An example of the CAN-De Fund's potential to increase the PREMIER Distrubutor customer base:
|PREMIER Distrubutor Activations per year:||500,000|
|Credit checks per year:||2,000,000|
|Customers not qualified due to credit restrictions requiring large deposits:||1,500,000|
If the CAN-DE Fund can provide deposits for at least 10% of these consumers who prove to be creditworthy, by a dealer's standards to be decided strictly by a dealer, PREMIER Distrubutor could expand their annual customer base by 150,000 new activations. This would mean a 30% increase.
To begin participation in the CAN-De Fund, a dealer could borrow or set aside several thousand dollars to target a specific number of activations within one year, for instance, an additional 100 customers who would not otherwise qualify for service activation. The money would be placed into the CAN-DE Fund.
For example, if a dealer borrowed $50,000 from a bank, the loan interest for 5 years would be about $1100, but would provide an additional annual revenue to a dealer of $25,000 for that first year. The money used towards those first deposits would be returned to the CAN-De Fund again and for continuous use, creating again an additional $25,000 revenue for the 2nd, 3rd, 4th, and 5th year creating an additional total revenue of $125,000 over a 5 year period.
Participating dealers will benefit by using CAN-De Fund monies to augment their finances.
Each month the cellular services carrier calculates commission earned on sales and commission charge-backs for early cancellations and provides a commission report to the distributor. In turn, the distributor prepares a commission report of commissions earned and commission charge-backs for each dealer; these are netted against each other to calculate net commissions. Usually net commissions earned are then offset against any balances owed by the dealer to distributor for inventory purchases. If the net commissions earned are greater than inventory purchases, a check is issued to the dealer by the distributor. If the total of net commissions earned is less than inventory purchases no check is issued. This can be a financial risk to the dealer.
Using the CAN-De Fund, the dealer has completed an agreement with the cellular services carrier and the distributor to take commission charge-backs from the CAN-De Fund account. Use of the CAN-De Fund account for commission charge-backs can significantly reduce the financial risk to the dealer when commission charge-backs exceed commissions earned.
Currently, dealers may obtain monetary assistance with advertising and marketing through co-op advertising programs sponsored by cellular services carriers. As part of the process, the dealer prepares an advertising item such as a billboard and requests approval for reimbursement from their distributor. In turn, the distributor obtains approval from the appropriate cellular services carrier. After approvals by the distributor and the cellular services carrier, the dealer places the advertising then requests reimbursement from the cellular services carrier through the distributor. Generally, this process is cumbersome and reimbursement is not received in a timely manner.
With the CAN-De Fund is in place, the cellular services carrier may agree to provide certain co-op monies to be deposited in the fund. Dealers may use these monies in direct marketing programs such as instant rebates, using the earmarked co-op funds for increasing sales instead of traditional co-op advertising programs. Preferably, allocation of some co-op funds for direct marketing programs would not be in addition to the traditional co-op advertising programs.