Blog: Not Your Father’s Distribution Strategy
By Charnsin Tulyasathien, epay
The mobile space has changed—from the early, “Wild West” days where subscribers represented land, and service providers represented pioneers grabbing as much as they could.
The early distribution strategy for prepaid mobile was built for this Wild West environment. Service providers signed up as many distributors as possible to build a network of top-up locations, hoping to make their services more attractive to subscribers through locational convenience. Buy rates were negotiated by distributors, wholesale networks were created and all the retailers were earning good money selling top-ups.
Fast forward to today. Based on figures from the Cellular Telecommunications Industry Association, the U.S. is at 102.2 percent penetration for wireless; this means there are more active wireless devices in the U.S. than there are people. The Wild West of the wireless industry is no more, and taking care of customers to keep them on your service is what’s important.
The key to success now is about quality instead of quantity. Dealers that are committed to the service provider’s brand, focused on retaining customers instead of switching them to the next service and have a stake in the local community are more valuable than ever. Protecting these dealers and incentivizing them to retain customers should be the imperative going forward. In return, customer lifetime value will rise, dealers will be more loyal and distribution costs will be more streamlined.
In the U.S., service providers have begun to move in this direction. Service providers, such as Sprint’s leading prepaid brands, Boost Mobile and Virgin Mobile, were the first to realize the new marketplace and implement a strategy to address it. They have gained visibility into their distribution and are managing where their product is placed, paying commissions to dealers more quickly and enabling redemption of customer promotions at the point of sale.
In short, these carriers are managing and operating in the independent channel as they do in their own stores. With full visibility and management, they are able to control the elements of their distribution. A passive model that relied on distributors now enables them to partner with their distributors and make sound decisions on sales and marketing strategy.
Other service providers have begun shifting their distribution strategies and are seeing immediate results. New entrants, such as Ultra Mobile and Prepayd Wireless, are adopting similar approaches.
Overall, there is growth and opportunity in the prepaid wireless market. But, the distribution strategies have to change and adapt to the current market. Those who accept this and adapt faster have the best chances of being successful.
Charnsin Tulyasathien is global director, mobile operator solutions at epay, a global prepaid provider and third-party distributor. In this role, Charnsin is focused on delivering new solutions to mobile operators around the world to better engage with the distribution and ultimately their customers through channel visibility, control and influence at the point of sale. He can be reached at [email protected].
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