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What will be the biggest challenges for mobile dealers and resellers working with mobile throughout 2012, given the last three years of recession and general turmoil, plus advances in new technologies, from smartphones and tablets, to cloud services?
Maggie Kennedy, O2 head of partners:
Partners are small businesses too and therefore the market has been incredibly challenging. This has been further compounded by customers looking to cut costs, and the move to more expensive devices such as tablets and iPhones.
Some customers’ expectations are still that these devices will be supplied free of charge. However, we are jointly changing this mindset as these high end devices are becoming more technologically advanced, but are also an integral necessity to any business.
This also presents a superb opportunity. Customers are looking for a single
source of supply to manage their total ICT needs. Therefore by really understanding how and what a customer needs to effectively run their business, we can work together to deliver against this. Some products and services O2 may be able to provide, some may be forged by you the local partner. Customers won’t wake up one morning and announce they need cloudbased technology, but they will be looking to us to navigate and establish what they do need and help them. If we don’t, somebody else eventually will.
In order for partners to ensure multi product success – if they haven’t already – they will need to adapt and evolve their strategies. O2 wants to help them do this, in addition to learning from partners. The key to this success will be a real and genuine trust from the customer through simply delivering a world class service. And multiple product sale is going to be the key way in which a partner will win business and ensure their existing business remains loyal.
The adoption of more cloud-based services will also be at the forefront of partners’ minds. The key for them is how they can grow in this marketplace and where these services will come from. We anticipate far more collaboration with IT VARs and specialists over the next 12 months, and some partners are already building relationships and acquiring to offer this.
The second huge opportunity is that more new businesses and innovations are created in difficult periods and therefore we should all recognise this and be ready to be on hand to help maximise it.
In mobile distribution the challenges are the same, and what O2’s ambition and role must be is to help enable and further simplify all aspects so we are clear and transparent and can help everyone be more successful. Those who are purely mobile are likely to see margins continue to reduce and find it more difficult to retain. This is a challenge we all face, so we it is vital we work together and build now for the future.
It’s certainly never been a faster moving market or more exciting; we should all feel optimistic.
Jason Kemp, Data Select director of marketing:
With the introduction of smartphones and tablets, customers are surrounded by high end mobile products. The penetration of these handsets in the current market is continuing to increase, with users expecting more and more from their smartphones.
So how will mobile resellers and dealers manage this ever increasing demand and set themselves apart from competitors? In a time of hardship, how will they reach and serve low income users when they too want a smartphone?
It is no secret that mobile operators are seeing drops in revenue and ARPU due to three years of recession. Most operators see this as a result of slower base growths in a continuing tough market. Users expect higher quality mobile products but at good value; they are cautious, reluctant to commit to 24 month contracts and afraid of breaking the bank. A challenge for mobile dealers and resellers will be managing this balance, while driving their own business.To do this, they will need to create ways to differentiate their smartphone products for their customers.
The future of technology is in the convergence of IT and mobile. Customers love their smartphones; they see them almost as mini portable computers and expect that quality service. But with this brings about a new challenge. How can they sell cloud solution services to a mobile market?
Jim Michel, Brightstar Europe managing director:
The biggest challenge for mobile dealers and IT resellers is to recognise that they can no longer stand still and ignore the convergence taking place between the worlds of mobile voice and mobile data.
The temptation for many will be to simply carry on doing what they have always done and not change anything about their business model. That’s only to be expected given the difficult economic climate; any change in direction will be seen as being risky.
However, change is happening. The lines between smartphones and tablet format PCs is becoming more imperceptible and the advances now being made in terms of adapting mobile technologies for business use are attracting the attention of commercial and public sector organisation. These organisations are looking to drive more efficiencies and lower costs, and there are an increasing number of resellers who are meeting the demands for complete mobile business solutions.
Resellers providing mobile solutions need to stay close to a partner that understands all markets and has the scale to provide the latest devices, credit terms and other logistics services to make them competitive. All resellers know that generally the mobile market is recession proof, but they still need to keep up to date with the latest developments to stay ahead of the game.
Dave McGinn, Daisy Distribution managing director:
The challenges facing mobile dealers and resellers in 2012 will be centred around their willingness to embrace the changing market conditions and transform their businesses into providers of ICT services and solutions.
Some partners are there already and have multiple product sets within their portfolio, allowing them to engage with customers on multiple levels. This has allowed them to solidify their customer relationships and begin to enjoy the enhanced revenue streams.
Other partners have the aspiration to be in that place, but do not necessarily the capability at this moment. So, the challenge here is how those partners up-skill themselves to address the opportunity, either by acquisition of specialist people, partnering with like-minded businesses that can share the capability, or investing in developing the skills internally.
