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O2 Q&A: UK head of SME David Plumb
Do you think O2 will see churn rise significantly as it becomes less competitive in the retention of sub-£30 accounts? This was the case with Telstra in Australia which ran with revenue share for four years before taking it out due to high churn.
– Anonymous
I am keen to help customers see the true value of handsets, and appreciate if they spend £360 a year on a mobile bill, they probably can’t expect a new £350 handset every 12 months. If as an industry we could help customers see the true value of devices, services and innovation then it will be good for our industry’s future.
In the meantime, as the industry evolves there is a risk of churn for O2 customers who purchase only on price. To date we haven’t seen that risk turn into reality. In fact, in 2009, we had our lowest year for SME churn ever. This resulted in our best market share in SME ever. The latest market report from Harris Interactive shows our largest lead ever in the SME market.
Do you think you will lose many of your Centre of Excellence dealers to cash flow or profitability issues around revenue share? What would be an acceptable loss, percentage wise?
– Anonymous
None of our partners have left us since we launched revenue share. Indeed we have welcomed some of the large industry leaders, like Azzurri, as key strategic partners.
One thing I would say is that over the last five years, I’ve worked with our partners to develop a relationship based on building a valuable business. Revenue share models that pay into perpetuity give resellers a valuable asset to sell, as upon exit resellers can sell their base and the associated locked-in revenue share.
This approach works best when you add on top revenues from the fixed and IT services markets. So that our partners can satisfy customer needs across the full ICT spectrum and generate a share of the revenue in all these areas.
Some resellers don’t share this long term vision and prefer a transaction payment model which leaves nothing to sell at the end. So it is possible that these partners would not favour the O2 model.
We said some time ago that dealers would find it very hard to keep their business going without some form of upfront payment. It is good to see O2 has finally recognised this and allowed upfront commission for resigns. Will you consider now doing the same for new connections?
– Chris Caudle, IMPDA
Through the period since revenue share was introduced we have continued to advance monies for new and resigning connections. This has been done to protect the cash flow of our partners and ensure they can be competitive.
We planned to stop advancing for resigns in January 2010, and after feedback decided this was going to cause our partners a challenge.
Why does O2 not pay through distribution either ongoing commission for consumer accounts or sufficient commission to be able to match the deals available direct? Has O2 considered meeting with some independent dealers to discuss how we serve it and vice versa?
– Chrissie Mayers, Border Mobiles
Our partner channel is purely a B2B strategy for us. It’s difficult for me to comment on the strategy of our consumer business.
Why do dealers have to take all the pain of commission (advance) clawback if a business customer goes out of business? Especially when O2 has passed them for credit already and the dealer has supplied kit in the light of this?
– Anonymous
Our partners have always recognised that revenue share is a risk and reward scheme so we both share the pain and the gain. If the partner with this question wants to raise any specific issue with us directly, then I’m happy to understand this more fully.
Are there any plans to rethink the ‘rules of engagement’ (ROE) procedure? I believe O2 will lose a lot of business due to these stringent rules. I have found it very hard to take over a customer account and have had ROE refused. The customer has had choice taken away.
– Anonymous
The ROE process has been in place for over five years now and has always kept the same guiding principle – that whichever partner acquires the customer should have the sole right to that customer until 30 days before the customer’s contract finishes, when other partners can resign the customer.
The ROE process allows (by exception) a customer to move between partners earlier than 30 days before the contract finishes, if the customer is unhappy with the acquiring channel and puts that in writing to us.
It appears to be an un-level playing field again with O2’s ‘rules of engagement’. Example, we have customers who have been dealer-managed for a long time, but due to the fact the iPhone is not freely available, and only supplied direct in the main, we are now losing larger accounts to O2 direct – even though they may only want a couple or iPhones on their accounts.
We have had situations where customers have been unhappy with the service received from O2 direct, and have produced written statements of such. At the end of the day, we are retaining the business with O2, and are not churning, and yet there is no leeway on iPhone supply.
– Anonymous
Selling the iPhone is a benefit of our partner programmes. Not only for partners who connect directly to O2, but also for our O2 Approved Partners who connect via our distribution channel. If anyone wishes to talk to us about our programmes please get in touch.
I am getting very mixed answers regarding O2’s ‘rules of engagement’. I am an independent dealer and my customers are still being approached by O2 direct one month before I am able to do a resign. Can you please make it clear where the independent channel stands?
