CELL BLOCK: Up-Selling Cell Buyers

By Christine Persaud

Many years ago, I was in the market for a new mobile phone. Despite my insistence to the salesman that I just wanted a simple phone that was reliable, intuitive, and flip-styled, he kept touting the great games on one particular device. I reiterated that I will likely never, ever play those games, despite how great they might be. I wanted to know more about the features I would use. But he just didn’t get it. Since I couldn’t play around with an active model, I really had to rely on his advice, and he just wasn’t giving any. Naturally, the experience frustrated me to no end.

Whether salespersons want to admit it or not, buying a cellular phone is an experience that’s almost as dreaded as buying a new car. If you don’t know what you want, you walk in skeptical about the salesperson, worried about the fine print, and concerned that things won’t work like you’d like them to. And since most stores never display active phones, you rely even more heavily on the advice and guidance of a salesperson than you would with something like a car, which you can test drive first to make sure it’s the right fit.

A recent Best Buy Mobile survey, conducted by Angus Reid Strategies with 1,003 Canadians, found that 60% of Canadian consumers are frustrated with dealing with service providers, and 74% say that a salesperson that’s knowledgeable about service plans is essential to their shopping experience. Customers also appreciate neutral and objective advice, with 58% of the respondents citing this as important to the purchase experience.

From a salesperson’s perspective, the sale is likely a lengthy, and sometimes arduous, process. The unknowing customer needs to be briefed on not only the selection of handsets, but also plan options, and useful accessories. While a customer might come in already knowing what phone he wants, it’s still necessary to go over an existing account (if there is one), followed by voice and data plan options, and accessories.

The reality is that buying a cell phone is rarely a grab-and-go purchase experience, so the way a salesman approaches it can make all the difference for a customer. How can you help maximize both the experience for your customers, and your profitability?

Sell Him What He Needs

While up-selling is an obvious attempt to make more money on a sale, it’s only useful when it also works to the advantage of the customer. In other words, don’t sell him something just for the sake of selling it. Make sure it’s something he needs in order to enjoy the purchase to the fullest.

With highly-coveted phones recently coming to market like the Apple iPhone, BlackBerry Bold, and Samsung Instinct, it’s clear that most customers will enter the store already having an idea of the exact phone they want. But there is still a healthy group of customers that are weighing their handset options.

Damon Jones, General Manager, Retail Division at Glentel, which operates the WirelessWave, The Telephone Booth/La Cabine Telephonique (Tbooth/la cabine T), and WIRELESS etc. stores across Canada, says that, right from the get-go, Glentel salespersons will ask the customer if he currently owns a cell phone, or has ever had one in the past. “This way,” he explains, “we know what they’re comfortable with.” Jones says that the customer is also asked about the network he’s on. If he’s happy with it, the salesman might suggest an upgrade. If not, he’ll consider porting the customer’s number over to a different carrier.

Once this is determined, Jones says that probing questions are asked to establish what the customer is looking for. Has he seen something he liked at another store or from a friend or family member? It’s important to get a sense of urgency: how quickly does he need a phone? Is it for business or personal use? And finally, how does he want to communicate? Through voice? Through text messaging? Or maybe even through social networking like the mobile version of Facebook.com.

Phil Johnston, Director, Wireless Strategy & Business Development, Best Buy Canada, agrees, adding that it’s important to ask the customer what is compelling him to be in the market for a new device. “If they get a lot of texts,” he says, “maybe they should go for a phone with a QWERTY keyboard, or maybe if the texting is being used in the place of e-mail, then they should get an e-mail-capable phone. Then it comes to things like style, colour, flip or no flip; all the subjective things.”

It’s also important, suggests Johnston, to explain what the phone can do, and answer the “top-10 questions”. For example, he says that one of the most common questions is whether a Hotmail account can be accessed via a BlackBerry.
“You don’t want to make assumptions about customer knowledge,” he explains. “Technology moves so quickly. For example, GPS is now in a lot of phones, and it wasn’t possible not too long ago. Some people have no idea some phones have it. We can’t assume that the customer is up on everything devices can do.”
Backing up this point, Best Buy’s survey reveals that a whopping 44% of Canadians between 35 and 54 admit that they struggle to get their cell phones working once they get home!

Once the handset has been established (or at least the category narrowed down), it’s time to focus on the plan options. It’s a no-brainer to qualify your customer, and find the best plan to meet his needs.

“People often focus on the phone,” explains Kevin Banderk, Chief Koodo Officer at Koodo Mobile. “But the phone can be $0, while the plan is $2,000 to $3,000 over the course of a few years. This is what matters.

