9/18/2008 5:42:00 PM
Orange instigates new structure of ongoing commission payments
Orange will instigate a radical overhaul in how it pays its dealers and distributors, potentially provoking an industry shake-up, Mobile can reveal.
A new structure of ongoing commission payments that mirrors how much the customer spends is expected to replace the single up-front commission payment method currently in place.
A small amount of commission will still be paid immediately after a sale under the new scheme. Senior executives in Orange’s sales division are believed to be discussing the exact amount to be paid up-front, and how much will be paid at intervals.
It has been described as Orange’s biggest ever change to its dealer strategy. The network hopes to reduce churn with bigger incentives for dealers to improve customer loyalty.
The ongoing payment model will be applied to all distributors and dealers, not just ones that fall in Orange’s b2b division. Such changes have been discussed for many years but are understood to have been accelerated under CEO Tom Alexander’s (pictured) watch after he pushed for a scheme where channel partners have their interests aligned with Orange.
The operator also believes the ongoing model will cut fraud, in particular ‘ghost connections’, and discourage dealers to sign consumers to expensive deals and downgrade them at the earliest opportunity.
Mark O’Meara, head of Orange’s indirect channel, said: ‘To improve loyalty and quality connections, we are considering… a revenue share commission structure where we will look to reward dealers and distributors for delivering quality connections.’
O2 already has such a scheme but is also believed to be looking to extend it in the coming weeks.
T-Mobile and 3 will be interested to see if dealers spurn the spread of payments because of the effect on their cashflow. Orange hopes the scheme will attract the high-quality dealers that are big enough to absorb the changes. Smaller dealers are expected to find it difficult to operate without the large initial injection of cash.
O’Meara added: ‘The details and timings are currently being ironed out. We have been consulting with some partners about this and are confident the changes will be positive for all concerned.’
One dealer said: ‘It will cut the wheat from the chaff, and it will get rid of the back-bedroom dealers.’