Ben Dowd, O2’s business sales director, sought to underline his commitment to dealers and distributors last week with a string of new announcements.
He claims that the operator has overtaken Vodafone’s share of the small business market.
At the centre of Dowd’s assertions is the operator’s decision to transfer 100,000 business customer numbers from O2’s direct channel to its indirect partners over the next six months.
He also claims that O2’s number of connections for 2008 is 50% higher than it was this time last year. The transfer of 100,000 phone numbers to dealers is based on a new regional strategy that will see O2’s direct team working more closely with third-party dealers, depending on their proximity to business customers.
O2 has divided the UK into eight regions, integrating its indirect partner network with its roving business direct sales team, as well as O2’s own high street stores and franchisees.
Dowd says: ‘We’ve invested heavily in our systems, we know where our customers are by postal code, and we know how best to deliver an exceptional customer experience. And often that will mean handing over the management of that customer to a local indirect partner.’
Reaction to revenue share
The revenue share model that O2 initiated in October has radically changed the indirect market, with Orange and T-Mobile set to adopt the same model.
However, the model has brought about negative feedback from some stockists. O2 business sales director Ben Dowd says: ‘We don’t want to come across as arrogant so if there’s a problem we want to face up to it.
[The comments] have been niggling but it goes back to stockists we’ve decided not to deal directly with or terminate. There’s an animosity in some of the comments.’
Dowd and his SME team, led by Maggie Kennedy and David Plumb, have been in long discussions with O2’s indirect partners for months, working through the new model.
The operator has 85 direct independent dealer partners and five distributors.
He adds: ‘We’ve worked out the differences, and overcome the challenges. The [model] was adapted several times before we came to the final version.’
He acknowledges the model’s significance as a watershed in operator-channel relations. ‘Revenue share will change how business is done. There will be a move to gain better quality customers, reduce mis-selling and simply align interests.
It will also have the effect of naturally eliminating those channels that have attracted negative press.’
Dowd makes no apologies for the added responsibility for distributors: ‘There is definitely a bigger onus on the distributor for selecting the stockists it decides to work with. But our distributors already bring us great business, and we want that to continue.’
Some critics have said the fallout amid the negative comments in some quarters has led to a loss in business. Dowd says: ‘There is a misconception out there that we’re losing customers, and that’s utter rubbish.’
Not surprisingly, he predicts a reduction in the number of dealers in the market. ‘Do I think a number of stockists will go bust? Probably.
But it is those operating their business on the up-front model that will be affected.’
Dowd says he is happy with the five distributors he is working with and has no plans to add or reduce the number.
The fact that rivals are adopting the model is testament to the success of revenue share, he claims, but there are holes in rivals’ strategies. ‘T-Mobile said they’ll do it and they culled a lot of stockists. Orange has a hybrid version and it looks like they’ve pushed back the launch.’
O2 set for dongle push
O2 has a 37% share of the SME market, and is hunting for more. According to O2 business sales director Ben Dowd, the operator is in the lead position, with Vodafone’s share in the low 30s and Orange’s in the high 20s.
‘I want to get into the 40s,’ says Dowd. When asked if he is recruiting more dealers that are not currently connecting to O2, he replies: ‘If there are channels out there that can live up to our performance levels, absolutely. We haven’t yet targeted any of our rivals’ key dealers, but that’s not to say we won’t.’
Dowd says growth will come from new products and services, although he concedes that O2 joined the mobile broadband game late. The operator plans a major push in the sector next year.
‘We haven’t missed out, but low-end SME and prosumer business has been an area 3 and T-Mobile have been strong in. Having said that, both have been hit with high levels of returns. We need to be clear with our customers on the capabilities of our [mobile broadband] service in terms of speed and coverage.’
The mobile broadband push next year will be different to that of rivals, he says. ‘We have Wi-Fi [through a deal with The Cloud], and will focus on all of our channels and be very competitively priced.’
He feels there is little opportunity to take O2’s fixed broadband business into the business market. ‘It’s a market dominated by BT.’
In the corporate sector, Dowd claims O2 has a 33% share, while Vodafone still leads with 40%, but the gap is narrowing as O2 continues to snatch large contracts from the market leader.‘ We’ve not lost a single corporate account in the last 12 months,’ he says.
Repeating the mantra of his boss Ronan Dunne, Dowd stresses the word ‘momentum’. He says 2008 has been fantastic for O2’s business division, and that plans for next year are even bigger. ‘We’ve got great momentum and we want to harness that to grow more next year.’