Mobile Operators: Is there any future in-store?

It’s no secret that ‘bricks and mortar’ retail strategies are battling against some difficult economic conditions right now. Mobile operators are by no means immune to this. Indeed, on many levels, as operators fight to remain relevant to consumers, within an increasing decentralised mobile value-chain, those challenges are concentrated further. All told, with the realisation that change will not be achieved through incremental alterations to the established model, leading a mobile operator’s retail strategy must be one of the most challenging jobs in telecoms right now.

Fundamentally, the relationship between mobile operator and consumer is changing. Relationships are now more complex and multi—faceted, with multiple brands now influencing the customer’s wireless experience. To remain relevant, and to secure the customer’s long-term loyalty, the role of the traditional store must change too. It must find a new balance between delivering on the functional requirements of the business (customer acquisition and retention) and driving more relevant and emotional relationships with customers.

The in-store experience has always been a vital touch-point in the operator-to-consumer relationship. Historically, it has only been leveraged at the start of the customer relationship – with occasional re-visits for accessory sales and support. While remaining a principle channel for customer acquisition, the in-store experience must now evolve. It must become integral and relevant across the entire customer lifecycle – from initial evaluation and set-up to continued service and maintenance.

Indeed, mobile operators may be one of the few retailers on the high street able to use this strategy to defend their bricks and mortar position. Unfortunately, the pace at which change can occur is often stifled by legacy practices; and for mobile operators this comes in the form of high-street stores being measured against customer acquisition and not the profitability of the customer over their lifetime.

With a change in performance management, and with tighter integration into its own online [fulfilment] channels, threats such as ‘showrooming’, where customers evaluate products in-store, but purchase elsewhere, become less of a problem for operators. This is because they are unchained from acquisition measures and can see the role a bricks and mortar presence can have in developing and retaining customers.

Physical stores can’t beat online for convenience and filling display units with more stock will not be enough. Instead a personalised, branded and guided ownership experience that matches products and services to customers’ lifestyles will be a core differentiator. With a customer relationship that [ideally] spans several years, surprisingly few operators are looking at the role their high-street assets play in retention and customer lifetime value; creating physical environments within which to access support, explore and discover new services and even act as a ‘click and collect’ location for customers to collect their online purchases.

However, such change must also be sympathetic to operators’ own online, multi-channel ambitions. Customers may demand a differentiated experience through physical stores, but they’ll still expect consistency as they ‘hop’ between the operator’s multiple channels. Information, pricing and support must be consistent regardless of the destination. This will require much tighter integration with marketing and merchandising teams to deliver more consistent messaging and device positioning across all channels. Intelligence regarding customer requirements and expectations should be fed-back by retail, helping all functions to better segment customers against device ranging decisions. Inventory management must also be better synchronised to support the multi-channel ‘hopping’ of customers and avoid any misalignment between demand seen in one channel and stock availability in another.

It’s not unrealistic to assume that a number of mobile operator executives around the world will be questioning the function (and viability) of their physical stores at this very moment. Incremental changes to the model will not wash though. Rather a complete shake-up of how operators consider and calculate the value that a bricks and mortar presence can deliver across the entire customer lifetime must be adopted. For example, while customer acquisition must remain a core, there must be greater attention given to the ‘quality’ of a sale. After all, two different sales experiences will result in two very different customer profitability templates. In some instances, retail agent commission gets paid even if the customer subsequently returns a device or disconnects as a result of poor product/service right-sizing. Legacy practices such as this simply aren’t competitive nor are they sustainable.

Ultimately, mobile products and services remain a complex sale and the physical store remains one of the few touch-points in the entire customer lifecycle where face to face engagement between the customer and the mobile operator is possible. This will remain vital in right-sizing wireless solutions to customers; and mitigating the unnecessary costs that for too long has inhibited improvements in customer margin. As such, the opportunity to deliver a highly personalized in-store experience is compelling.

By Tim Deluca-Smith, VP of Marketing at WDS, A Xerox Company