Answering the Call
CRA Locks Down Telecom Costs as It Opens New Lines of Communication
Laura Bernstein and Bob Varady say there are three bills no one can read: the electric bill, the tax bill, and the phone bill.
It’s the last of these that the business partners, co-owners of CRA — Cost Recovery Associates Inc., in Holyoke — chose to tackle after years of cumulative experience in the telecommunications industry.
“We knew a lot about the phone business, and we saw a need for a service that was more beneficial to the end-user,” said Bernstein. “And where there is confusion, there is profit.”
And that’s where CRA comes in.
The Telecommunications Society of America estimates that U.S. businesses accrue more than $47 billion in costs due to errors in billing every year, and that’s quite a mountain that Bernstein and Varady have been working to move since 1999.
The relationship between the two entrepreneurs began while both were sales associates for what was then known as Brooks Fiber in Springfield, later purchased by MCI, in 1998. Varady, a long-time entrepreneur, had already founded his own telecommunications business, the Telephone Group, on Dwight Street in Holyoke, but left it in the hands of his staff while he pursued sales positions in an attempt to, as he put it, “learn the nitty-gritty.”
Bernstein put it a different way. “He was bored,” she said. “But telecom is a very difficult business to work in, and for Bob, as a business owner, to take on a sales position just to learn more was very inspiring. Everyone wanted to emulate that.”
Conversely, Bernstein had never run a business on her own, but Varady said she stood out in her field.
“Something just clicked,” he said. “Laura is an excellent salesperson and knows how to build and maintain relationships. After six months of working with her, I knew I wanted to go into business with her.
“It took some convincing,” Varady added. “I asked, she passed. I told her to think about it, and then I asked again.”
This pattern continued for a few years — the co-workers even left MCI more or less together after the company stopped its local selling operations, taking jobs with Total Communications in Connecticut. The polarized objectives of Bernstein and Varady were still there — she wanted to pay the bills and excel in her career, while he wanted to take advantage of company-sponsored workshops and training courses, and forge his own path.
There were a few other career stops for both of them, always with Varady asking Bernstein to go into business with him, accepting a ‘no,’ waiting a few months, and trying again.
Finally, she gave a different answer — and the first permutation of CRA, a business doing work that had really never been done before, was born.
“We started doing audits of bills,” said Varady, “and that was a good start, but we’d fix one bill and then the next month there would be problems again. That’s when the business morphed into a more service-oriented venture.”
The subsequent business model is unique, and essentially puts CRA behind the wheel when it comes to evaluating, disputing, and ultimately reducing the telecommunications-related expenses for a diverse set of clients, ranging from colleges and universities to financial institutions and restaurant chains. Bernstein and Varady, who represent two of a six-person staff, rely on technology, careful record-keeping, and an extensive list of contacts within provider companies and other allied fields to save their clients thousands of dollars, if not hundreds of thousands, each year.
In this issue, BusinessWest looks at how they do it, and where these business partners want to take their venture.
A Positive Tone
CRA charges each client a flat fee on a monthly basis, based on the client’s monthly expenditure, its number of locations, and the complexity of the services it contracts for. Bernstein said 99% of CRA’s clients sign a three-year contract.
At first, this multi-faceted service was a hard sell to business owners, many of whom had never even questioned the total amount due on their telecom invoices. But as the amounts on those bills soared, and companies became more bottom-line-focused, that mindset changed, said the partners.
CRA’s current client list includes upwards of 500 different customers both regionally and nationally, and it is comprised mostly of small and mid-sized businesses. Clients with a national reach include Newbury Comics, Encharter Insurance, and Rand McNally, while locally, CRA’s clientele includes Florence Savings Bank, Human Resources Unlimited, Teddy Bear Pools, the Holyoke Chamber of Commerce, O’Connell Oil, and American International College, among others. All of these companies have forged ongoing relationships with CRA to save much-needed dollars and cents — but also some aggravation.
Susan McEvoy, chief information officer with American International College, said her work with CRA in the past year has resulted in substantial monetary savings, but she was quick to note that the time savings have been equally important.
“Working with the big telecom vendors can be incredibly time-consuming and often frustrating, because it is difficult to get the attention of the right people who can actually help you solve your problems,” she said. “These issues are usually compounded by layers of technical and business complexity inherent to the industry.”
McEvoy said that, with CRA handling these issues, she’s gained valuable hours to focus more on the core aspects of her job.