“If [the person is using the phone for] talk and text, you have one idea,” he adds. “But when it’s messaging and the Web, you have other options, and carriers.”
Koodo, which is partnered with Telus Mobility and has its own retail kiosks as well as being sold through other stores, focuses on talk, text, and long distance rather than data. So salespersons for this brand typically tailor questions toward things like long distance calling: does the customer travel a lot? Commute to work in an out-of-town city that might be long distance?

“We also ask about text messaging usage,” says Banderk. Every Koodo plan comes with 50 text messages, but, Banderk adds, “some customers might talk about Facebook, so we’ll discuss alerts with them, and promote text messaging as a way that they can keep in touch. It’s more about informing than selling.”
When it comes down to it, being open and honest about fees will build trust with the customer, and avoid him coming back to you with complaints about his monthly bill.

“Network choices are fairly similar [among carriers],” says Jones, “but who does billing by the second? Who charges X for Y service? Everyone gripes about cost.”
As Jones points out, upgrading your phone in Canada isn’t always cheap. “But Canadians have accepted it to some degree,” he claims. “It’s just like gas [for the car]. It’s just another expense that you have to deal with.”

Selling the Accessory

The accessory sale often has favourable margins, and it helps that many of the options in the cellular arena are needs and not just wants. If your customer drives a lot, it’s handy to have the option to power up the device via a 12-volt adapter. If he also chats a lot while on the road, a Bluetooth headset or speakerphone is the safe, and in some provinces, only way to go. People take their mobile phones everywhere, which means a protective case, holster, or skin is of greater importance than it might be with any other device.

ones says that while margins in the accessory category have slipped a bit this year, sales continue to grow. Year-over-year, Glentel saw a 35% rise in the eight months to date in 2008 versus that same period in 2007. It comes as no surprise that smartphones like the Apple iPhone and BlackBerry often lead to more sales.

“There’s more variety,” says Jones, adding that people who buy a higher-quality product appear willing to spend a bit more on accessories as well.

Vito Gurreri, Product Manager/Buyer at ImportCom Distribution, distributor of a variety of mobile phone accessories, muses that iPhone users will buy “pretty much everything that’s out there!” While he has no actual figures, Gurreri guesses that smartphone users would be more likely to opt for more accessories.

Nevertheless, it’s important to listen to your customer’s needs, regardless of what phone he’s buying, and suggest items that he’ll thank you for later.
“You can’t conclude the sale without asking him what else he needs,” advises Gurreri. “It’s almost like you buy a car and don’t put gas in it.”

Koodo’s Banderk says that the attachment rate for accessories with a cell phone sale is about 50%; while Jones pegs it higher at 70%. Best Buy Mobile’s Johnston estimates that at least half of Best Buy customers leave the store with at least two accessories at the time of purchase of the phone.

“Cases are by a landslide our biggest accessory,” says Jones, who adds that one of Glentel’s “claims to fame” is the fact that over 10% of the company’s sales are generated via accessories. In August, Jones notes that there was a 70% attachment rate on cases with the iPhone, and 54% for other mobile products. The second-biggest category, according to everyone I spoke to, is 12-volt adapters.

“If this is your third or fourth device,” Jones muses, “in the early days, all you could get was a case and a car charger!”

“Everyone at some point or another is in a car, whether they own one or not,” says Gurreri.

In relation to protective cases, Gurreri emphasizes some important considerations that the customer may overlook. For example, a woman will tend to carry her cell phone in her purse, which really isn’t the greatest environment: there could be creams that could spill, or items, like keys, that could scratch the screen. This is the opportunity to recommend a rubber, plastic, or nylon case. Most women won’t take well to clipping a holster to their belts, in which case you can explain the option of a clip for the shoulder strap of a purse. “Many think you can only clip it to the jeans!” says Gurreri.

When it comes to men, Gurreri suggests asking how the customer plans to answer the phone in the car when it’s in his back or front pocket and the seat belt is engaged. This is an opportunity to discuss Bluetooth headsets, speakerphones, or even cradles to mount the phone on the vent or in the centre console.
Naturally, this leads to the third consideration for accessories: safety. Whether there’s a by-law in the province or not, it’s worthwhile to mention the convenience and safety features of using a Bluetooth wireless headset or speakerphone whenever possible. Bluetooth speakerphones, which clip to the visor in your car and pair with your phone just like a headset would, are emerging but “haven’t hit mainstream yet,” opines Johnston.

