9/29/2010 12:59:00 PM
Out with the old: Vodafone's channel restructure
A major overhaul of Vodafone’s indirect channel last week saw the operator commit itself to three year relationships with its partners.
This shift is something not seen in any mobile operator’s plans before, Peter Kelly, enterprise director at Vodafone UK, tells Mobile.
‘What makes this proposition different is the sheer amount of force and focus we are putting into it. For me this is about recognising that the future for Vodafone in the small business space is about building that relationship with our indirect partners – and long-term commitment is the key,’ he says.
Vodafone has structured its 400 dealer partners into three tiers: 25 in Platinum; 75 in Gold; and 300 in Silver. Qualification for each tier is based on various criteria, such as the value of revenue earned, number of connections, skills, capability, accreditation and certification and successfully meeting various KPIs.
Vodafone has invested in a new dedicated central support unit with more than 250 specialist staff called Vodafone Partner Services, which includes its rebranded Yes Telecom distributor.
It is based at the former Yes Telecom HQ at Didsbury in Manchester.
In the past, indirect partners had been critical of Vodafone, saying account managers would change and support teams would move around. There was little consistency of contact or approach.
‘Dealing with a big company like Vodafone was at times difficult and complex for indirect partners in the past,’ concedes Kelly, ‘so we have created one structured model with named account managers, commercial and marketing contacts, so our partners can get the best from Vodafone on a day to day basis.
‘All 400 partners will receive support in terms of people, commercial, marketing and incentives,’ continues Kelly. ‘But the higher up you are, the more significant the investment you get from Vodafone.’
Kelly explains that the change was about building a more agile and responsive partnership between Vodafone and its indirect partners. ‘We will be much more open and transparent with clear goals in terms of revenue, value and skills. We will also have a three year plan and we will work together to deliver that plan. Historically, we didn’t have that.’
Vodafone has simplified its commercial structure, providing more transparency on the incentives and revenue share. It is also being clearer about what it is trying to achieve commercially. Vodafone has listened to what its partners needed commercially, so that the goals of both now aligned.
‘Our partners told us they wanted absolute transparency around the commercials; be clear about what you are incentivising us to do; be clear about the commercial transaction; be clear about how the KPIs relate to surety around incentives and rewards. Our partners also wanted us to be more consistent in our approach – don’t pull in and out of the market,’ says Kelly.
‘They were also concerned about being paid and on what criteria, so they wanted to move to longer term plans – hence the three year deals. Previously we worked on a one year deal or something very loosely defined – some of our partners were living from quarter to quarter.’
Kelly adds: ‘Our partners want more revenue surety, so they know what they can afford to invest in. Their ability to do that used to be hindered by the lack of longevity in the relationships.’
Vodafone will improve the commission process by providing detailed monthly reports and insights, so it will be very clear on their performance - dealers will get complete commission statements.
Indirect partners have been unhappy about the amount and quality of information they used to get from Vodafone about its plans. The company is now sharing much more information about its innovation roadmap and the products and capabilities it is investing in, Kelly says.
Vodafone also kept a lot of information just for its direct channel, according to Kelly, including aspects such as launch activity, competitive insight and lead generation.
‘We were not maximising that for our indirect partners and they asked us if we could share more of that marketing information,’ says Kelly. Vodafone is now providing its indirect partners with full access to all its marketing capability through a single dedicated marketing portal.
‘Historically, Vodafone would do lead generation for its direct sales channels,’ says Kelly. ‘Now we have set up a dedicated team in Didsbury to do that for our partners in the indirect channel.’
The indirect channel will have access to Vodafone’s VIP customer reward proposition and to Vodafone’s customer hospitality assets, such as Formula One. They will also have access to the new Network Operations Centre and can bring their top customers to the new Customer Experience Centre at Vodafone’s Newbury HQ.
The details of the commercial arrangements and revenue share in each of the three partner tiers have not been released.
But the higher the level you are, the more help and support you get from Vodafone. Kelly says that previously some of the largest and most highly invested partners were not getting the kind of service they deserved. Instead, they were getting much the same service as smaller partners.
However, Kelly explains there will be some flexibility around the commercial arrangements with Platinum partners. But given the size, complexity and nature of the businesses in the Platinum tier there will be a few variants depending on their skills and size of base.
‘There will not be 25 bespoke commercial agreements with each of the 25 partners. But there is some flexibility in the commercial agreements, be it upfront cash, revenue share, or more traditional arrangements,’ says Kelly.
But the new levels of support also come with a stick. ‘We will be very strict in enforcing targets and KPIs, as this is a big investment for us. We can’t provide incentives and not expect them to deliver,’ says Kelly.
‘We will have quarterly reviews against performance. There will be promotions and relegations from the tiers, but I would prefer to see the numbers in the Platinum and Gold tiers grow – it shows people are buying into our goals.’
The way partners can move tiers will depend not only on their performance in terms of hitting sales targets and revenue generation, but also on their skill sets and overall capability. Those firms that also invest in training, accreditation and certification will move up and receive more support, incentives and potentially rewards.
‘We will be asking our partners to become accredited in Vodafone One Net, RIM, Apple, Microsoft and so on.
The further they invest, the more it will help them move up the tiers and create more value in the marketplace. We are investing in our training capability and resources, so we expect our partners to invest
in their people,’ says Kelly.
Vodafone will provide training support especially for its unified communications product One Net, initially unveiled in September 2009. Kelly sees it as a key differentiator for its partners in the enterprise space.
‘All this provides a strong acquisition model. We are looking to grow the business using shared risk and reward, be that on a revenue share basis or upfront cash. We will aggressively build new investment in the marketplace,’ says Kelly.
He adds: ‘We are convinced the Vodafone Partner Programme will dramatically increase our small business revenue. There has been a good growth in the segment this year. We’ve been doing the right things, but we have formalised it now with the structured tiers, more investment and more resources.
‘Our partners appreciate that we have the best network in the UK and they are seeing a good long-term commitment from us. The investment is deep and the propos