partners on phased cloud migration, we’re taking our UK channel with us on that journey and helping them win customers, grow revenue, and increase market share.”
Scalability was discussed by many stakeholders as a key benefit of this approach. Richard Ireson, sales specialist for cloud solutions, Nuvias UC, said, “The master agency model allows partners to push through a high volume of orders and see a recurring revenue flow seamlessly into their wallet and enables easy scalability of vendor solutions within their portfolio. However, they have to follow a lengthy process to sign up as a sub-agent, before being able to see the benefits.
“Although the master agency model is supposed to reduce the number of touch points in a transaction, you still need to involve everyone in the sales chain initially – from reseller to end customer – to update them on the process and give them an understanding of the model.
Michael Lloyd, CEO, Nuvola Distribution, pointed out several advantages to the master agent model. He said this approach means resellers do not need to upskill their workforce. He explained resellers can “literally find the opportunity and “throw over the fence” to the vendor to manage and close” which can be “good for cash flow”.
However, there can be some disadvantages as a distributor. He explained that, within a master agent model, “there isn’t a great deal of value add we can give as the vendor does all the heavy lifting apart from [elements like] marketing”.
Lloyd added, “For the reseller, they do not invoice and therefore lose a certain amount of control and also may feel their books look less attractive. They also cannot add much value to the end-user and have fewer opportunities to upsell other products or solutions.”
Pandemic ripple effect
It is also worth considering whether the pandemic has had an impact on the trajectory of many channel businesses. For Horn, from IntraLAN, the master agent model will gain momentum as channel companies target new growth.
He explained, “The IT industry is growing at an exceptional rate in Europe as it becomes more valuable to the global supply chain. The UK serves as an optimal hub for businesses looking to access European end-users and vendors.
“Lockdowns certainly impacted the model’s growth, as master agents couldn’t fully embrace the agile scalability offered by the model. Over the past few years, we have observed an increased presence of US-based master agents expanding into the European market. We predict that this growth will gain momentum again as we move past the restrictions of the past two years.
“The US and UK markets are noticeably different. Therefore, the master agent model must be adapted to fit not only the needs of customers but also long-standing channel partners. There needs to be a greater focus on sharing technical know-how between agents, customers and vendors in the UK for the model to succeed.
“We expect the model will struggle behind lacklustre tech skills because it’s a far tighter market than in the US – UK customers want direct lines to vendors with knowledgeable support.”
Adapting to the UK
When asked if the master agent model can work in the UK market, Harrington, from Aryaka, said, “Of course it can! Having led the EMEA arm in multiple US-based channel-focused SD-WAN vendors, I know the master agent model is effective in getting the technology into the hands of those who need it, especially when expanding into new areas where a vendor isn’t well-known yet.”
Harrington pointed out that the Aryaka brand is still growing its presence in the UK, yet is well known in the global SD-WAN market, having been recently awarded Gartner’s “voice of the customer” leader accolade.
He explained, “By giving our time and resource to our master agents, we’re proving our trust in their capabilities, increasing their knowledge and confidence when explaining the benefits of a combined SD-WAN and SASE network architecture.”
Ireson, from Nuvias UC, explained cloud offerings are particularly suited to the master agent model. He said, “Generally, we are seeing a shift to the cloud across businesses in the UK. We believe that the uptake of the master agency model will happen more naturally as businesses scale up their cloud offering.
“Currently, UK smaller business culture is driven by maintaining strong relationships – something which is restricted if you pass your deals onto a third party. Plus, they need to see the full revenue of the deal to regulate their cash flow, rather than relying on the marginal commission kick-back.
“However, as businesses continue to grow, the master agency would be more manageable to maintain their growth.
Managing challenges
Despite these benefits, there are of course challenges to bringing master agents into the UK channel ecosystem. Harrington, from Aryaka, outlined how these can be addressed. He said, “What I’ve found to be vital in forging that vendor-master agent relationship is setting realistic expectations for both sides.
