With a new management team in place, Vodafone Platinum Partner Excalibur has set its sights on trebling turnover. Padraig McGarrigle reports
As a life-long Reading football fan, it was perhaps not surprising our first meeting with Andy Tow since joining Vodafone Platinum Partner Excalibur Communications took place at the club’s Madejski stadium.
The experienced industry man, some would call “veteran” given his 30-year CV, has been low profile in these pages in the past year following his exit from airtime distributor Chess Telecom after its takeover of Avenir, where he spent six years.
But Tow (pictured left) has no desire in discussing the past. He is now focussed on his latest managing director role – and is clearly relishing the challenge.
“I had no hesitation in joining Excalibur ,” said Tow, doing his best impression of a new Reading FC signing.
“I had some flattering offers after leaving Chess, but Excalibur really stood out as a company with exceptionally high values and one that goes about their business in the right way.”
The switch from running a distributor to B2B dealer came as something of a surprise given Tow’s history in the channel, which has also included stints at Data Select, Unique Distribution and Vodafone.
But according to Excalibur’s CEO James Phipps (pictured right), Tow’s experiences in B2B distribution made him the perfect candidate to help spearhead Excalibur’s next “evolutionary phase” and achieve its ambitions growth targets.
These include more than trebling turnover from £7 million to £25 million over the next five years.
Phipps’ new “top level management” team also includes former Vodafone commercial marketing director Peter Boucher who joined in January.
Phipps says Excalibur now has the most experienced management team in the channel.
“When you look at who we have working at Excalibur, and who we are able to attract it tells you everything you need to know,” said Phipps.
“We have a plan to grow 25 per cent year on year, and we believe with our knowledge and skill-set we are more than capable of achieving that.
He added: “Andy is a highly regarded business leader who would never be short of top- quality job offers after leaving Chess Partner Services.”
“To get him to join us was a real coup and shows we are a company capable of attracting the best talent out there.
“It goes without saying we are very pleased to have secured his services and are confident he will play a pivotal role in our continuing development.”
Excalibur has undergone something of a transformation since Phipps gained full control of the then “struggling” and “rudderless” business back in 2011.
Back then, in addition to a bit of B2B, the company was still trying to make its name in retail. It ran a dozen Mobile Phone Centre stores dotted around the UK, predominantly in the south west) amassing a base of around 15,000 consumer customers.
The last stores were closed in 2012.
It was also trying its hand at hardware distribution and sales, running an e-commerce site Foneshop.com and supplying local traders with stock and a vehicle tracking division which was later sold to a former director for £1 million.
All of that has now gone, and in a few months time, Excalibur will be moving to a new purpose-built head office in Swindon removing any lasting attachment to the old company.
“Four years ago when I took the company over, it was struggling. You’re talking about as big a change as possible. We got rid of 15,000 consumer accounts. We got rid of more than 10 retail outlets. We could have walked away with £2 million in our pockets but I paid every person, including the window cleaner. I want to sleep at night knowing that I’ve never screwed anyone over, so it’s not going to come back and bite me
“We’re now solely a B2B company, and that’s all we want to be,” said Phipps.
“The days of us dipping our toes in consumer are in the past. Our focus is now 100 per cent on B2B and it’s more than proved to be the right decision.”
As a result, Excalibur is now one of the leading industry players, with a base in excess of 40,000 connections from more than 6,000 business customers. ARPU is typically around £39, “way above” the industry average of around £29.
The achievements go back to Tow’s declaration that Excalibur does business in the ‘right way’ – focussing heavily on customer service, but also diversifying its product range to meet customer needs – whether they know it yet or not.
“Excalibur is structured for both now and the future,” said Tow.
One of the main tactics introduced by Phipps, was to focus on working with only “good quality” customers – rather than adopting a land-grab mentality just to amass connection bonuses. These tactics they claim are used by some of its competitors.
“Dealers boast about about how many customers they have. In truth, many of those customers aren’t worth the hassle,” said Phipps.