– Anonymous
All customers are ringfenced by the acquiring partner until 30 days from their contract end date. After this date the customer can be re-signed by any partner.
Therefore it’s very important that you stay in contact with your customers and make sure they’re re-signed well before their contract end. There are call centres who ring customers and say they are “ringing on behalf of O2”. This is not true as we do not have an outbound team that calls partners customers.
The only way a partner customer can get to speak to an O2 direct person, is if the customer calls in to O2 and asks to terminate their O2 contract. At which point we will attempt to persuade them to stay on behalf of the partner.
How do you manage O2’s sales channel strategy to ensure your direct teams and indirect partners are joined up?
– Andy Tow, Avenir Telecom
One thing we have been keen to adopt is a one-team approach and we actively encourage collaboration across our sales teams. This means that the customer always has the choice about which channel (or combinations of) they connect through.
In what I believe to be a first in the mobile industry all Sector and Regional Heads in O2 SME and Corporate are now targeted and commissioned on partner sales. This means that managers within our direct teams are incentivised to win the business for O2 and not worry about which channel actually takes the connection.
In 2009 we acquired or retained over 10,000 business connections through cross channel collaboration, so it’s an important strategy for us.
I am an O2 Mobile Landline customer and I would like to know why you have dropped the service provided by GoHello, which was fantastic. Why would you drop something that worked so well? The functions available on the service were exactly what I wanted.
– Anonymous
Unfortunately the company that provided the Mobile Landline service suffered some financial difficulties towards the end of last year. As a result we feel it is in the best interest of our customers to temporarily suspend sales of the service.
In the meantime we have moved current customers onto a temporary platform, which provides most of the services of Mobile Landline. Clearly it is disappointing that we have had to do this as we know from customer feedback that Mobile Landline was being very well received.
When will you resolve Mobile Landline issues? My taxi business has nearly collapsed due to problems with your landline services. Your customer services team has been no help whatsoever.
– Kevin White, KDY Taxis
Mobile Landline has been a huge success for O2 and I am as disappointed as you that we have had to suspend sales of the service and move existing customers onto a temporary service.
We felt that a stable, temporary platform with less functionality was better than stopping the service completely.
The new O2 SME tariffs are nowhere near as competitive as the existing ones. Why has this decision been made? O2 will struggle to be competitive in this market because of these changes. They are awful. What gives?
– Anonymous
I hear lots of comments about tariffs, sometimes that some are too cheap and some are too expensive. We gather market feedback on these things weekly and respond as we need to. I’m confident that most of the time we get these decisions right or amend them quickly.
Why, until now, has no one in head office been able to shed more light on these new SME tariffs?
– Anonymous
We recently shared full details of our new tariffs with our partners and details are available on our customer website. Until the end of March partners will be able to sell both our old and new tariffs,to give people time to get up to speed.
I would like to know more about how I can become a direct dealer with O2. We are finding it difficult to compete due to the divide in commissions. We connect around 150-200 per month with high ARPU and low churn. What do we need to be doing to become a direct dealer?
– Anonymous
Drop us a line at O2PartnerComms@o2.com including your contact details, the market you’re in and we’ll get back to you to discuss further.
Why does O2 no longer have training representatives on the road for dealers? It’s been about three years since I last had a visit from one?
– Anonymous
Around three years ago we consolidated our training into our Partner Academy in Northampton, a dedicated centre that trains over 1,000 partner people per year.
Having the academy also means we can train more people as the trainers spend all of their time in classrooms rather than on the motorways. I believe that overall this has allowed us to deliver much more training and development to our partners.
Looking at increased involvement from the likes of Google in this market, and increased emphasis on platforms and applications, what are O2’s plans to ensure that the network remains of central importance to the customer?
– Paul Hooper, Uplands
At O2 we have always put the customer at the heart of everything we do and that is not going to change in the future. We have been at the heart of innovation over the years. We were the first mobile operator to bring BlackBerry to the UK, we were first to rollout the iPhone, the first to develop business shared bundles, partner resign payments for longer contracts and revenue share.
We will continue to do this in the future. While the arrival of the likes of Google into the mobile market is interesting it is also an opportunity. Within O2 we have our Centres of Excellence where we work directly with application developers to nurture the development of future services.