The mobile business industry panel tackles topical issues

QUESTIONS  and answers

3 UK has decided to replace volume bonuses for dealers with quality bonuses (paying out on onnections if they’re still live after four months). Is this the best way forward for the mobile business?

Limpenney, Frequency Telecom: 3 entered the market with a brash strategy and is now pulling back from its previous position. This move will make life very difficult for dealers that supported 3 in the past.

Whilst quality connections are prime requisites, it will be difficult to accurately measure what a quality customer is. This will take some time to work through and sales and connection processes will have to be carefully refined. In the short term, it may have an adverse effect on 3’s connection volumes.

Fulfitt, Jag: This does nothing to incentivise the average retailer. Under the old scheme, if the customer disconnected within that time period then the network would clawback the monies anyway – so in effect the volume bonus would not be paid out.

The difference now is that sales staff paid commission based on a percentage of what the retailer receives from the network can not have this with their initial payment, as the retailer has no way of guaranteeing whether the customer remains connected.

The retailer will also have to take the networks word for how many connections stayed live, whereas under the old scheme you were effectively informed when a customer disconnected because it would result in a clawback.

Also, if it is the network’s fault that the customer has disconnected through dissatisfaction from the service received from the network, why should the dealer have to suffer?

Alexander, MoCo: 2007 is the year to make one significant decision about where you will fit into this fast-paced ever-changing industry. The decision is; are you in business for the long or short term?

Long-term dealers will take this change in commercial remuneration as the first step towards cleaning up the market.

This is not to say they will welcome the change, more that they understand they have had it good in previous years and that suitable measures have be put in place to sustain growth and profitability from the networks.

The main issue is with those dealers who want to deliver their long term business strategy in 2007 but also recognise that today’s cashflow is king. This dilemma will be answered by the network who offers it all upfront in large amounts – thus forcing the dealer to change networks and chase the commission.

Price, Avenir Telecom: Emphasis on quality is now shaping the industry, so it is unsurprising that an operator has chosen to make this shift in its bonus scheme – and others may even follow suit.

The profitability and progression of the market could not be sustained on the high-volume and high-churn business model indefinitely.

This is a huge transition period for the market and it will present many challenges in the short term for dealers and retailers. This change will inevitably have an impact on dealers’ cashflow.

As a distributor it is our responsibility to support our clients to ensure that they have the packages, knowledge and infrastructure in place so that they can adapt to these changes, grow value and maximise the opportunities that this may present.

Many big brands have decided that 2007 will deliver real revenue from wireless marketing, but how will the consumer react? When (if ever) will mobile advertising really take off?

Price, Avenir Telecom: As consumers begin to use increasing data services for TV, music and more involved web access, the environment to introduce ideas such as mobile advertising will have a more natural fit as they are already integral to these services in their original domain.

In the next year it is likely that big brands will test the waters with more subtle routes to entry, such as display advertising on search sites and sponsorship. Operators will need to make this easier to buy into and be able to justify return on investment through demonstrating consumer reach and response.

Certain consumers will still regard some methods, particularly on-location mobile content distribution to be intrusive. And, if this is to succeed, focus needs to be kept on maintaining a positive user experience.

Limpenney, Frequency Telecom: Mobile advertising will have an effect when it becomes more visual and creative. Then it will work like viral email with people sending it on to their friends. It’s difficult to believe that with the high level of quality and ability in advertising and marketing in the UK that a medium that can specifically reach individuals will not work. It just needs time and application.

Seaton, Airwide Solutions: In our recent independent survey of 50 brand name companies, 89% of major brands stated their intention to use mobile campaigns by 2008, with over 40% stating they have already deployed text messaging campaigns.

Expectations are high, with 5 to 20% of recipients expected to undertake financial transactions after receiving mobile marketing messages. But the risks are also high – a consumer’s mind is made up from their first impression so it’s crucial to ensure they aren’t inundated with spam, fraud or spoof schemes.

As such, operators are aggressively looking at enhanced anti-spam and policy management solutions, including ‘personalisation’ services allowing consumers to control their definition of ‘spam’. Combined with the money that brands are pouring into mobile marketing, if campaigns can be targeted via demographic information and consumers can be protected, the ingredients are in place for mobile marketing to gain significant traction.

Alexander, MoCo: Just as the internet, text messaging, and MMS have changed the way people absorb brands and marketing messages, wireless marketing will certainly have its place amongst the approaches used today.

Some brands have decided to push forward with this type of marketing for two main reasons.

For one, this is an area that is not completely saturated with competition, making it easier to deliver a measurable return on investment.

Secondly the ‘brand giants’ have a prerequisite to be at forefront of all new media messaging to retain their status and awareness. With this type of new media marketing it is not a question involvement for the larger brands it is a statement of position and dominance in the market.

The Mobile Business Industry Panel aims to get views from leading figures on key topics. On the panel we have a selection of senior management from operators, distributors and retailers, plus a couple of industry observers and pundits. Each month we invite comment from some of them and we print the best/most interesting of their responses.

If there are any questions you think we should put to the panel just email them to us:

Managing Director, Frequency Telecom

Director of Sales and Marketing MoCo Distribution

Managing Director, Avenir Telecom

Scott Fulfitt
Operations Manager, Jag Group

CMO, Airwide Solutions
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