Log in

View Full Version : Cashback Concerns Mount



3GScottishUser
26th October 2005, 06:44 PM
From Mobile Today (25/10/2005):

Distributors have started feeling the pain over disappearing cashback dealers, sparking a growing anti-cashback feeling running through the channel. Some distributors are even footing the bill when irate customers seek money.

Operators have told some distributors that if a dealer on their books disappears with cashbacks still owed to the customer, the distributor will have to shoulder the cashback responsibility and pay out what the dealer had owed.

A spokeswoman for 3 said last month: ‘The distributor owns the relationship with [the dealer].’ She added: ‘3’s agreement is with the distributor. The distributor will be liable to 3 for any penalty.’

While some distributors actively encourage dealers to start offering cashbacks in order to generate larger volumes, many distributors and long-standing dealers have voiced concern that the prevalence of cashbacks over the last year has attracted shady individuals into the industry.

Asked about fly-by-night dealers, one senior figure at a distributor said: ‘This is happening all the time now. There are lots of dealers disappearing.
‘New dealers will build a bit of trust in the first couple of months – steady and reliable. They then start banging on big numbers with some big cashback deals. They can easily build up £500,000 in a year with some silly offers and do a bunk with the cashbacks and commissions.’

However, some say cashbacks are inevitable given the volume-led customer dash of the network operators. The MD of one major distributor said: ‘It’s all driven by the networks – if they change things dramatically, the dealers change things dramatically.

‘At the moment every distributor would deal with [a dealer] putting on a few thousand connections a month. If the networks cut their commissions or if they changed their model to a revenue share one based on Arpu rather than a volume, we would have to look at things completely differently.’

Separately, 3 is concerned that its reputation is being tainted by cashbacks. In a bulletin to its dealers last week, the operator said: ‘3’s contact centre receives a high volume of calls from customers who are unsure how their cashback offer works.’

http://www.mobiletoday.co.uk/artman-test/publish/article_859.shtml

Ben
26th October 2005, 07:49 PM
"If the networks cut their commissions or if they changed their model to a revenue share one based on Arpu rather than a volume, we would have to look at things completely differently."

Bravo! And that goes for all the networks, not just 3. Cashbacks are an indication that the current model isn't working.