Jones says that a second AC charger to use at the office or while traveling is also becoming a popular item, a trend that both Gurreri and Johnston confirm. Johnston points to a neat alternative device called the Power Stick, which can be charged up via USB connection to a PC, then taken with you to power up your mobile phone if it runs out of juice. The device, which he claims is being well-received by customers, ships with nine connectors for various mobile phones. (www.powerstick.com).
“It goes power, protection, and then usability,” says Banderk, in reference to the order of importance accessories have to the customer. “Then, it’s the less functional, fashion items like charms.” Johnston cites, in addition to charms, tattoos (i.e. stickers) and other fashion-related items for phones as also being on the radar.
When it comes to the accessory sale, “I always use the story of the guy who buys a video camera,” says Gurreri. “He leaves the store, takes it out on a trip in the wilderness, and the battery dies, and he can’t charge it. Or he gets caught in the rain.” While it might seem at the time like the customer was happy with his purchase, “at the end of the day,” Gurreri adds, “you really didn’t sell him what he wanted. It’s the same thing with a cell phone. He might know what phone he wants, but he didn’t think about how he’s going to charge it while driving, or how he’s going to wear it while at work.”

Gurreri sums up the accessory sale in a nutshell: “It’s sort of like an interview about living standards”.

On a related note, Johnston adds that accessories can often times drive the sale of one phone over another.

“People change phones frequently, and even if a phone is a good price, people have $100 worth of accessories at home that they can’t use anymore. Sometimes asking if they can use old accessories with a new phone could be a decision-maker.” If anything, this is also a strong argument for universal accessories that can be used with a wide variety of devices (see Cell Block in the July issue of Marketnews for more information on these).

The New Breed of Accessories

The new breed of savvy smart phones is subsequently leading to a whole new realm of accessory possibilities, like stereo Bluetooth headsets, flash memory cards, and even portable speaker systems. If the customer is focused on the music features, it’s worthwhile to discuss options like stereo Bluetooth (with A2DP-enabled phones) or portable speakers. If he tells you he’ll be using the snazzy new camera phone as his primary point & shoot camera, then a memory card upgrade would be a useful investment. But, as Gurreri suggests, the salesperson should let the customer lead to this part of the discussion rather than bring it up himself.

“The customer didn’t buy an MP3 player,” he says, “he bought a phone. If the customer says he’s buying it as an MP3, then other recommendations can come into play.”

While stereo Bluetooth is relatively up and coming, flash memory cards have been around for a while. But never until now have they been so important to cell phone users. In fact, SanDisk recently announced 16 GB (!) microSDHC and Memory Stick Micro (M2) flash memory cards, geared predominantly to use in mobile phones. Conversely, flash memory is also somewhat of a thorn in the retailer’s side.
“There’s no money to be made in this category,” says Gurreri matter-of-factly.

“Customer beware: you better know you need a memory card because the salesperson won’t recommend it!”

While Glentel’s Jones admits that memory is a low-margin product (it’s only the company’s fifth-highest unit quantity category), he explains that “it’s a solid product that the customer wants and needs.” He reinforces this by noting that Glentel’s year-to-date memory card sales have exceeded the entire 2007 unit sales by 31%! Quarter-over-quarter, unit sales increased 123% versus the same time last year.
“Pricing has fallen by 75 per cent,” he notes, which has contributed to the unattractive margins. Jones says the 2 GB capacity is the most popular, but we’ll likely see larger cards come into play in this arena as they become available and more affordable, and more phones that support large capacity cards come to fruition.

Best Buy’s Johnston, however, feels that it’s the tough sell aspect that results in less memory card sales, not the lack of margin.

“The challenge is that the customer’s needs for storage will change, but they don’t know it until they use the features, like music, photos, and video,” he says. “It’s a tough conversation in the store. You tell the customer they’ll be taking photos or loading music, and will need more storage. The customer says ‘I haven’t done that with my old phone, why would I do it with the new one?’” Then, of course, Johnston says most end up coming back at a later date to pick up a higher capacity memory card. Interestingly, a large section of the Best Buy Mobile store in Vaughan Mills, ON is occupied by flash memory media of all kinds, reinforcing Johnston’s point that the category is becoming “essential” with the types of mobile phones on the market today.

Bottom line: despite the unattractive margins, you’d be doing a disservice to the customer who would use a higher capacity flash memory card by not recommending the option.

