Hugh Symons Communications, like all distributors, is feeling the squeeze. HSC boss Bob Sweetlove (pictured, near left) estimates that the airtime distribution market, the company’s main business, has shrunk from 170,000 connections per month last year to just 40,000.
The effect of the decline in the amount of available airtime connections has been compounded by the networks’ desire to distance themselves from high-risk cashback retailers. As a result, HSC’s sales boss, Carlos Pestana (pictured, above left), says the company has all but completely pulled out of distance selling.
The distributor says its strategy to move forward is focusing on the quality rather than volume of connections.
Impact on the chain
HSC’s attempts at attracting higher value customers are having an effect on others in the value chain. In its hunt for quality customers, the company has become more selective about the dealers it works with.
Staff manning the phones at HSC say that one in four dealers who want to sign up are now rejected. ‘Now it’s all about quality,’ says one of the sales employees. ‘We used to just get connections for a network - that was all we had to work on - but now it’s not about the volume.’
Dealers still seem happy to do business with HSC. ‘It is always more competitive on its commission than its rivals,’ one comments.
There have also been changes at the other end of the chain. Networks are becoming more co-operative and are beginning to provide HSC with data on the customers they connect, including metrics like ARPU, churn rates and 14-day money-back.
This kind of information used to be almost impossible for distributors to come by, but now it enables HSC to improve on measuring itself against networks’ KPIs.
As part of the strategy to drive up the quality of connections, Sweetlove says the company got rid of aggressive sales staff, contributing to a staff reduction from 85 to below 60 over the last 12 months.
However, the downside of the less pushy approach was revealed at a management meeting - outbound calls are up, but sales remain the same.
Luckily, the belt tightening doesn’t seem to have affected morale; when Mobile visited, the place was crackling with energy, led by the enthusiastic boss. ‘You can hear him before you can see him,’ one staff member joked about Sweetlove.
New products and services
The distributor is keeping up with new trends in the industry, and now it also wants a piece of the booming USB dongle market. It’s currently trying to take 3’s dongles into the IT sector and into schools via local education authorities.
‘The networks want us to open new channels for them,’ Sweetlove comments.
HSC’s move towards the IT sector would see the distributor bring itself back full circle, as its original business was selling computers in the late 80s.
‘The ties that we have on the IT and mobile data side is going to pay dividends,’ Pestana says, but he concedes that new channels bring new problems that need to be addressed. One of which is getting IT re-sellers, who are used to working on small percentages and margins, to understand mobile industry commission structures.
Educating the industry is a key challenge for the distributor. Sweetlove cites lack of knowledge as the main barrier to BlackBerrys being embraced by dealers. RIM’s trainers have recently teamed up with HSC to train dealers.
As the only Sim-free distributor of BlackBerrys it could be a lucrative market for HSC, with a target from RIM of 2,000 units per month.
Sweetlove has identified the points at which dealers come into contact with HSC as an area for improvement, and finance in particular is one area in need of development.
A candid Sweetlove admits: ‘If you asked 100 dealers what area we’re not so good at, it would be finance.’
And he’s not far off the mark. ‘They always miss commissions Ð you have to keep chasing your money,’ one dealer says.
To address these problems, the company is completing a restructure of the finance team, and improving its online dealer portal, Your HSC.com. The site already allows dealers to order online and check their orders at all stages of the process in one place.
‘We’re trying to go down the route of Amazon - the dream is to create an online version of our business,’ Sweetlove says.