“This leaves me with more time to focus on matters where I have a great deal more expertise — and interest,” she said.
Bernstein said this is an apt endorsement and description of what CRA strives to do — offer its collective expertise in an area that often distracts and confuses a company’s administrative team.
“At first, I think people are a little leery about giving up control to someone else, but really that’s an illusion,” she said. “Our involvement gives them more control in the long run. We’ve gotten very good at anticipating our clients’ needs and delivering a level of service that assures them we can reduce not just costs, but mistakes, grief, and time waiting on hold.”
It’s Got a Ring to It
CRA works with clients through a number of steps, each designed to help businesses better understand their telecom services and, most importantly, to reduce their costs.
Bernstein said the process begins with a blueprint: bills, customer-service records, and the findings of on-site surveys performed by CRA are compiled and cross-checked, to create a sort of snapshot of what a given company’s telecom network looks like.
“We compare paper records with the physical site to compare what’s in writing with what’s going on at that site,” Bernstein explained, noting that it’s not uncommon to find unused lines that a client is still being charged for, or other technical glitches. “If the information doesn’t jibe, that affects cost, and errors continue because of the paper game. We want to make sure people are paying for what they’re actually getting.”
Once that blueprint has been drafted, the company takes the next step, by rerouting a client’s telecom bills directly to CRA’s Holyoke offices. The customer’s name remains on the bill, and only the mailing address changes, but Bernstein said this step is integral in creating a comprehensive record of charges and services that both CRA and the client can access and manage.
“We open the bill, date-stamp it, enter the information into our server, and send an E-mail to the client within 48 hours letting them know their bill has arrived,” she said. “We don’t interfere in accounting at all; that’s handled by the client. But the bill does make a pit stop here, and that’s when we audit it, identify whatever errors there may be, and fix them.”
At this point, CRA adds or changes any necessary services — adding or removing lines, for instance — and addresses any cost- or service-related issues directly with both service and hardware providers. The firm will also meet with sales representatives on a client’s behalf, and will make technical and carrier recommendations to allow clients to streamline their operations and save money.
“We can do that because of our relationships in the industry,” said Varady, noting that CRA is also a member of one of the largest telecom buying groups in the country, allowing the company to secure better pricing than a client could on its own. “In some cases, we have contractual relationships with phone companies where we make a commission, and we’ll make an allowance in our client’s fee in those cases so we aren’t double-dipping.
“We do have biases,” he continued, “but that’s because we’ve learned to be biased. Some companies do better with certain services with others, and the technology moves so fast in the telecom world that some companies have gotten good in certain areas, while other companies do well in other areas. That knowledge helps us help our clients do things smarter and save money.”
In fact, Bernstein and Varady say their clients average between a 10% and 40% savings annually in telecom costs after signing on with CRA, and many of the errors they identify and eliminate are paper- or human-based. Further, the model allows CRA to remain fluid when working with clients, shifting focus to address different needs.
McEvoy said AIC’s relationship with CRA reflects this malleability.
“The college originally hired CRA to help us resolve some major phone system issues resulting from miscommunications and misunderstandings in working with the big telecom vendors,” she explained. “CRA helped us get past some difficult holdups when we would have otherwise been dead in the water. Now that we’ve smoothed out some of the bigger issues, CRA is helping us to streamline our telecom spending and manage our day-to-day phone system operations.”
As the business continues to grow, Varady said he’d like to expand the brand in some way, perhaps by creating additional CRA branches in other parts of the country, or by passing some of the partners’ knowledge on to like-minded entrepreneurs.
“I would love to replicate this model elsewhere,” he said. “The policies, plans, and procedures we have in place have taken years to develop, and they’re proven to work.”
Plus, CRA has few, if any, competitors conducting the same type of work, and this also bodes well for expansion.
“We never run into anyone with a similar model; there’s no issue with competition,” said Bernstein. “We often have CFOs give us a call and say, ‘I’d love to compare your prices with your competitor, but I can’t find any.’”
With a laugh, Bernstein added that she doesn’t think there are many people out there who want to deal with phone bills and their myriad nuances, but for her and Varady, it’s as good a fit as a receiver to its cradle.
“I’m glad I agreed to do this, because I’ve received a tremendous education,” she said. “I’m very fortunate.”
To that, Varady added that, for him, it’s been a wonderful ride.
“In the beginning, Laura kept saying she couldn’t go into business — that she just couldn’t do it,” he said. “I’m glad she changed her mind.”