“It’s absolutely not about having the biggest base. We want to ensure we look after our customer in the best way. I’m not sure we could do that if we spent our days trying to add thousands of extra accounts just for the sake of vanity.”
But it wasn’t always this way.
In previous conversations with Phipps, the drive for growth matched its rivals – with regular forays to acquire other companies for connections.
Those plans were quickly abandoned, with Phipps saying companies available for acquisition were “rubbish” and “unrealistic” when it came to buy price.
“We had a look around, but we couldn’t find anything that matched the way we operate,” said Phipps.
“Most of these people are an absolute mess. The business is a stack of cards, When you’re buying the business, it really opened your eyes to how others work and the impact that has on the customer.
“Most of those players have multiple network relationships and are moving their customers around, playing the re-connection game as soon as it ready for renewal and reaping the new connections bonuses. We don’t do that.
He continued: “Rivals are only interested in acquisition because the commercials from the networks are still currently geared towards dangling a carrot in-front of their noses.
“But the networks are starting to pull away from that model because they realise it gets them rubbish ARPU and a customer who will churn.”
That’s not to say Excalibur has been quiet in the transfer market – far from it in fact.
While many players in the traditional B2B reseller space have been buying up rivals (or selling up), Phipps has been “future proofing” the business.
Excalibur notes the growing importance of convergence – a buzz word for the industry for a number of years.
He suggests many dealers are still coming to terms with the ‘convergence” phenomenon, often relying on the network operators to guide them, Phipps claims Excalibur is already reaping its rewards having identified its convergence opportunities as far back as 2008.
Then, Excalibur was having success selling BlackBerry handsets and server software to enterprise. It soon become an accredited Microsoft Gold Partner. In 2008 its managed service revenues accounted for more than £200,000 of its revenues.
Since then, demand from customers for IT has grown every year and its capabilities were further strengthened in December 2011 with the purchase of two Microsoft Gold Partners, ‘Emnico IT’ and Bridge Solutions
Today, annual revenues from managed services have rocketed, and now account for £2 million of its £9 million annual revenues in its last financial year, with Excalibur now boasting more than 150 managed service customers (fixed, broadband, cloud etc).
Whilst the addition of services such as Vodafone One Net play a major role. One Net is a service Excalibur heavily promotes but Phipps and Tow claim its the The Microsoft Gold Partner accreditation which sets it apart from its “traditional” competitors.
“Microsoft Gold Application Development certification is Microsoft’s recognition of our technical competencies in Microsoft branded development platforms,” said Phipps.
“Everyone else wants more mobile businesses but actually I went and bought two Microsoft Gold partners.
“There is a lot of work involved in becoming a Microsoft Gold Partner in the first place and then you have to work harder to maintain it.
“We’ve got one customer who takes 10 products from us. For me that is the golden ticket. It’s about looking at your base and finding additional products that suit their business, not simply looking at your base and wondering how you can add more customers. That’s what many of our competitors are doing. Which is not to say we would turn away new business, of course not.
“But once you’ve got a base of customers taking multiple products, it’s quite difficult for a mobile phone competitor to poach them.”
Phipps claims too many mobile dealers spend all their time chasing the smallest part of a company’s IT budget – mobile.
“If you look at it to the pound, the mobile spend of an SME makes up no more than 30p. We want the 70p but everyone is chasing the 30p. There is no money in it. By the time you’ve done the deal and sweetened it, you don’t make any money.”
Tow added: “A lot of people use the UC or convergence word. They actually mean they sold a fixed-line contract and a mobile contract on the same bill.
“That’s as far as it goes for some, but what we do is completely different. You can not underestimate the importance of The Microsoft Gold accreditation.
“Our sales people are consultants now. They have a discussion about IT, they talk about infrastructure, managed services agreements, network support outage lead times, SLAs, mobility strategies.
“There’s a lot more to it and mobile may not come up until way down the conversation. ”