Spend Matters welcomes a guest post from Matt West of NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom and shipping.
Last week, Galen Gruman at InfoWorld took a swing at T-Mobile’s self-described “radical” new data plans, which do little to cut customer costs and increase pricing competition. But he didn’t stop there. None of the big four wireless carriers was spared from Gruman’s scrutiny as shown in the following excerpt:
Clearly, the competition among four carriers has done nothing to spur meaningful innovation, whether in technology or in business approaches. In fact, it has made the carriers more the same, while also raising prices. For example, Verizon's Everything plans last summer actually raised total spend for customers, yet customers did not flee. That sent a strong signal to the other three that there was room to charge more -- and they have.
Gruman hit the nail on the head in his assessment. Customers – including enterprises – are facing a more homogenous marketplace for wireless carrier services. Companies used to rely on the differences in carrier pricing to negotiate lower rates. Today, those cost differences are becoming marginal. Is securing fair and competitive carrier rates still critical to wireless cost management? Yes, of course. But it doesn’t go as far as it used to.
Companies that want to keep wireless expenditures under control must look beyond pricing. The greatest returns on wireless cost management efforts can be found in the following areas:
- Volume discounts. Negotiating the right discount for your volume of business.
- Plan optimization. Are you on the right plan, right now? Companies have to be diligent in monitoring their usage and adjusting their subscriptions accordingly.
- Incentives and credits. Customers must negotiate for the incentives and credits that reward certain behavior and follow through with claiming any credits owed.
- Auditing and refund recovery. Carriers make billing mistakes. It’s up to the customer to find the errors and recoup the cost.
The average company is overpaying by 15 percent for wireless services. However, NPI’s research indicates that only half are a direct result of leveraging competitive pressure to capture pricing savings. The other half typically comes from subscribing to the right plans and features or from negotiating for incentives paired with a major sourcing event.
As competition in carrier pricing continues to diminish, the levers for wireless cost reduction have changed. Companies that understand which levers to work will spend less and get more from their carrier relationships.