Let’s stop playing Hungry Hippo’s and start building businesses like Minecraft

Cerri Kilworth

By Cerri Killworth, Marketing Manager, NetPay Merchant Services

With so many announcements of mergers and acquisitions of some of the biggest brands in the UK’s telecoms market making news headlines, it has got me thinking what is next for telecoms market when the hungry hippo’s have eaten all the smaller businesses and left the market distinctively lacking in competition, driven down margin and profitability. Should organisations be looking to the Minecraft methodology for building better businesses?

In early 2015 we saw BT and EE announce their £12.5bn merger, and while this will have a positive impact on the wallets of their shareholders, no-one really knows what the real effect be on the market place. Whilst some analysts are predicting that the impact of this merger will be better prices for consumers and businesses, we are still unsure as to what the effect will be on resellers of these services.

But, instead of eating up business of a similar ilk wouldn’t there be more value in businesses expanding and collaborating with organisations whose services compliment their existing portfolio.  Building an even bigger and better service offering for customers, without eating away at that all important margin and ultimately profit.

The telecoms market place is an incredibly crowded one, making differentiation an important focus for any business within the sector. Whilst the 4 big players are getting bigger and focusing on quad core service offering, the smaller reseller margins are being squeezed making the ability to remain competitive difficult.

 

What can you do?

It is now more important than ever for businesses large and small to look at introducing new products and services into their portfolio. Market share is important, but buying up similar businesses to your own is only going to make the market less competitive and stagnant for organisations who are looking for companies that can offer more services at prices they can afford and that adds value to their business.

Partnering with a business offering services that are complementary to your own could be the key to boosting your revenue, attract more customers and improve sales of existing goods. Allowing you to test the water so to speak, without having to fund the development yourself.

 

Will it really work?

There have been many businesses that have successfully diversified their product portfolio. Apple is probably the biggest and most notable example. Apple originally started life as a personal computer manufacturer and has now established itself in the mobile phone market and music industry with its iTunes ecommerce store and more recently its merger with Beats by Dr Dre.

 

So why is Apple so successful?

Apple wasn’t always so successful in fact in 1998 it was on the brink of bankruptcy. But then, worried that it would be viewed as a monopoly without competition, Microsoft came to Apple’s rescue with a $150 million investment. But what has made Apple even greater, even more so than Microsoft is that it managed to do is cultivate a recurring revenue stream. Beginning in 2001, with iTunes which started life as a free music player with a built-in store and has since evolved into the sales of not just music but movies and books raking in hundreds of millions of dollars a year from sales and more recently adding headphones and speakers to its portfolio.

Apple has successfully gone from a 1 product business to a multi-product, multi-service organisation almost overnight.  Apple identified a niche in the market from which they would be able to earn money with little effort allowing them to use this to invest and develop new products and services ensuring that they continually expand their business.

 

How can your business emulate the Apple model?

Adding new products and service lines or starting new companies within a group can significantly enhance your ability to grow rapidly. However, it’s important to pursue a strategy that is right for you and your company. I am not talking about the wholesale supermarket approach of stack them, high sell them cheap. It is about ensuring that you select services that suit your business and more importantly your customers’ requirements.

Merchant Services and Payment Gateway solutions is an ideal complementary service that can easily be added to your product portfolio. NetPay offers telecoms resellers the opportunity to earn lucrative recurring revenue from various partnership models that suit your business. Allowing you to be involved as little or as much as you like.

The opportunity to cross-sell has never been more prevalent, offering multiple services to their customers. Success in the telecoms market is actually not just about selling telecoms services, it’s about connecting, mobile, software and payments as part of a business services portfolio. The most successful businesses will be those that diversify their portfolio enable them to make more sales to existing and new customers, expanding into markets that would otherwise have been closed to them.