Interview with Brandon Ellett - April 2016

ERCG continues its ABC leadership interview series with Brandon Ellett, Founder and CEO of The Commission Exchange. We sat down with Brandon and discussed several topics, including --

• ABC commissions and payout structures
• Retailer margin compression and rising ABC fees
• Opening up new opportunities and an alternative way of managing capital

ERCG:  The Commission Exchange is a fairly new company. Tell us a bit about the journey -- how did the company get started, what challenges did you face, and what made you think the market would accept your solution?

The road to the present has been long, although the journey has just begun. The Commission Exchange launched in the third quarter of 2015 and set out to introduce a better way for the ABC community to expeditiously access their unpaid commissions. The reception to our first-of-its-kind service in the marketplace, both by ABCs and electricity providers, has been incredible. Given my background working on the REP side, where I was dependent on commissions to support my family, I saw first-hand the challenges each party has relative to commission management, particularly in a market that faces inherent cash flow challenges and increased margin compression. That said, The Commission Exchange believed the market deserved a better way, which is the cornerstone of our business.

Sales professionals and commission-based organizations deserve an easy way to instantly access approved but unpaid commissions. Similarly, providers need a no-cost way to make that happen. Our company’s business model considers both sides of the transaction – commissioned sales professionals and retail electricity providers – and provides a win/win solution. The channel market is now empowered with choices and options for managing their capital, and our partnering providers have newfound flexibility to grow their business. 

Nothing new comes without its share of challenges, and our story is no exception. Since inception of our company on paper to the day we launched the business, our team tossed around an extensive range of options and scenarios to ensure the process would be simple and beneficial for everyone. With several quarters now under our belt, the proof is in the simplicity and expeditious timeframe in which a request can be handled: From the time we receive a request to funding one of our members, the online process can be completed in less than 24 hours

Broker commissions are always a hot topic in our industry, ranging from fees, payout structures (upfront vs. residual), and accuracy. What have you been hearing from brokers and suppliers in recent months, and how do you see your company removing some of the payment "friction" that our industry faces?

Let’s start with the channel partner community, which is the client-facing engine of this industry. Channel partners are driving the providers’ products and new offers to the end-user marketplace, and friction has resulted because there are limited and decreasing options for the channel marketplace. With regard to structure, that’s where our core services are focused. When margin compression is combined with an increasing amount of forward-start agreements, all you have to do is follow the flow of the dollar: It’s going out but not coming back in. This is precisely where The Commission Exchange helps providers empower their partners so they can grow their business. 

With regard to commission accuracy, this is an area of significant focus for The Commission Exchange. There are hundreds of payout/commission plans across the REP community, making it simply unmanageable for everyone. No matter what “system” they start out in, they all seem to be ultimately dumped into Excel, requiring a significant amount of time and resources to manage and verify.  The Commission Exchange’s product development and partnerships are exploring innovative opportunities for tackling these challenges, and we’ll have updates for you and the marketplace very soon.

For which states and commodities do you currently offer your financial services, and what are your growth plans? Are any states more or less attractive to you and why?

The Commission Exchange offers payout support to channel partners across every deregulated power state, and we’re working to expand offers into gas-only markets as well. Our company is highly focused on organic growth within our core offers, and as I said earlier, there’s tremendous demand for complete commission management solutions on both the channel and supplier side. We are very supportive of expansion of deregulation into new states/regions, but mature markets are obviously more attractive at this point. We are equally keeping our eye on offering services in markets with political and regulatory overreach.

What qualities do you look for in an ideal supplier partner?

Ideal suppliers just simply get it. They are sales-first organizations and understand the necessity of a 100% commitment to support the people selling their products because let’s be honest: without sales, literally nothing else matters. These savvy businesses understand the evolving needs of their channel partners and are open to adopting innovative ways to provide them with exceptional financial tools to support their growth.

From your vantage point ...

Do you predict that commissions will go up, down, or no change?

In aggregate, they will and should go up. Commissions are based on the value a salesperson brings to a transaction. The more new products, services and savings to the marketplace, the more the ABC community will deservedly earn.

Do you see financial services like The Commission Exchange triggering more entry of new ABCs or bringing on a wave of consolidation in our industry?

There’s a lot going on in the ABC space. We’ve seen a lot of action in terms of book acquisition and the broker of broker’s model, as well as new entrants that lead with a variety of niche offerings. The recurring challenge for all players, both new on the scene and acquiring, is access to financial services to execute their strategies.  In all scenarios, ABCs want and need options that provide greater control over commission payouts. That’s where the Commission Exchange is focused. Our solution is unique…it’s in demand…and it’s working.