Working with Brokers

One of the biggest challenges for a call center is the challenge to have enough work to keep a stable workforce occupied and engaged. This means having a pipeline of work continually flowing in to replace those projects that are ending.

We followed a process of a mixed channel approach. We had a sales team out beating the bushes, we did advertising (primarily internet pay per click), we exhibited at targeted trade shows, and we used brokers.

There are several types of brokers - from those that simply refer work to you and they never talk to the client again to those that have an ongoing management relationship between the client and the call center. I always preferred to work directly with the client, because if we had the broker in between us, it was one additional break-point where information could get corrupted as it passed between the client and the call center.

Brokers usually charge on a percentage of gross revenue. Most brokers seem to work between a range of 3% to 10% of gross revenue. So if a call center billed $100,000 in a month and the broker was getting a 10% commission, he would get $10,000 in commission.

The contract between the broker and the call center should include how the commission is calculated, ability for the broker to audit billing and collections (to ensure he is getting paid correctly), and the length of term of the contract. Some brokers will demand a fixed commission for the life of the contract. Others will go along with the approach of a decreasing commission rate. For example, year 1 might be at 6%, year 2 is at 4% and year 3 is at 2% and then stops. Others drop to a lower level and stay there for the life of the contract. It all depends on what you can negotiate and what makes sense.

Most brokers will require that they get paid within some many days of when the call center gets paid. Some will push to get paid the same day every month, whether the call center has been paid or not, but I never had one that didn't back off on that point when I pushed it - that really plays havoc with cash flow if you have to write a big check and haven't received that payment yet from the client.

There is a tendency of call centers that brokers have to deal with. This tendency is to be excited about the project when the broker first brings it in and is happy to pay the commission. After some time passes, the call center forgets the broker's contribution and can start to feel resentment at writing a big check every month to someone who hasn't been in the trenches with them.

One way to combat this is to help the call center remember that none of this revenue would be there if the broker hadn't brought it in. Another point to bring up is that they need to know the true cost of their in-house sales and marketing efforts as a percentage of gross sales. If you add in the salary, taxes, benefits and commissions of the inside sales team, plus the expense of their sales trips, hotels, per diem expenses, marketing efforts, advertising costs, trade show expenses, etc., you find that 4-5% of gross revenue may be a good deal.

I have a friend that has no direct sales team and relies almost entirely upon brokers to bring work in. He pays out $400-$600k in broker commissions per year, but he is happy to do so. He says that doing this lowers his fixed overhead and he only pays if revenue is generated. If the brokers aren't bringing in new work, then they don't get paid.

Two brokers I have worked with in the past have been Andy Paulsen and Bill Samuels. They were good to work with and had a good flow of business for us to look at. It is important to help the brokers know what your expertise is and where you will succeed. They have a vested interest in placing work where the client will be happy - it reflects on their reputation as a broker and on their commission. If they place work with a call center that drops the ball, they don't like having to hear back from the client wondering why the broker sent them to a call center that didn't perform and they lose out on that ongoing commission stream. If you treat the clients right that come through a broker, pay the broker promptly and timely, and keep the lines of communication open, you can develop a long-term stream of business through the broker.