Adding Value to the Sale

When it comes to signing up for a plan, retailers in the cellular arena really have no control over what a customer is going to pay. But where a company can differentiate itself is on the service side.
Koodo focuses, in part, on promoting and encouraging a self-serve environment. Customers can log on to their accounts online and do things like swap a phone, change their phone number, view their bill, and even change their plan.
The company also offers a 30-day, no questions asked, money back guarantee. While Banderk won’t release data on how many phones have actually been returned, he says it isn’t very many, and the most common reason when it does happen is that the customer decides he “doesn’t like it.” Occasionally, Banderk adds, it might be a coverage issue whereby the phone doesn’t get a signal in the person’s basement.

Glentel offers a premium protection program for anywhere from $49 to $79 that helps to protect the customer’s investment. The price covers a two-year term, and if, at the end of this period, no claim has been made, than the company will extend the warranty for another year. After a third clean year of no claims, the purchase price of the plan is converted to a credit toward any item in the store.

“They will get the value somehow,” he explains. “And we’re nationwide, which means even if they move, they can use it in any province.”

Best Buy Mobile is Best Buy’s new concept stores focused predominantly on cellular and other related products. Currently, three standalone locations are open in Ontario, and store-within-store designs are in Langley, BC, Edmonton, AB, and Oakville, ON. Within these stores, Best Buy is really pushing the service aspect of a sale through things like the Walk Out Working program, which ensures that the customer’s device is up and running when he leaves the store. This might mean that the salesman helps him set up an e-mail account on the phone, or walks him through how to add applications. The company will even go so far as to pair a purchased Bluetooth headset with a new phone for the customer so that once he leaves, it’ll begin working instantly.

Probably the most enticing convenience feature, however, is a mobile transfer
service, which assists the customer in transferring all of his data from an old phone to a new one. The required equipment includes a Samsung Ultra Mobile PC equipped with MobileGenie software, and a toolkit that includes every phone connector known to man. By connecting the old and new phone to the PC, the salesman can easily transfer phonebook contacts, photos, and even video, as long as the format is supported on the new device. While the time it takes will depend on how many files you transfer, Salesperson Chris from the Best Buy Mobile store in Vaughan Mills Shopping Centre, tells me that, on average, it takes just a few minutes to transfer about 100 phonebook contacts.

There are also subtle aspects of the new Best Buy Mobile stores that are focused on service. In the Vaughan Mills location, for example, there’s a checkout right at the front of the store so that customers just buying accessories can get in and out as quickly as possible. A computer on the floor lets customers access the Best Buy Website to check stock in other store locations. And a monthly published catalogue outlines all products sold at the store, along with plan options for all major carriers, and even comparison charts of items like Bluetooth headsets.

Johnston also emphasizes the “no-pressure” environment since salespersons are non-commissioned, as they are in standard Best Buy locations.

The best value one can add to the sale, however, is proper training. Each Best Buy Mobile employee, explains Johnston, attends a three-week training program that includes training from Best Buy itself, from the carrier, and from the handset manufacturers. Sister company Future Shop, which recently ramped up its attention in the cellular arena via new Cellshop in-store hubs, is also placing a lot of emphasis on training. All Cellshop employees, says the retailer, will attend Future Shop’s own “Cellshop University”, which provides extensive training on handsets and data plans from all major carriers. Graduates will then be given the Certified Cellular Product Experts designation.

Wrapping it Up

While going through all the fine print of a contract, features of handsets, and account activity to determine the best plan option for a customer can be a lengthy, and perhaps frustrating, experience, it’ll pay off in the end. The average turnover rate for a mobile phone is debatable, but typically between 2 and 3 years. But people will not only be looking to upgrade their phones more frequently: as devices become more and more sophisticated, the range of accessories on the market will continue to grow as well.

The bottom line is that happier your customer is when he leaves the store, the more likely he is to return and see you when he’s looking to upgrade, or enhance that purchase.

“If the salesman does his job from A-Z,” ImportCom’s Gurreri indicates, “the
customer should leave without any questions about his phone.”

Hot Cell Phones

We’ve highlighted some really neat mobile phone accessories in the past few issues, but what about the actual phones? Each phone currently on the market really excels at one thing or another, whether it be data access, music/video streaming and playback, web browsing, digital picture taking, or perhaps a combination of many of these things. Being familiar with the devices means that you’re better able to recommend the right phone to each customer. Here’s a cross-section of some of the neatest phones to hit the market as of late.

