YES: we’re not a distributor

Keith Curran, MD & Co-founder of Yes Telecom talks exclusively with Mobile Business Magazine on how ‘Distribution’ is not in his vocabulary and the inside track on what it takes to add value in networks route to market, pinpointing the year when churn was born.
Keith, one of the founding fathers of the independent channel is frustrated by the recent comparisons of Yes Telecom with other distribution companies, explaining that Yes is not a distributor, but a service provider.

Most distributors would say their route to market is via dealers, whereas Yes believes the key reason for the last 6 years of success lies with close relationships with what Keith describes as ‘Business Partners’

So what’s the difference?
Keith tells us that Yes has always looked at the mobile market in a very different way than most.

Although an unpopular thought, he believes that it has been ‘Game Over’ for the mobile industry since 2000 due to market saturation, explaining that everyone had a mobile phone, so when the Networks and partners went ‘spear hunting’ for new customers they never found any and so settled on purloining them from one another.

And lo, it came to pass – churn was born.

Analysing the market, Yes saw the 80/20 rule applied, discovering that 80% of mobile users never warranted a free £200-£300 phone, that they were in fact being subsidised by the high value 20%.

Keith Explains
“Cast your mind back – users used to buy a phone and tariff on contract and when the battery died or the unit failed they’d call up and buy a new phone. Now? They’re counting down from 365 to make the call demanding a new free upgrade, cheaper calls, a holiday to Mauritius and a back-rub.

We recognised that a different approach was required and developed a ‘Value Model’ software package.

In short, the software calculates how much value each and every customer delivers, not merely just how much they spend and then generates a tariff they deserve.

We believe this is a commonsense way of doing business; by analysing cross network, own network, landline and international minutes combined with data and SMS usage of every customer, the Value Model Software calculates the value of every deal and pays our ‘Business Partners’ accordingly.”

Keith explained that about 50% of dealers got the concept, the other 50% either didn’t or thought it too complicated, it doesn’t take a genius to guess which 50% are his ‘Business Partners’ and which are not.

Asking Yes to explain the concept in a little more detail it became obvious that two customers having the same spend do not give the same profit, many services cost far more than others so the profit from two £100 per month customers could be wildly different, ‘why would you pay the same commissions for both? – it doesn’t make sense’.

So who is a valuable customer?

“Mr & Mrs Smith don’t cut it and are part of the 80% that do not deserve a free handset. So let’s look at the other end of the spectrum, the Corporates? No, understandably with that kind of buying power they want everything for nothing, requesting tender documents from their suppliers screwing them down for every penny, often playing one network off against the other.”

Who’s left?
“Yes is doing very well looking after the SME and SOHO market, many of the latter being important individuals that require and expect personal service for which they are prepared to pay a premium as long as they see the value in it, this is why Yes supplies all customers with a personal account manager and platinum level service, in return we get a higher ‘value’ customer whom is loyal.”

Service Provider, Business Partner, Platinum Service, Value Software – just buzz words?
“No. Yes has built several ‘CARE’ Teams (Customer Account Relationship Enhancement) each made up of 6 customer care members which are dedicated to each ‘Business Partner’ and their customers, 2 from each team are allocated to three core market segments within the SME and SOHO sectors –

•    100-150 Handsets        –    High end SME (just beneath the Corporate market)
•    20 + handsets                –   Mid SME
•    High Worth & SOHO     –    High worth individuals and business users

With the dedicated care teams working together with our ‘Business Partners’ the customer gets unrivalled levels of service which ensures they remain loyal.”

Why does Yes allow its Partners to retain ownership of the base?

“This is the biggest misconception within the industry, no one owns any customer, not the network, not Yes and not the dealer. We give our business partners the tools to win high value business and the support to retain them. We work with, not against, our partners creating a feeling of ownership and rightly so.

For instance, many dealers will question the commissions they get from other distributors and networks, asking to see the billing figures for them. More often than not networks will refuse, citing the data protection act, not so at Yes. If a partner wants to check on the billing status of a customer they merely have them sign a third party disclosure so that the partner can log into the data whenever they choose.

These close partnerships which are based on transparency and trust work to our mutual benefit, for instance when a customer calls Yes for an upgrade we log their details and have their ‘Business Partner’ contact them – our partners know their customers and are best placed to service them.”

How do you guarantee your partners are producing value customers?
“Giving our partners the best tools allows them to do the best job, by having our own billing system means we can offer truly bespoke billing, 12 tariffs?  More like 4,500. Each customer can have a tariff which is unique to them, if there is less value in the deal there’s less money for the partner [but still a loyal customer] more value in the deal, more money for the partner.

It’s this kind of common sense approach that has led to our ongoing Profit Share Program which gives even more flexibility to our partners, with 3, 6, 9 & 12% ongoings available, partners can choose to take less immediate commission and a higher ongoing or if a high revenue handset is required to close the deal, take more revenue upfront and less ongoings. Why work on a fixed revenue share when our Business Partners are best placed to take advantage of flexibility allowing them a transparent profit share based on the ongoing value of each customer.”

This sense of customer value is presumably what led Vodafone to take such an interest in Yes ultimately leading to them purchasing a controlling stake of the company in June of this year.

Flourishing business
Mobile Business Magazine was as guilty as most other media in thinking that Vodafone’s increased share may have meant the end of this seemingly unique way of doing business, but quite the opposite is the case and always has been. Vodafone so loved the business model they bought the company and have continued to be hands off allowing the additional investment to allow Yes to flourish.

Vodafone’s recent announcement regarding their route to market show they understand value over volume, and that Networks which continue to pay a fixed price per subscriber will continue to have high churn rates, lowering ARPU and a lower ‘value’ customer base as they continue to seemingly incentivise their dealers on volume not value.

Keith is somewhat bullish when it comes to Vodafone’s fluctuating share price, ‘the City just don’t get it, they think it’s all about volume, no, it’s all about value, it’s all about ROI, you don’t spend £1.1m to get £1m in return’

Do you have any inside info on more Vodafone distribution channel announcements?
“Anglia’s CEO, Andy Smith got it right in his interview with Mobile Business last week, far too many distributors do puff themselves up by throwing good connection figures around, it’s not all about volume it’s about on-going quality business. And the word from the inside? Who throws away good quality business, not Yes, not Vodafone, no company I know of.”

When talking with the obviously passionate Keith Curran you couldn’t help but think that since having a closer relationship with Vodafone his well founded belief in value, customer care and Business Partners may have rubbed off  – perhaps he’s indirectly responsible for the recent seemingly rapid change in Vodafone’s route to market?

Keith Curran, MD, Yes Telecom

Prior to founding Yes Telecom 6 years ago Keith already had a pedigree within the emerging independent mobile industry –

1981    –    BT
1986    –    Panasonic
1988    –    Midland Garage Services (Latterly known as the small firm – The Caudwell Group)
1995    –    CellStar
2000    –    Yes Telecom