A cross section of ‘dealer land’

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The dealer market has experienced vast change over the past two years, with the ramifications of the cashback collapse, the dominance of high street brands, the emergence of mobile data and the introduction of revenue share models. Mobile News rounded up three survivors of the recent changes from three distinct channels to discuss the state of the market.

Jamie Turner (pictured right), of Phone Tek Nation, specialises in consumer sales, and has supplemented decreasing prepay and contract sales with unlocking and repairs.

Sohail Ratansi, of Fones U Like, crosses the divide between high-end consumer sales and small B2B contracts, typically connecting 1-10 lines via distributors.

John Duggan (pictured left) runs Vodafone direct dealer Tancroft Communications, which specialises in large business and corporate contracts, an area dominated by the network operators but increasingly fruitful for dealers in a fragmenting market place. So…

How’s business?

Turner: It’s pretty good in unlocking and repairs. People would rather repair an old phone than spend on a new one and with the SIM-only market continuing to be popular, people are always looking to free up their handsets.

Ratansi: From mid-March until now has been the busiest time of the year for me. Between January and mid-March, I was sending a lot of proposals out for new business and those proposals are now starting to come back and be processed.

Duggan: Things are good. We’ve just taken on two new sales reps to meet demand from corporates. Customers want reassurance that what they’re getting is true and I think we do that successfully. We tell them that if they’re not happy after two months, they can walk away.

Why, then, are there such horror stories around about the plight of independent dealers?

Turner: Cashback negativity dragged dealers’ reputations through the dirt and people are still scared about getting ripped off in case the dealer they buy from isn’t on the high street tomorrow. There were probably a number of dealers not honouring cashback deals and that fear probably still exists. It’s different with the likes of Carphone Warehouse and Phones 4U because they both have an established high street brand.

Ratansi: Dealers have become increasingly frustrated at how congested the high street is. Argos and the supermarket chains have got a grip on prepay and the low prices they’re selling at has virtually eliminated dealers from that market.

Duggan: Dealers and networks are always in conflict about who owns the customer. There seems to be a high level of mistrust on both sides. Clearer lines should be drawn. Dealers need to know where they stand, and require assurances. Revenue share ties them in to longer term relationships and that is good in theory. But there still needs to be better communications from certain networks.

Day-to-day, what are kind of issues do you face?

Turner: In unlocking, it is the investment in getting new kit in. New solutions are released fairly regularly, and so we must be alert to that and prepared to pay for it. We pitch the idea that if we can’t unlock it, then no one can. So we have to be on the ball. Kit is expensive, but it is worth it, and pays for itself soon enough.

Duggan: We work with corporate accounts, and the challenge is to compete with much bigger providers by keeping costs for customers down and offering flexibility. We’ve recently invested £3,000-£4,000 in developing our own billing platform, which enables clients greater transparency. It means they can save significant money on their bills without actually having to switch provider or tariff. They can control billing and usage, and cut unnecessary expenditure.

Ratansi: Similar for us, in a way. We work in the SME sector and the ability to offer those types of customers personalised services is absolutely key. I have a client who received a silly quote from BT recently – £300 for 26 lines, or something. It was really cheap. We broke our quote down for the customer, and it came to closer £500 just for the handsets. But we tailored the proposition very carefully, offered full sight of the proposition, let them know BT’s experience in mobile and made clear our own experience. And the customer accepted our bid. In B2B, it’s about offering near-enough to bespoke packages as possible, along with special service and support.

Duggan: That’s right. If you compete with the networks on price, you will always lose. It must be the personalised service, and customers still value that greatly.

Really? In this climate, when cost is important and dealers’ reputations have perhaps been sullied by cashback, are punters not looking for high street brands and cheap deals?

Ratansi: Cashback caused problems, for sure, and customers were going to the networks in case their dealers went bankrupt. And the networks have become more aggressive too.

Turner: But many customers have remained loyal, and many would rather come to a dealer anyway because they offer more choice and a more personalised service. Customers want a conversation, they like the fact we get to know them and offer specialist advice. The only reason a customer would go to a network store is that we can’t offer a Samsung Tocco for £12 [like 3]. That’s it.

Duggan: Independents offer all networks, whether direct or via a distributor. Why wouldn’t customers go there? The service is better, the choice is wider. In business sales, those things are essential.

Ratansi: We visit each of our clients three times a year and run through their spending and plans for the future. The point is to work out if they’re spending too much, and how to account for changes in their working lives. I don’t mind making less on a deal if I know I’m going to retain the customer. Many clients know they will receive a better quote elsewhere but don’t trust they’ll get the same level of service.

How are relationships between dealers and networks? Who does well, who doesn’t? Why?

Duggan: The most honourable network is Vodafone. Our relationship with it is extremely good –  we never have to chase it for anything and can put our full focus into growing our own business. That has given us a lot of confidence in it.

Ratansi: I think O2 has alienated itself from certain parts of the dealer market – on the consumer side by dropping its commission to virtually nothing, and on the business side through its revenue share scheme. T-Mobile has been more approachable, I find. And it’s revenue share split is more appealing. Its offers are good too – its Flext refresh was great. The only issue I have at the moment with T-Mobile is payment for upgrades, which has dragged on since September.

Duggan: In general, the networks don’t understand the dealer channel. How can a giant corporation like O2 not think its revenue share model through properly, or consulted the wider dealer market? But O2 appears to have chosen its partners, and probably isn’t very interested in what the rest of the dealer community has to say about its revenue share.

Turner: Orange is doing well with its Dolphin contract tariffs. Customers can’t ask for much more than unlimited texts for £15 a month, which is great value.

Full article in Mobile News issue 439 (May 18, 2009).

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