Mobile contract negotiations can be a complex and time consuming activity for businesses and if incorrectly managed they can also lead to very large and unplanned excess costs over the term of the agreement. Despite this, many businesses still treat mobile as a simple ‘commodity’ when it comes to negotiations and opt to manage the entire process in house without professional support and often without the analytical tools, knowledge or data to accurately compare vendors and proposals.
In this article we’ll review why mobile is anything but a commodity as well as highlighting some of the common traps to avoid when planning for and negotiating mobile contracts. We’ll also explore why having a clear negotiation strategy and specialist resources on your team, can deliver significantly increased savings, quicker results and importantly help to you to avoid the hidden mobile contract pitfalls that will lead to excess costs and problems for you during the term of the agreement.
Mobile Networks have large teams of commercial analysts with complex pricing tools, whose job is to maximise the profit they make from your business over the term of your next agreement – who’s in your negotiation team?
Mobile networks know exactly how to structure proposals, tariffs and contract terms so that they appear to offer great value for money and immediate cost savings but actually hide large profits for the mobile network. Most businesses gladly accept these ‘quick win’ savings and carrier spend projections without thinking to challenge the detail – and the devil is always in the detail on mobile contracts.
The most common technique mobile networks, dealers and resellers use to obscure the real costs is to only provide details of the headline rental charges whilst conveniently ignoring all out of bundle charges, like calls to 084/087 numbers, international calling, out of bundle roaming charges and peak data usage that would have exceeded proposed allowances.
This simplistic method of projecting costs makes the deal look like great value on a one page summary but often vastly underestimates the true costs. The mobile networks rely on the fact that most businesses don’t have the detailed data and analysis tools or know what questions to ask to identify the hidden or real costs. They also know that the lure of a ‘quick savings win’ will be enough to prevent most IT and Procurement teams from challenging whether their under-estimated projections are really correct.
Other techniques (amongst many) include applying the optimum use of bolt-on’s when projecting costs (which would be almost impossible to replicate in real life); basing spend projections on short periods of usage or low usage months, that don’t truly reflect longer term usage or trends, and not transparently specifying minimum commitments or penalties.
The bottom line is that whilst your mobile vendor will be assuring you that their offer is exceptional and the amongst the best they have ever offered for your size of mobile estate, the reality is that most businesses don’t know whether they are really achieving long-term value, and most simply aren’t.
Going into these negotiations without an experienced guide or relying solely on a team member who helped negotiate the last contract renewal is a guaranteed way to ensure you’ll be overpaying in the future. Whilst mobile contracts may seem similar, no two large business mobile usage profiles are the same and to avoid over-spending you’ll want a contract and commercial terms that are tailored to your usage and requirements.
Most businesses (and many IT and procurement consultants) can’t accurately model different mobile carrier proposals and tariffs so they ignore the complex details and repeatedly make all the wrong decisions as a result.
Mobile billing is the most complex of all Telecoms and IT billing and every network applies very different tariffs, billing rules and policies for voice, data and roaming usage. So to compare different vendor proposals side by side accurately, you’ll need to be highly experienced in mobile billing and be able to process large volumes of detailed and itemised usage data. You’ll also need to be able to complete complex analysis at an individual connection level to be confident that you’ve modelled proposed tariffs correctly. It also helps if you have detailed insights in to the major factors that will influence your mobile usage profile over the coming years, and can model these scenarios as part of your decision making process.
This type of detailed analysis simply isn’t possible using spreadsheets or without your team possessing an in-depth understanding of how each vendor’s tariffs and billing really work.
Working with a specialist mobile contract negotiator will remove this challenge and ensure that you have access to accurate and comparable data to base your decisions on. A reputable firm will also be able to show you exactly where each proposal has its strengths and weaknesses and where vendors will be hoping to make large hidden profits in the future.
Most businesses don’t have a clear plan or vision for the type of mobile deal they want and whether mobile device costs should be included.
As with all negotiations – your business is either leading the discussion or it’s being led. If you’re being led, then most of the time you’re going to end up significantly overpaying.
That’s especially true if you’re considering including mobile devices or a ‘tech fund’ in your next deal. Tech funds are one of the ways that mobile networks lure customers into signing up for complex commitments and they always lead to significant overspending. (To learn how your mobile network benefits from tech funds at your expense visit our web site at www.utelize.co.uk for free access to our best practice detailed reports.)
A professional mobile negotiator will help your business to create a clear requirements document before you commence negotiations with your network. They’ll also walk you through the different mobile network commercial models so your business can go into negotiations leading the conversation with clear targets for pricing and commercial terms from the outset.
Short cut the process, reduce your commercial risks and maximise your cost savings with expert support.
One of the most common techniques used by mobile networks at renewal is to delay the renegotiation and contract process. They initially try and hook you in, based on their high level renewal proposal, with the one simple aim of quickly removing the competition from the process.
However, once you make the decision to push forward and resolve the fine details of the deal, the delays inevitably start to come in. The aim of course, is to keep your business on the older and more profitable contract for the longest time, without getting to the point that you get so frustrated that you actually walk away or start a formal RFP.
All too often customers naively believe that they will be able to quickly conclude a great negotiation quickly only to find it commonly takes 6 months or longer for the new terms to be physically contracted and even longer for new terms to be applied to the billing. An experienced negotiator can help to put in place measures from the outset that will minimise contract delays.
Above all however, when the networks know that your business is working with an experienced and professional mobile negotiator, then the whole process from defining requirements, to analysing offers and negotiating an effective final contract, is fast tracked. Helping you to arrive at a better, more flexible and quicker deal that also protects your business against future risks.
About Utelize Mobile
Free up your IT team and reduce your mobile costs with the support of Utelize Mobile.
Our specialist independent team works with corporate IT teams across a wide range of industries and sectors; taking care of mobile network administration, managing mobile costs & usage, negotiating market leading contracts; and supporting business users with their mobile devices.
Helping our customers to quickly free up their in house IT teams and budgets, so they can focus on IT transformation and their core business.
To learn more about partnering with Utelize, please contact us at [email protected] to arrange an initial meeting or mobile health check or if you prefer call us on 03300 240 444.