Swimming in channels: Manage the dealers for success
New subscriber acquisition is one of the first steps to commercial success for the CSP. Equally important is the experience during sign-up and activation.
While there are many sources to tap into in the hunt for additional customers, says Eric Hatton of Evolving Systems, in this article we’ll focus on one in particular: The dealer channel. For the communication service provider (CSP), an effective dealer and distributor network is critical.
Bearing this in mind, it doesn’t require a leap of faith to grasp that how, where and when distributors and dealer networks sell mobile device SIMs, and how they then activate them, is an operational area that telcos would do well to optimise. Yet, often, this isn’t the case.
It’s not as unusual as you might think for a dealer strategy to amount to expecting prospective subscribers to visit dealers or company-owned stores at prime locations after which ‘everything will be ok’. That, of course, really isn’t a strategy at all. ‘
The question, then, is what to do?
Quite a bit can be done to enable CSPs to cash in on the dealer opportunity and find new ways to give them a competitive edge. Also, with sometimes as many as 30 different SIM types corresponding to different plan types, form factors (2FF mini, 3FF micro and 4FF nano SIMs) and recent promotions, ensuring that dealers have an adequate stock of the required SIMs (as popular campaigns drive sales and need) ought to be encouragement enough for CSPs to investigate.
The numbers are compelling. For example, one barrier to entry that often discourages the telco from fully tapping the dealer channel is the cost of expanding its dealer base. This can be as high as US$800 (€685)/dealer for CSPs relying on traditional solutions to manage their dealer networks.
Yet using modern technology solutions, this figure can be reduced to just $50 (€42.82) using low-cost, out-of-the-box management software. In the real-world example above (deployed in the Middle East) the CSP grew its dealer network from 300 stores to over 9,000 dealers in a matter of months.
The benefits don’t stop with scale, either. Taking a modernised approach to managing the channel also delivers:
- The benefits of digitisation – selling and managing the source in a way that reduces both errors and time to sell, both long-standing issues for CSPs who’ve relied on traditional, often basic spreadsheet-driven approaches.
- The ability to combine SIM/recharge sales information and meet Know Your Customer requirements (often related to two devices) into a single app on a low-cost device instead of an expensive ePOS (electronic Point of Sale) system or tablet device can drive down the cost of equipping a dealer with the hardware required to sell from around $800 (€685) to around $50 (€42.82).
- Deployment of a mobile rather than static sales force to expand the customer base, one that can go where the prospects are (for instance, at an event) rather than relying on them to come to you, as is the case with fixed locations.
- Gain-and use-real-time granular data on sales. For example, modern dealer management solutions can show Profit & Loss by individual dealer, in the process combining the sales data they collect with consumption data from other BSS (business support systems). This, in all likelihood, will eventually become a key component in addressing both churn and fraud prevention.
The latter benefit is worth dwelling on. Combining dealer sales data with consumer consumption data means further tightening the results the channel delivers by understanding which dealers are driving profitable acquisitions vs. which might be making money for themselves but not benefiting the CSP. This is a common problem in the channel, which results from gaming commission schemes.
This is easily done and often not counteracted; by activating SIMs for non-existent customers using a copied ID or pushing customers who come into a store to recharge to buy a new SIM as the commission involved is higher for the dealer. Operators cannot change all their commission schemes without risking unintended consequences or independent dealers going to competitors, so it is more effective to root out the ‘bad apples’ and target them specifically with promotions to change their behaviour.
If all this may seem obvious, the reality in the industry is that many CSPs have little clue what really goes on in their sales channels and, thus, little idea about why they have such high churn rates caused by their own dealers. It’s also arguable that a corollary benefit of addressing the channel management issue may be that independent dealers are more loyal to one operator vs. its competitors.
The reality, in summary, is that all CSPs swim in the dealer channel. It’s unavoidable. Yet its management is an issue often overlooked or even forgotten. Considering the benefits that modern solutions can yield — reduce errors, reduce resources, reduce MSISDNs, reduce attrition in the salesforce, increase sales, increase upsell, identify and minimise un-desired behaviour and digitalise the entire process – there is no excuse for this to be the case particularly as the bottom line is at stake.
The author of this blog is Eric Hatton of Evolving Systems
About the author
Eric Hatton heads the Customer Activation & Network Services Business Unit for Evolving Systems. Evolving Systems is a provider of real-time digital engagement solutions and services to more than 100 customers in over 65 countries worldwide. The Company’s portfolio includes market-leading solutions and services for real-time analytics, customer acquisition, customer value management and loyalty for telecom, retail and financial services companies.