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Q&A: Retailers Role in Wireless
an interview with Edmond H. Legum

Although cellular has been around since 1983, the relationship between retailers and wireless carriers remains strained in many cases, and many retailers still struggle with the challenges of selling wireless.

For insights on how the carrier-retailer relationship can be improved, how carriers can maximize sales through retail channels, and how retailers can improve their wireless profits, TWICE sought the opinions of Edmond H. Legum, president of the Edmond-Howard Network, an association of wireless communications consultants.

Legum has been involved in high-technology sales and management training and consulting programs for such carriers as APC/Sprint PCS, AT&T Wireless and Nextel. Here's what he had to say:

TWICE: How have cellular carrier/retailer relationships changed in recent years?

LEGUM: During the past six or seven years, some things haven't changed at all, and some things have. When we first began wireless consulting in 1991, one client talked about one of its dealers, a large, well-known electronics chain, complaining about the caliber of their employees and the condition of their stores. This chain was then and is now among the top five retail outlets of wireless.

About the same time, we were working with a retail electronics chain and one of its regional managers told us why the company disliked working with carriers, putting it this way: "Let's say you are selling toasters, and the electric company comes up to you and says, 'I'll give you $25 every time you sell one.' Everybody lowers their price because now their revenues are supplemented by the power company. Toasters become worthless, and you have to give them away. Then, surprise! The electric company comes back and says, 'We can't afford to pay you $25 any more. How about $10?' "

Since those conversations, carriers still may suffer from a lack of sensitivity to what matters most to retailers. They may hire account reps who know little or nothing about what makes retail tick.

Nonetheless, some things have changed for the better. We're starting to see carriers bring in people to run their indirect channel who have real, dyed-in-the-wool retail experience.

Some carriers are starting to help their retail partners do a better job of visually merchandising wireless. Some provide displays or use their own sales people to man store-in-a-store kiosks. Some, especially GSM players, make activations quick and customer-friendly.

TWICE: What don't cellular or PCS carriers understand about retail?

LEGUM: Instead of answering that directly, we recommend that carriers perform a quick self-analysis of their peoples' understanding of retail.

For example, a carrier might ask, on a scale of 1-10, how do I rate my account reps' understanding of how retailers do business? How well do they understand retail P&Ls, gross profit, inventory management, visual merchandising, retail advertising, the financial impact of the holiday selling season, retail processes? Can the reps actually run a successful store operation themselves?

When a carrier can say, "Yes, my people understand all of this," I'd give them an 8 or 9. Then they have a good chance of stimulating their retailers to do more business.

We also recommend that carriers give their people the tools they need to work effectively with their indirect accounts. They need the knowledge to prepare business plans, know how to conduct a good agent visit, know how to analyze agent performance, and how to help their dealers build their business.

TWICE: What can carriers do to strengthen their retail channels? And should they, or can carriers do a better (or less costly) job through direct marketing and through carrier-owned stores and kiosks?

LEGUM: Carrier-owned retail and indirect retail may prosper side-by-side because different customer segments may prefer to do business with different types of retailers. For example, a Wal-Mart, Circuit City, RadioShack and a carrier-owned retail store may all, theoretically, be in the same strip center and draw from their own segment without diminishing the sales of the others.

Who will do a better job? Who will do it at a lower cost per gross activation (CPGA)? Some carriers find they they can reduce their CPGA with their own retail stores. Some find it more cost-effective to go with independent retailers. In either case, if one is marginally less expensive than the other, should a carrier shut down, or withdraw attention from, the other?

We recommend carriers consider the mix of business generated by both channels. In the mix, it may be revealing to analyze the combined benefits of volume and profitability. Can a carrier make up for the losses in activations caused by dropping one channel?

It may be difficult and might require an ambitious new promotional effort, the cost of which might place pressure, again, on their CPGA. The trick is to maximize the profit opportunity within each channel.

TWICE: What are the biggest challenges facing high-volume retailers in selling wireless? Managing retail salesperson churn? Creating a seamless buying process among retailer, carrier and end user?

LEGUM: These issues are extremely important and may be symptoms of some other more deeply rooted problems. We ask clients to consider the bigger picture. In our opinion, the most pressing challenge facing high-volume retailers is management alignment.

How can upper management better support what is going on in the store? How can front-line sales and management personnel in the field better support what upper management is trying to accomplish? What is management saying in regard to selling wireless?

Where we are today? What are the conditions of the industry an dour markets? How will our plans to improve sales strategies fit in? What are the results we want and need, and how can we work together to build our business?

I believe uncertainty may be part of the problem that wireless retailers face today. Management alignment provides a sense of direction.

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