“From the master agent’s perspective, what sales support is available, training and accreditations? How complex is the journey to get that support? How can the vendor upskill their team and ensure the commercial rewards worth the time?
“From the vendor, what’s the target sales volume? How confident is the master in attracting X-number of sub-agents into the proposition?
“It’s all about transparency and honesty. Finding gaps in knowledge on both sides of the relationship and working together to fill them.”
Nuvias UC’s Ireson pointed out the billing issues that can arise from adopting this model. He said, “The UK market dictates that they like to manage billing with a single supplier. When moving to master agency, this element changes. They’ll see their software being billed by the vendor and hardware coming from their supplier.
“Also, when it comes to buyout periods of existing contracts, commissions aren’t flowed down immediately, so it can take time to see the benefits of a deal. This means, once the deal is closed, the partner might have to wait months, potentially years, to receive the funds for it.
“There are ways for distributors to help their partners overcome the above challenges. Nuvias UC have recently put a master agents’ commissions accelerator programme in place, to ensure that channel partners receive their funds upfront.”
McMahon, from Avaya, added, “Moving to the cloud can be a challenge for partners so through our cloud-first solutions and cloud-first channel programme we aim to help them to level-up in stages as they progress on their cloud journeys. It’s important for vendors to offer hybrid cloud delivery options as having a multi-cloud application ecosystem enables channel partners – and their business customers – to choose the cloud technologies that deliver the business-results they want at the speed they want.
“In this way, partners have the freedom to pursue subscription and cloud-based models at the rate which is right for their business. With a journey starting from our Avaya OneCloud Subscription offering, based on a TSD agent model, and going all the way through hybrid deployment methods to full-public cloud products, we’re enabling our partners to remain profitable as they adjust their businesses to the SaaS model.
“As a partner-oriented business, we understand that agent responsibility has a stopping point. Through our TSD agent programme, agents across EMEA address market trends on the front end, where customers want simple transaction sale, whilst Avaya fulfils their needs on the back end, where customers demand consistent and comprehensive service delivery and support.”
The long term
In terms of how this might play out in the long term, Avaya’s McMahon said that vendors simply need to be pragmatic and listen to their partners. He said, “Having different models whether public, private or hybrid are key to delivering choice to the channel and end-user customers today and into the future.
“The acceleration of change in the last couple of years has demonstrated this need for a choice in the cloud solutions market and Avaya can provide this breadth of portfolio and different options tailored to suit our partners whether legacy or net new channels.”
Lloyd, from Nuvola Distribution, feels the model will continue to take root in the UK, but it will not drastically erode existing approaches. He said, “There is a place in the UK for this model, particularly with “new” players entering the comms space, such as IT and print resellers. However, the tradition is a wholesale model, and I feel that will be the prominent model adapted.”
As such, Lloyd expects the long-term trend to be “more wholesale resellers than master agents in the comms market”. Wholesale resellers, Lloyd explained, could outnumber master agents at a ratio of 3:1.
Ireson, from Nuvias UC, added, “We expect to see vendors adapting their channel programmes to cater more for the EU and UK markets, by developing programmes which will allow partners to see immediate benefits from becoming a sub-agent.
“Therefore, we should see more uptake from partners, as long as they can remain flexible and have the option to transact via both master agency or direct wholesale, depending on the type of customer and opportunity which they’re working with.”
Upcoming name change
There is also an ongoing conversation happening across the Channel about the words used within the term “master agent”, with the word “master” having negative connotations around race. In addition, those operating within the model feel the term does not accurately describe the relationship between partners.
At the time of publishing, “technology solutions brokers”, “technology solutions brokerages”, and “technology service distributors” (mentioned by Avaya earlier in this article), were being suggested as some alternatives. As there is no consensus about what term should be used going forward, we have used the existing name but will update this article on our website when a new term is agreed.