The market for smartphones is massive – in 2018 market penetration reached 75% in the United Kingdom and more than 80% in the United States. While growth has slowed over the years due to ongoing adoption, the number of expected smartphone users continues to grow by several million annually.
As technology evolves and service providers deploy innovative solutions to improve their networks, subscribers often upgrade their equipment to keep up with the times. For example, consider today’s rollout of 5G fixed wireless and the need for 5G-compatible phones.
Similarly, the Internet of Things (IoT) is an emerging area of growth to keep an eye on. Every second, another 127 devices are connected to the internet. Not just computers and phones – but just about anything – light poles, homes, clothing, watches, vehicles and more. And when consumers upgrade their phones and other interoperable, connected devices, retailers earn commissions.
Due to the number of internal systems, complex transactions and manual inputs, however, many large retailers miss out on the commissions owed to them for activating phones and devices on wireless networks. This leakage can lead to millions of dollars in lost profit.
Emerging technologies will result in new service providers, broader consumer options and the potential for new partnerships and promotions. And while retailers will benefit from additional commissions, it can also lead to payment errors due to the increased complexity.
Ensure commissions don’t slip through the cracks
Typically, the greater the spend – the more potential there is to identify errors and recover spend. When it comes to activation audits, recoveries are typically identified after reviewing the commissions owed to retailers from activation transactions – whether it’s a mobile phone, tablet, smartwatch or otherwise.
Contrary to common belief, activation transactions do not end at the point of sale. Rather, the commission is earned closer to 30 days after the device is activated. Also, the carriers themselves maintain what they consider to be the ‘system of record,’ or the database used to determine whether a commission is earned for a transaction. Accessing the data in the carrier’s live system is a requirement for an effective activation audit.
The mobile phone industry is enormous and expected to maintain and grow in subscribers for the foreseeable future. In addition, with new connectivity options on the horizon, retailers may need to negotiate contract service provider startups or challengers. The increasing availability of IoT technology leaves the door open for more and more devices to be connected online, which will require carrier networks.
There’s no time like the present
What does this mean for retailers? It means continued growth in activation commissions or revenue-sharing opportunities with wireless carriers. There is no better time than now to start or introduce an activation audit program with your carrier partners.
PRGX can help you start by reviewing and even modifying your contract language, beginning with implementing audit rights as needed. By performing these audits annually, we can more quickly and easily find and recover lost commissions, plug any gaps where leakage is found, set the standard for transparency and control, and improve contract language in advance of future negotiations.
Activation audits can deliver a short-term cash return while remediating process improvements for future contract negotiations with new or existing carriers. Let PRGX review your current agreements to identify points of leakage and tighten controls. Learnings from us can result in exponential future savings – revenue that otherwise might have gone unnoticed and unrecovered.
Want to learn more?
For more information, watch PRGX’s webinar: Why Retailers Need a Mobile Phone Activation Audit or download the e-book Why Retailers Need a Mobile Phone Activation Audit.