UP AT THE SHARP END

Paul Marks, managing director, Fonefi nders & Mfonex

Sohail Ratansi, managing director, Fones U Like

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 movement in the industry, with Jim Hyde about to leave T-Mobile, and Masson quitting Advantage; even distributors are not free of problems with Brightpoint shedding over 200 staff. But is the industry backing itself into a corner with forever low prices, especially when customers get handsets for free and don’t see any perceived value in it? What do you think the industry needs to do to change customers’ attitudes to bring value back into mobiles?

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: I have always been a believer in putting value back into phones. The days of the throw away items has got to end, where a handset the dealer has paid £300 to £400 for, and that the network has subsidised, is given to the customer free.

Customers moan when and if we ask them to pay for the phone because they don’t believe in paying. ‘Why should we pay?’ they say. They don’t know the true costs. Perhaps we should all put the real cost of the handset on our publicity just to show that it’s us the dealers who have really lost out, so they can have a nice new shiny phone worth a lot of money for nothing.

Call me old and cynical, but when I started 10 years ago you couldn’t get a free mobile phone. It wasn’t the done thing for networks to subsidise the phone. A least there was a value as the customer had to pay something, so perhaps there were fewer clawbacks in those days.

Sohail Ratansi, director, Fones U Like:
Sohail has been involved in telecoms since 1996, from a retail job to Cable & Wireless to a break in banking, then back to the mobile industry. He set up Fones U Like in 2006, starting in consumer, and moving into B2B. Now, 95% of the company’s business is B2B: For a start, a uniform lower subsidy on handsets. There’s no point in a small independent dealer having his commissions cut due to volume sales, but a giant like Carphone Warehouse having better commissions so it can subsidise the handset totally.

End all 12 month contracts, also. We as a nation are so used to 12 month contracts and upgrading every 12 months that we have no real knowledge of how much handsets cost.

Better commissions on SIM-only deals would be good too. Let’s start getting the public out there to carry on using their handsets. I would personally push more SIM-only deals if the commissions were better. Pay as you go handsets too need their subsidies cut. They are a great source for box breaking and handset replacements, which again defeats the purpose trying to get the public to hold onto their handsets.

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: I think in general we need to stop giving away handsets of such high value with contracts, increase the cost of pay and go varieties, and don’t have such a broad range available on pay and go. We need to bring back unique handsets

to contract, to give customers a sense of being special again.

Yes sure, manufacturers want all of their handsets available to everybody, however, where does this leave the value of the handset to the contract customer? SIM-free handsets are, as we in the industry all know, more expensive to buy in than the pre-pay variety, but most customers do not see this value in their contract. With handset values dropping quickly, a customer who has been connected for six months or more will not see the real value their phone had.

The current credit crunch provides an ideal medium to change the way we sell our product.

Ratansi, Fones U Like:
I recently got a deal for myself from another dealer as my commissions couldn’t match the freebies I was getting. I got a free PS3, fi ve games, a Blue-ray remote and a Blue-ray movie for taking on an 18 month contract on Orange. Ok, I paid £90 for the handset, but still what a deal! Over 18 months it’s still going to cost me more than £700, but as I use the phone everyday its no biggie for me as I would have spent that kind of money anyway.

One of my fi rst clients of this year has been haggling with me for a free laptop with his upgrade. Now I don’t think these people realise the free laptop isn’t always free, it’s usually paid for in the line rental. But I have worked out a package for him to get his free laptop.

It’s all down to clever marketing, but I think the public is now becoming more aware of this, and after explaining to them how much they would be paying if they went on lower tariffs without the freebies it makes more sense to them – and the request for free laptops does start to fade away.

I also think credit checks should be more stringent than they have been recently. Maybe back to what they were like in the late 90s when it was harder to get a line. This may lower connections in general but it will reduce the never pays, and also can aid in retaining customers without having to give them everything including the kitchen sink to keep them.

Mayers, Border Mobiles:
In a word, yes, we need to change the way customers see their deals. Electronics in general are becoming cheaper almost by the minute. In order for customers to qualify for their free gifts they are having to sign ever-longer contracts, but we have seen the cost of data packages fall dramatically over the past year, so where will the same price plan be this time next year?

Had a customer signed a 24 month deal this time last year, for their money they would now be getting twice the value. These same customers are the ones who complain about why they are paying twice as much for half the value, forgetting the free gift. They are the same customers who only sign the deal in the fi rst place to get the free gift, the ones who are most likely to not complete the contract and the ones who are most likely to cause the dealer commission clawback.

Networks need to work with distributors and dealers to help us all get through the credit crunch. Customers have a better idea these days on how the system works, so maybe it’s time to change the way it works with a better understanding of customer, distributor, network and dealer requirements?

Marks, Fonefi nders & Mfonex:
I think that it’s long overdue for networks to go back to charging the customer towards the cost of handsets. The gimmicks and free thrown-in items have got bigger and bigger.

I think it is in the present customer’s nature now to expect extras as a right when they get a handset. They have been given all manner of things and free handsets for so long, that they now don’t know any different.

Currently many dealers are now offering laptops, but the question is what is next? I think some sense need to come back into the industry and all of us need to now change the customer’s expectations of what they will get when they order a handset. There has to be a limit to what dealers, especially small independents, can offer if they are to survive.

The other thing which many young people complain of is 18 month contracts. Networks, especially at this time, should really look at bringing in more 12 month contracts to help to reduce non-payers.

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 membership@impda.co.uk. If you have a concern or story then either email admin@ impda.co.uk or call 0844 884 9702.