|Chris Mayers, managing director, Border Mobiles|
Each month the IMPDA asks a panel of dealers how they feel about the hottest topics affecting the channel community. This month, we are looking fi rstly at ongoing revenue and how it is and will affect dealers. With most of the networks now running ongoing revenue schemes for dealers, we asked what our panel thinks about how this is going to pan out. We all know that it is aimed at the long term customer and increased retention, but if customers change networks as often as they do now, at the end of their contract is the ongoing revenue actually going to be the golden fl eece, or a wolf in sheep’s clothing for dealers?
Paul Marks, managing director, Fonefi nders & Mfonex -
Paul Marks has been in mobiles since 2003, selling mobiles to the public and business. Based in Orpington in Kent, he fi rst founded Fonefi nders, then in 2006 joined and became operations director of Mfonex, an ecommerce solutions company, that’s head offi ce is in Manchester: Thinking about it from the perspective on ongoing revenue might be a good idea as it gives us a long term money earner. Also, hopefully this should stop all the silly cashback deals as it will be a diffi cult model to follow thanks to this new process.
The only problem at the moment is the O2 model, which works on APRU, as there is a big chance of getting cashback. I think that Orange and T-Mobile have got the right idea and it appears this has become the favourite with dealers.
At least they have thought about us, the dealers, and how it is going to affect our cashfl ow. As long as there is a decent amount upfront to fund the handsets it will work very well.
It isn’t really clear at the moment how we are going to be affected by clawbacks. That is a bit of a worry; if the customer does not pay the bill are we going to be clawed back the whole amount of the ongoing revenue, or will it be just a proportion? Nobody at the moment is really sure, so lets have clarity on how that is going to pan out.
One of problems that every dealer is concerned about is how the disties are going to work out the ongoing revenue. Are their systems able to cope with it – many think not.
There have been mixed reactions to this way of paying us and I was the fi rst one to be sceptical of it when O2 came out with its famous proclamations,
which rubbed the dealers up the wrong way. But now thinking about it, it is possibly the way to go. We shall see and as the saying goes, ‘the jury is out’!
Chrisse Mayers, managing director at Border Mobiles –
Border Mobiles fi rst started in April 2004. It is based in the small town of Hawick on the border of Scotland and England. It is a small family fi rm supplying mobiles via its website and from out of its own shop: Ongoing commission certainly looks here to stay. I have to say, I think O2 needs to possibly look at the other two major networks’ propositions, as they certainly look on the face of them more viable, and should provide dealers with a regular monthly income which may help during quiet connection months.
It’s yet to be seen how the ongoing revenue will breakdown, such as whether we will get individual mobile number commission breakdowns, or simply a combined total, like the current T-Mobile Solo commissions with no way of knowing who and how much we have been paid for.
If the latter is going to be the case, dealers will need to be more intimate with customer’s accounts, possibly registering all of them for online billing (of course keeping in place their normal paper billing). This could prove extremely time consuming for each independent but undoubtedly good for customer tariff analysis, albeit rather invasive. Time will tell how the individual networks work each commission run.
As long as independents keep their customers close to them, I see no reason for customer poaching from other would-be suppliers. However, I don’t think the model is going to gain any loyalty to any one particular network as there is no increase in commission against customer year’s service; even a 1% rise for a number of years could encourage dealers not to churn customers away.
This could be the Golden Fleece for dealers I feel, as long as dealers look after their customers properly. However, this too would stop any individual dealer from becoming too big, as administration time becomes greater and there in I feel hides the wolf!
Mayers, Border Mobiles:
We all have the ability to credit check companies that we are thinking of doing business with. However, the question could also be how reliable are the credit reports or how up to date? If networks can do credit vets on customers, giving a glowing pass to them, then technically these customers should never cause clawback …. But they sometimes do just that!
I think dealers should be able to deal with multiple distributors across all of the networks, especially in the current fi nancial climate. That way spreading the risk more evenly.
Also, networks should look at the payment of ongoing commission if a distributor fails. Do we lose our ongoing commission because we have lost our distributor? Or can it be transferred to another distributor?
We are all responsible for our own businesses and keeping a close eye on commission payments should be sufficient to guard against potential big losses. Networks pulling the plug on any distributor is a worry in itself, and their reason for it never appears to be fully substantiated, unless its their way of culling the independent base and getting more customers to go direct, by making our avenues to market more restricted and therefore less competitive.
Yes, I think dealers should check more thoroughly with who they deal with, and access for themselves how much they are prepared to let any one company owe them at any given time, but distributors should also be trying to make sure this amount is kept to a minimum to maintain dealers confi dence. I think that the rumours that fl y around regarding companies can themselves create a problem that never existed.
Marks, Fonefi nders & Mfonex:
We are all on tender hooks biting our nails worrying. Who could be next? There have been many dealers caught out by the networks suddenly falling out with disties, by suddenly chopping their network and then there’s a great rush to fi nd someone else. There have been many fall outs between disties and networks, and the results have been seen in the mobile press.
Of course the bigger worry is that if a distie goes belly flop, we are all left in the lurch with no distie, and more importantly, no money. This means that we have possibly little or no chance of getting anything back.
In doing that, it affects out business. Unfortunately these days it’s the ones that we least expect that have folded; look at Advantage!
So should we be doing credit checks on disties like they do to us? I think yes; it gives us a fair indication of what their fi nances are like and we can then make an informed decision on whether to sign up with them or don’t touch them with a barge pole.
We have businesses as well, and we rely on them for an income. They are our pride and joy and when something happens like this, it backfi res on us.
So let’s do unto others what they do to us. The disties are always worried about dealers. I think the time is now when we should be worried about them. Its our future!
The IMPDA (Independent Mobile Phone Dealers Association) is open to all UK dealers and distributors. The aim of the IMPDA is to achieve a level playing fi eld for its members, and to champion quality improvements in the industry for a better future. If you would like to join the IMPDA then simply email firstname.lastname@example.org. If you have a concern or story then either email admin@ impda.co.uk or call 0844 884 9702.