The $25 a minute charge which disrespects newsagents

20/01/07 UPDATE. The concern expressed below has been well addressed by Bill Express announcing a sales game for newsagents. More here

This blog posts starts with three questions:

Should a supplier wanting retailers to sell their new product charge for in store training?
Is $200 for 8 minutes of said training fair?
Can the training be adequate if the trainers have not been trained themselves and are given up to 20 stores to visit in a day?

Bill Express (ASX code: BXP) is charging newsagents up to $200 to train them in the sale of the new BOPO rechargeable credit card. Well, actually, they are not charging newsagents. Rather, they are cutting this month’s marketing rebate – a credit newsagents have received to their Bill Express equipment lease costs since the installation of the Bill express network in newsagencies three years ago – by up to $200 depending on the rebate a store earns. We’re told it is a cut to the rebate for this month only.

By cutting the rebate Bill Express saves up to $600,000 this month – to fund the training. In my newsagency the training visit lasted eight minutes and consisted of dropping material off and chatting briefly – there was no training – certainly nothing of value was shared, yet I’d been told by a Director of Bill Express that this training would be important for compliance. There was no aspect of compliance in the training in my newsagency.

In some newsagencies the ‘training’ has been over the phone while in most it seems to be in person and completed in 10 to 15 minutes. One newsagent said their trainer was covering 20 newsagencies that day. Another said their trainer was trained over the phone. Another said the trainer said she was getting $30.00 a site to do the training.

There have been more than 100 public complaints by newsagents about this in the last five days. It’s a problem for Bill Express and for the industry associations which have endorsed the one off reduction in newsagent marketing rebate of up to $200 to fund the training. If the $30 payment to the trainer is accurate and allowing for a 25% agency premium plus some setup costs, it is fair to claim that this national ‘training’ has cost Bill Express under $150,000, leaving a windfall profit of up to $450,000, courtesy of newsagents, to book this month. If accurate, it’s a nice bottom line bonus.

The average time being spent per store supports the $30 per outlet theory, it’s why the training is rushed. While I am hot happy with a supplier asking me to pay to be trained to sell their product, what Bill Express has delivered is disrespectful and it harms their reputation among newsagents. The training will not improve compliance or the ability of newsagents to sell the BOPO product. Newsagents have effectively been forced, without proper consultation, to fund the delivery of in store marketing materials and not much more.

Would Coles or Woolworths accept this? I suspect not.

Bill Express would be well advised to reconsider its position on not paying newsagents the marketing rebate this month. In the light of the actual costs revealed and the evidence that no real training is being delivered it is inappropriate that newsagents be charged as originally planned.

If Bill Express does not reconsider and accept that it has made a mistake in its relationship with newsagents in how it has handled the BOPO matter, it will experience mass cancellation contracts as they fall due.

Newsagents have, in their national retail network, an asset of extraordinary value. The day newsagents price access to that asset commercially is the day newsagents will demonstrate that they understand the nature of competition.

Newsagents had hoped that Bill Express would draw bill payment traffic from Post Offices. This training mess puts the competitive offering at risk as billers will not be comfortable supporting a disgruntled network or a supplier which does not respect its retail network.