How to Negotiate Right-Fit Mobile Contracts
Businesses incur costs from every angle, but one cost businesses struggle to reign in is device airtime & procurement. As many of us know from personal experience, the mobile industry is renowned for over-complicating its services, contracts and tariffs. On a business scale, the challenge of managing a mobile budget is multiplied.
The challenge for IT and purchasing teams is to ensure you are achieving the optimum pricing, whilst ensuring contract terms are flexible enough to deal with changes.
So, where do you start?
Mobile networks, devices and budgets have always been challenging for businesses to control. Devices are constantly with employees, supporting both their business and personal usage and are more prone to loss and damage than any other form of hardware!
Unlike most IT expenditure, mobile costs are highly sensitive to end user behaviour, and trying to control users’ behaviour is not possible. The arrival of 5G in 2019/20 will only add to this challenge, forcing businesses to find the right balance between user productivity and usage controls.
Four Significant Mobile Challenges Facing Organisations:
Increasing mobile data consumption which is driving greater management challenges, increased airtime costs & frequent bill shock.
BYOD programs failing to deliver expected savings, driven by higher IT support costs coupled with lower BYOD adoption rates.
Increasing mobile security, data leakage & GDPR risks leading to increased pressure to provide & support corporate devices.
How to get the most from your negotiations
Plan your requirements
It’s important to note that your mobile network has a vested interest in maintaining the status quo, as a result, it’s uncommon for the mobile networks to initially resist any proposed changes! They may also suggest that it’s not possible to achieve the things you ask for, and will seek to bypass your negotiation terms, putting pressure on decision makers.
This is just a ploy to discourage you, it is 100% possible to achieve the right fit contract!
To achieve the best outcome, use the following approach:
Take Time to Understand Proposed Reporting, Billing Alerting and Support Capabilities
It is vital you understand exactly what you are signing up for, having the right contract framework is the starting point for being able to continuously manage your mobile costs. However, you’ll need to manage in-contract usage to deliver the benefits.
Ensure you know exactly what services and support your network will provide you to help control costs, billing and usage.
SEPARATE MOBILE NETWORK & DEVICE PURCHASING
Prior to smartphones, mobile phones cost a fraction of the price and a typical airtime bill of just £300 per annum.
Now that we live in a smartphone society, phone costs have dramatically increased costing between £150 to £1000, it’s likely your device costs as much as your airtime over a 24-month period!
You need to either have separate agreements or clear sections in your contract that don’t tie the purchasing of devices to the mobile network via the use of the tech fund.
AIM FOR SIM ONLY CONTRACTS
For many businesses with ad hoc device purchasing requirements, there may be no commercial issues with buying devices from the network. However, you need to make sure that you’re not obligated to buy devices. Terms of the airtime service need to be distinct from device purchasing with no commitment to unreasonable minimum spend or connection criteria.
A SIM only contract, with the option to purchase devices, is the best option. It can be aligned to any reasonable term to align with your business.
FULLY UNDERSTAND BOLT-ON RULES
If bolt-ons need to be applied in advance, then it’s highly likely that your business will suffer from overspending. This is because it is almost impossible to know in advance how much data or voice usage will be required. If bolt-ons need to be managed by the business, consider using shared voice and data pools instead.
UNDERACHIEVEMENT PENALTIES SHOULD BE PROPORTIONATE
Contracts that contain revenue-based commitments can often have shortfall penalties applied. If you agree to this, ensure the penalties for failure are proportionate to the networks actual loss!
By separating device and airtime, the penalty should be materially less than the lost revenue.
KNOW YOUR ROAMING PROFILE AND UNDERSTAND ROAMING TARIFFS
With UK data, the concept of having shared data and voice pools for roaming usage is a sensible one and helps avoid roaming bill shock, you can do the same thing for roaming but ensure you check what countries are included.
ONE PRIMARY COMMITMENT PER CONTRACT
Many mobile networks want to tie their customers into multiple overlapping commitment, the common ones include:
• Minimum connections
• Minimum spend
• Minimum term
By combining these, networks succeed in leveraging their negotiation position at renewal time, thus you will fail to achieve one or more of the criteria. This forces businesses to pay early termination penalties or in some instances the network may agree to a co-terminus arrangement.
Ideally you want to remove all commitments, in practise however the networks will not offer their best pricing without a commitment. Thus, you need to target one commitment, either minimum holding or spend.
USE SHARED DATA ALLOWANCES
Mobile data consumption is expected to increase significantly over the next couple of years, resulting in domestic mobile data being the most significant areas of cost growth! Therefore, it’s essential to negotiate the right tariff and charging mechanism.
Mobile data usages varies month to month from user to user. So, the use of a shared data pool or aggregated user data is ideal.
Shared data pools are where a large pool of data is paid for and accessible for multiple users. Aggregated data is where each user receives a defined amount of data. This approach helps smooth out the fluctuations in usage each month, plus is typically more efficient and cost effective than providing users with their own plans. It also avoids the need to continuously optimise tariffs at a user level.
ENSURE TARIFFS ARE CLEAR AND CONTRACTS PROVIDE CLEAR DETAILS OF ALL CHARGES
Many networks only provide headline prices in their tariffs, and many charges are available by request. Ensure that your contract contains full details of all tariff charges and billing rules:
• Define minimum billing increments – e.g. per second or per minute
• Ensure that any “zones” used for billing, roaming and international calls are clearly defined
• For Non-geographic calls, ensure the “access charge” is clearly stated, this is the amount that the network can legally add to the cost of calling services numbers
• Clarify which countries are included in the roam like home allowance
• Clarify all out of bundle data charges
How Mobliciti Can Help
Negotiating the “right-fit” mobile contract for your business is one of the most important factors that determines how successfully your IT and Finance teams can manage mobile services and devices in the future. For those businesses that take a short-term view, without truly understanding their usage profiles or considering future changes, then it’s likely that there will be continued overspending and inflexibility.
Take advantage of our mobile Insight Review for comprehensive insights into your mobile network costs, usage trends and airtime contract & pricing.
Get in touch today to find out more.