It’s no secret that there’s been a lot of uncertainty in the air as we experience the biggest cost-of-living hike in more than four decades.
The Bank of England has warned us the UK’s heading into a recession as the high rate of inflation squeezes incomes for millions across the country.
It was probably inevitable, right?
The world is coming out of a global pandemic that saw governments reallocating unprecedented amounts of money. That money has to come from somewhere. On top of that, geopolitical tensions are happening all around us, supply chains are grinding to a halt, and the pound is tanking…
In other words, things are looking a little… well, bleak.
So, what does it mean for telcos?
Telcos can no longer ignore rising costs — especially as the cost-of-living crisis is expected to worsen over the coming months. There’s a fine line to walk: supporting customers whilst protecting financial performance.
Telcos have long struggled with their customers’ unwillingness to pay more for new services. But in the current climate, resellers will have to raise their prices and pass costs down to their customers.
Unlike other industries where prices go up year-by-year, telco customers have gotten used to receiving more value for the same price or less. Because of this, the industry will likely see weakness on the B2B side, and consumers will look for ways to reduce out-of-bundle spending, seek retention discounts and spin down to lower speed tiers and data bundles.
Despite the pandemic-induced demand for high-quality connectivity, there’s always the risk that customers will reassess their spending and look for alternatives. If price increases are too aggressive or the customer experience suffers from cost-cutting or labour shortages, there’s no guarantee that once-loyal customers will stick around.
On top of this, the cost-of-living crisis is hitting Britain’s workers harder than anything they’ve faced before, and the pressure for pay rises across all industries is higher than ever.
So, let’s cut to the chase. How can resellers increase their profit margin to stay above water in times like this?
It’s time to diversify your portfolio
Understanding that it’s a sink-or-swim economy is the first factor in staying afloat.
Of course, it’s hard to implement a business-changing strategy to cope with rising inflation and impending recession only months before it hits. But no plan will be worth its salt unless it’s cost-effective, which will become crucial as consumers’ habits evolve during the downturn.
This means it’s time to diversify your portfolio and introduce higher-margin products.
Sticking to your one-service offering means your top-line revenue will continuously decrease, so it’s important to become more efficient and reduce costs to maintain margin levels.
Newer, more innovative products and services — like support or managed service contracts — are a stride in the right direction. Customers will pay a premium for the longevity of these services, resulting in a significant profit margin. That would be nice, wouldn’t it?
Plus, adjusting base prices and promotions to protect margins, reinforcing premium price positionings where possible and implementing pricing actions that offer ‘more for more’ is a good way to consolidate to accumulate.
For staff wage increases, rewarding your employees with a pay rise can improve productivity and retention rates. Still, it’s important to recognise that a higher wage would mean lower profit margins and costs, which would undoubtedly be passed onto the customer through higher prices.
To resolve this, prices need to go up where they can, or cost efficiencies and savings need to be made by increasing the responsibilities of your employees. It’s also worth considering other components of your employer-employee deal — including bonuses, long-term incentives, health and wellness benefits, career progression and development training opportunities.
Maximise your margins with Invosys’ bundles
We’re living in pretty turbulent times. It’s not all doom and gloom, though. You can always count on Invosys to be the light at the end of the (almost never-ending) tunnel!
Because of our vast portfolio of products, our telecom resellers have the opportunity to bundle products and services together to maximise their available margins. Our connectivity and cloud solutions have been curated in-house by our expert developers — designed with channel partners in mind…
When we provide managed telco services, we’re not just a voice at the end of the phone — we offer a white-labelled service, remote local support and hands-on maintenance. And when we supply our industry-leading Invosys Number Manager platform, we also provide in-depth training and 24/7 telecom support.
As we see an acceleration to the cloud in this rocky landscape, offering businesses small and large improvements in productivity and affordability, it only makes sense to reset the balance with Invosys. So, what are you waiting for?
Need help revolutionising your services to maximise your revenue? Invosys is your solution. Contact us at +44 (0)161 444 3333 or email [email protected] today!