Despite negative commentary from some corners of the dealer/distribution sector, the b2b market remains full of opportunity.
You can see the results for dealers who saw the writing on the wall last year and switched to a consultative approach with quality customers, and sought out high retention rates and low churn.
It requires dealers to take a different approach to the high-volume model of consumer connections.
To best capitalise on the current market climate, dealers must understand their customers’ businesses, locking themselves in so the dealer is viewed as an indispensable element and central to improving the way the customer communicates.
Success is based on offering more than just mobile phones; it centres on consulting the delivery of data and systems integration.
By positioning themselves as integral to their clients’ businesses, dealers will be able to build long-term profitable relationships. With an outsourced business model, customers become so reliant on them that they hand over the responsibility of everything that involves communication.
This also provides additional revenue opportunities, as high-margin fees can be charged for the management of this service and the consultancy provision it brings.
To achieve this, dealers need to focus on developing quality customers rather than mass volume, specifically in the SME market. By forging strong relationships with both networks and dealers, distributors remain the lynchpin of the indirect channel, and can provide the optimum route for operators to access SMEs in particular.
In addition to feeding insights into the networks to help shape strategy and encouraging a culture of more open dialogue throughout the channel, distributors should work more intelligently with their dealers to ensure mutual and beneficial knowledge sharing.
For some dealers within the b2b sector this is not too much of a seismic change. Many originally began as independents that focused on businesses and then morphed into retailers who targeted the masses, some of which were sold to chains or operators.
As the industry has changed, some of these have reverted back to focusing on their core strength of looking after the corporate community, and so encouraging a consultative culture should not be a hard sell among these dealers.
The SME market is a significant growth sector, and these businesses represent 52% of organisations in the UK, making them a valuable customer base. Figures from the networks support this, as Vodafone has found that customers with between one and seven handsets attract £15.00 per head more, per user, per month than customers with 20 handsets.
The networks provide a clear indicator of the direction in which b2b is moving. As they continue to position themselves as providers of complete communications solutions, it is clear that the emphasis for dealers is on quality, retention and value. It has been for some time, but it is more critical than ever for dealers.
By focusing on developing high-value customers, the networks are providing technical and financial support, as well as training to ensure that a dealer’s sales team is data accredited. Customer retention is a clear priority, as indicated by the advent of 24-month contracts, and a focus on enforcing specific performance criteria around secondary connections.
Return on investment is a theme that will dominate the entire mobile supply chain for 2008; from the networks to distributors and from distributors to dealers. Success will be based on a ruthless attitude to turning away customers that don’t provide an appropriate return.
Volume will need to be sacrificed to maximise value and profit.
Consolidation will continue to offer opportunities for many – merging with the IT sector, for example, is a progressive move that fits with the growing demand for converged solutions.
Ultimately, b2b will continue to provide lucrative margins in 2008.