And finally, there is the group of partners with neither the desire nor the capability to embrace the changes and diversify, and for them, the challenge is to maintain a foothold in the marketplace. More customers are undoubtedly demanding more from their mobile providers and have the expectation of being provided with solutions that tick more than one box.
With all the network operators at various stages of their own evolution, partners resistant to the change face an uncertain future and must face up to the ultimate decision of evolve or die.
With his evolution, however, comes the opening of new recurring revenue streams, bringing a value to their businesses and a net worth to their customer bases, so overcoming the challenge brings its own rewards in creating more sustainable, profitable businesses.
Dr. Ekkehard Stadie, Partner with Simon- Kucher & Partners:
The mobile dealer and reseller market has always been dominated by fierce price competition, teaching customers that telco products are a mere commodity. As a result, mobile customers rank price amidst the top three purchase decision criteria, constantly narrowing the ‘margin window’ for dealers and resellers.
The strong push for increasing market shares by mobile operators through subsidised handsets and never-ending promotions is fuelling aggressive sales marketing at the expense of customer satisfaction. If dealers want to secure their revenues (and margins), they need to shift their focus from predominantly price-driven sales actions towards improved service quality propositions, offering premium customer service or 24h handset replacements. New products such as the increasingly sophisticated smartphones may need additional support by qualified staff to explain how to use the devices.
Given constantly decreasing sales margins due to lower ARPUs and a saturated market, the consolidation of the sales network will remain an important challenge in 2012. The shop density in certain areas seems too high to provide sufficient space for every dealer. In inner London, you can easily find multiple shops of all network carriers within just a few hundred metres, not to mention independent dealers and resellers which are squeezed in between.
For dealers and the retail arms of network operators, the major challenge remains: how do I really differentiate my shops?; Are these stores simply places where devices can be tested and delivered?
In order to stand out from the crowd, the most urgent tasks are to: differentiate the products; emotionalise the shopping experience; and most important of all, try to improve the frequency of shop visits.
Various innovations are now being used, such as dynamic pop-up stores which are a new mega trend. Existing retail shops are being ‘pimped’ by other brands which are not available in the particular country or city. Other formats are being tested in the US such as ING-Diba, where a bank teamed up with a coffee shop. The customers who buy coffee and spend time in the café can be served by bank employees dressed as baristas. In the mobile phone sector, this would translate to the phone experts being able to provide coffee, plus support for the increasingly sophisticated mobile devices. This is just an indication of how other industries are heading in diverse directions in order to differentiate their basic services.
Andy Tow, Avenir Telecom managing director:
It is well known that the mobile phone market is saturated, and there are challenges to maintaining a customer base while seeking opportunities to grow that base. The dealers that will ultimately be the most successful are not only the ones that can provide the standard services, but those that can go beyond this, to think outside the box and diversify their offering to make themselves that little bit different.
The initial offering to the customer in terms of services for monthly outlay, and upfront payment for the device, will continue to play a part in the initial consultation with the customer, but beyond this the challenge will be to make the ordering process as painless as possible, to ensure stock is available, to provide ongoing support in the most convenient way possible, and also to up-sell additional products and services that the customer may not initially think they require, but will really help them run their businesses more efficiently and effectively.
The model of a mobile dealer selling a phone to a customer and then not seeing them for two years is in the past, and customers will demand more support and service. Solution selling is the way forward and so every dealer will need a completely new ‘kit bag’ of products to allow them to offer regular updates to their customers of what’s new in the technology world. This will enable them to have conversations with, and sell to, their customers throughout the contract.
Hence, they will have to increase their knowledge, and be aware of all of the new technologies, and more importantly the ways that these can benefit their customers in order to maintain their position in the market.
Garry Growns, Daisy Wholesale sales director:
The key challenge, as I see it, is very clear; differentiation. With resellers offering what is fundamentally the same network connection, along with the same handsets or hardware, it is vital that they think about how they can differentiate themselves in this fast moving and competitive market space.
They need to focus on two key areas; service and scope of capability. Service should be of paramount importance; our customers pay our salaries, they fuel our growth and without them we don’t have a business. Every contact our customers have with our respective businesses is an opportunity to demonstrate our capabilities and commitment. They have a choice over whom they do business with.
Secondly, the end user will more often than not require more than just mobile. There are not many businesses which do not have mobile, together with a fixed line and internet connection. Those resellers who are therefore able to meet more of the end user requirements are the resellers who are more likely to secure the ongoing customer relationship.