Dr. Lucy Green, Managing Director, Larato
There is a clear and present opportunity for Telecoms, Mobile and IT resellers to make more money by adding one or more utilities to their portfolio. That said, the number of resellers taking up this opportunity remains relatively low. Underlying reasons for this range from concerns about operational costs and complexities through to the sales and marketing overhead of presenting customers with a different value proposition.
Making the move to sell multiple utilities may not be as tricky as you think. This article looks at some of the possibilities and provides expert tips on how to succeed.
Buyers like combining their IT and Voice purchases. They tend to spend more and will often sign up to longer term contracts. This door to growth is open wide.
Landlines and mobiles are already accepted as utilities. Storage, compute power and software are almost there.
For IT resellers, adding voice is an obvious step; why supply Skype for Business without supplying the SIP trunk? It’s arguably more challenging for voice resellers to add IT services because installations and usage can be complicated.
Gamma’s cloud product manager Stephen Ashley-Brian offers some down-to-earth advice about becoming an IT and Communications reseller.
“Resellers should make sure they are able to sell the right blend of services to a customer. Quite often, customer problems arise because the services they purchased are not quite right for what they need. Accurate selling is a must for resellers who are converging IT and Voice portfolios”.
Ashley-Brian goes on to explain
“Resellers need to handle first line customer support. By equipping themselves to handle the simpler issues, resellers can provide first line support that they can charge for. Alternatively, there is always the outsourcing option that keeps support super simple”.
As a Telecoms or IT reseller, embracing energy sales may be easier than you think.
Bundling telephony and energy makes good business sense for buyer and supplier. James Pink, Director of Development at Pink Connect sums it up well.
“Businesses all over the UK walk in on a Monday morning, switch on the lights, PCs and heating and pick up the ‘phone. These services are the lifeblood of every business.
When you are speaking to businesses about their telecoms and they are rifling through their ‘phone bills – why wouldn’t you ask for their energy bills as well? It’s a 10 second sales pitch – “Give me the power bills too and I will see what I can do”.
The proposition is understood immediately by the prospect and you are pushing on an open door because no-one really believes they have the best power deal”.
Dean Cockett, Director at BusinessWise picks up the thread.
“Adding energy to a voice or IT portfolio creates a win-win. Resellers already have a customer base that trusts what they do, so why not build on that to maximise the potential of these relationships?”
A rollover is an expensive energy trap that many UK firms fall into. When a business energy contract is due to end, the business needs to cancel the contract within a set time period. If it doesn’t, the energy supplier can automatically sign that business up to a new contract. It won’t be a good tariff and the business will be stuck with it for at least a year. Known as a rollover contract, this is often used automatically by the Big Six energy firms. There is a lot of money involved. According to the Competition and Markets Authority (CMA), energy suppliers made £500m of excess profits from small business customers last year. The CMA estimated that the Big Six energy firms were charging small firms around 14% more for energy than the CMA judged would be a proper competitive rate.
James Pink comments; “Many UK businesses run the risk of being “rolled over” by their energy suppliers. Resellers can turn this practice to their commercial advantage. Three months before the end of a company’s contract, the reseller can send a ‘notice to quit’ which prevents the energy supplier rolling the customer over. The reseller works with their energy partner to find the best tariff and signs the customer up. It’s a simple model that creates value for the reseller and their client”.
There are various models available to telecom and IT resellers to start selling energy. The simplest is to partner as an agent of an experienced provider. Dean Cockett, Director at BusinessWise explains: -
“All we ask resellers to do is refer clients to us. There is no complicated sell, no need for rigorous training to become an energy expert; just make an introduction and we do the rest. We advise our clients to buy well in advance of their next contracts and forward buy for years ahead. This enables them to take advantage of the markets while at their lowest and ensure budget security for the foreseeable future. The beauty of our business model is that we take over from the reseller immediately after the introduction phase and offer their clients our expert service. Customers are happy with the savings they make. This strengthens the relationship between the customer and the reseller who enabled the move”.
“Resellers worry about churn. Selling more services to a customer lowers churn more than anything else. So, adding a core utility like power can increase the lifetime value of a customer, protect existing business and open opportunities to sell more”.
A more valuable business
In the long term, adding more utility services to your portfolio will increase the value of your business. Incorporating sales of landlines, mobiles, energy or IT boosts your average revenue per customer and that makes your base much more valuable.
The key to success is to decide the right business model for you and then find the right partner to work with.
Here are two useful checklists to get you started.
Come to the Convergence Summit North Seminar, “The future is bright for the multi-utility reseller” on March 16th and find out what opportunities there are for you.
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