Dealers have said the reality of revenue share is better than expected, as the first results of schemes from O2, T-Mobile and Orange start to roll in.
Dealers reported they were surprised to be receiving more than anticipated from ongoing payments, but have complained that customer information models still need to be tweaked.
O2 dealers said they found after the eight month ‘true-up’, when their actual ARPU was measured, that they were earning 50% more on ongoing payments.
O2’s revenue share system means dealers receive ongoing payments based on a predicted ARPU of £40 for the first eight months, after which they are given a true-up or true-down.
One Orange business dealer specialist said: ‘We’re getting more ongoing than we thought – clients who make international calls significantly boost [payments] as they spend outside their bundle.’
Another Orange business dealer said: ‘I suppose it is nice to get the payment, but I know what all my customers spend so it’s not a shock.’
However, some dealers said the clarity of customer information reports from the networks had been a major obstacle with revenue share.
One Orange business specialist said: ‘The networks clearly weren’t ready for it when they launched, revenue share is a work in progress and there will always be teething problems.’
One Orange direct dealer said: ‘The problem is the lack of reporting, Orange is just in the process of launching another share website – I’m hoping they sort the transparency issues, although we are roughly getting paid the right amount.’
Meanwhile, some have found the sheer amount of information hard to organise and expensive to implement.
One T-Mobile direct dealer said: ‘We have an idea of what we can expect, but the accountant has to keep chasing it and we have to do a lot more work.’
Revenue share signals death of cashback
Revenue share has triggered a decline in cashback offers from dealers.
Many businesses are now trying to entice customers with discounts to customer bills on a month by month basis.
A number of dealers have moved to a ‘bill credit’ style discount for customers, giving money back on a monthly basis, as the cut to upfront commission payments has killed cashback.
HSC’s business manager, Bob Sweetlove (pictured), said: ‘Rather than cashback, dealers are starting to split the benefits of revenue share with customers by giving them money back month by month.’
Barclay Communications’ director, Adrian McCourt, said: ‘With the introduction of revenue share the industry is becoming less of a cashback business, which has to be a positive thing going forward.
How do revenue share schemes compare?
• Launched October 2008
• 48% up front based on the value of 14 months of a contract. Dealers are paid an ongoing of £45 ARPU.
• After eight months, true customer spends are measured in a ‘true-up’ or ‘true down’.
• Launched 1 April
• 80% up front and 20% deferred.
• Launched 1 April
• Payments are 90% up front, with 8% deferred ongoing commissions and 2% as an upgrade commission.
• Ongoing payments are based on actual commissions.
• The network set a £42 monthly ARPU bar, representing the level that would match commissions under its previous scheme.