Dealers angry over network’s 24-hour notice of drastic changes to contract renewals
Dealers have slammed Vodafone for slashing upgrade commission payments by 20 per cent and changing contract renewal terms.
Dealers claim these measures will increase their churn rates and will result in many customers scrapping their March deals.
One outraged dealer said: “In the space of 24 hours Vodafone has destroyed a huge amount of pipeline business, where commitments had already been given, leaving partners both stranded and embarrassed.
“They have turned the clock back four years to the days when they failed to understand and connect with the channel, and clearly do not appreciate the churn risk that could follow.
“We have no choice other than to seriously review all our clients early, rather than let them go full-term and hope that we can retain them with weak upgrade commercials.”
Vodafone told gold and platinum partners on February 29 there would be immediate changes to the way in which they can upgrade customers mid-contract.
Until now, dealers have been able to renew contracts a year before the official expiry date to help prevent the customer shopping around at the end of their contractual commitment.
However, the new rules prevent 12-month renewals unless the revenue on the contract is above £70 per month.
Dealers claim average revenue per user across Vodafone is between £35 and £45 per month, which means most contracts will not be able to be upgraded until month 13.
Vodafone told dealers the changes are to reflect the value of the customer.
Dealers get no commission from customers in Band A. They do, however, get up to £510 for those customers in the highest tier, Band S for ARPU above £95.
Vodafone head of partner services Tony Bailey (pictured) said: “We have made some changes to our partner programme commercials. Details are confidential.”
Dealers say they were given 24 hours’ notice that Vodafone contracts could only be changed one month before they expired.
As a result many dealers had to abandon pipeline deals that no longer qualified.
The current commission rates and bandings will be valid for the next six months.
Dealers claim payments have been dropped by 20 per cent across the board on average and they say they may be forced to churn their own customers to avoid losing them to rivals.
Another dealer told Mobile News: “We understand Vodafone wants value rather than volume. But they have called this one massively wrong.
“I’m shocked by the way Vodafone has moved the goalposts without any consultation.
“The way this matter has been handled damages our long-term prospects with customers. It is seriously going to affect our relationships with our customers.
“This is going to hit Vodafone’s balance sheet as customers leave the network”.
However, some partners defended Vodafone’s actions, pointing to the financial pressures faced from mobile termination rates and impending investment in 4G technologies.
One partner said: “Everything coming under a strict 12 month renewal was giving financial pressure to Vodafone’s commercial ability to continue to do it.
“Vodafone makes no secret about wanting high value customers, and this is another example that emphasises this.”
Summary of changes:
• Commission down average of 20 per cent
• Some signed deals for March rendered invalid
• Increased exposure to churn may result
• SIM-only contracts commission axed
• 12-month renewals for £70+ ARPU contracts only