Apple iPhone: The iPhone excels at features like web browsing and e-mail access via the really intuitive touch-screen interface and oversized screen. It’s also a “fun” phone via the multitude of third-party applications (“apps”) that can be instantly downloaded onto the device. Make sure the customer gets a feel for typing on the touch-screen before he buys one, though: if he finds manipulation difficult, it could be a deal-breaker. You should also discuss battery life issues (it’s a power-drainer!) with frequent users to avoid dissatisfaction after the purchase.

BlackBerry Bold: As a business-centric device, this model is easily the cream of the existing BlackBerry crop. The QWERTY keyboard is really comfortable to use, and web browsing blazingly easy using the trackball. The icing on the cake, though, is the high-resolution screen, which shows off Websites and especially video, in vibrant colours and true clarity. It would be a good sales tool to show the customer the difference between the screen on this device and any other he’s looking to buy; even previous-generation BlackBerries!

Nokia N95 8 GB: This is definitely the multimedia lover’s phone, boasting 8 GB of internal memory, and access to the Rogers VISION suite of services, which ranges from music access, to streaming video, Web surfing, and video calling. It also has a 5 MP digital camera and Carl Zeiss optics; and works with Nokia Maps for providing turn-by-turn directions. Topping this off is the most recently-added feature: access to the N-Gage mobile gaming service. It’s definitely a phone that will appeal to the younger, teen/tween crowd.

BlackBerry Pearl Flip 8220: This is RIM’s first incarnation to boast a flip-styled design. The phone incorporates all of the standard Pearl features, including the intuitive SureType keypad that takes some getting used to, but becomes like second nature once you get used to it. The advantage with this model over the bart-styled Pearl is that you can edit documents as well as view them using DataViz Documents To Go; and sync songs easily from iTunes using Media Sync, a feature that’s also available in the Bold. Also like the Bold: it has WiFi, letting you log on to free hotspots.

Motorola ROKR E8: The multimedia-friendly ROKR E8 incorporates ModeShift technology, which adjusts the display according to only those controls that you need at the time. For example, when you’re playing back music, you’ll see only the music controls. In camera mode, you’ll see photo-related functions. And in phone mode, send/end and receive calls will appear. Tactile feedback adds to the futuristic look, and Bluetooth stereo enhances the music listening experience.

Sony Ericsson G705: This slider-designed phone features special compatibility with the YouTube Website: users can download and upload videos to their accounts on the site directly from the handset! It also accepts RSS feeds from the Web, and incorporates Google Maps, FM radio, WiFi connectivity, and a 3.2 MP digital camera that can also shoot short videos. This phone isn’t yet available in Canada, but will hit the market around the Q4 2008 timeframe.

Motorola Z6w: As a WiFi phone, this model works in tandem with Fido’s UNO service so users can switch seamlessly between the cellular network and WLAN wireless network. It’s ideal for customers that don’t own a home phone at all: why waste cellular minutes while you’re at home when you can use the WiFi you already pay for? The WiFi function requires a free router and additional plan option that ranges from $15/mo. to $20/mo., the latter of which affords unlimited local and Canadian long distance calling.

LG WINE: This “vintage” styled phone will satisfy the craving of design-conscious customers that just want a basic mobile phone. It’s finished in sleek black or gold, and includes all the standard features one would need to get by while on the go, including Bluetooth, picture messaging, speakerphone, shortcut menus, and a 2.2” display. Other add-ons include GPS functionality and a 1.3 MP camera.
HTC G1: While it isn’t yet available (and likely won’t be in Canada for some time, if at all), the HTC G1 is worth a look because it’s the first to operate on Google’s new Android open source platform, which is offered for free to partner carriers and manufacturers, and lets developers create apps that can be downloaded to the device. It combines iPhone-like functionality, like a large touch-screen, with Bold-like features, including a trackball for navigation and QWERTY keyboard. It also has WiFi, a 3 MP digital camera, and, of course, affords easy access to several Google properties, like Maps, Street View, Gmail, and YouTube. A built-in compass lets you view locations 360-degrees around you by physically moving the phone.
LG Voyager: There’s no question that this is the phone for avid texters. Turn it on its side and flip it open to reveal a QWERTY keyboard. Then, type away as if you’re holding a mini computer. The 2.8” screen is touch-sensitive, and boasts tactile feedback, which will come in handy when doing things like surfing Websites. The phone also supports instant messaging and e-mail via a Web-based program. It’s equipped with a 2 MP camera that can take photos and video, and stereo Bluetooth.

Samsung Instinct: This highly-anticipated mobile phone hit the Canadian market in August, and it’s the ideal phone for someone who wants to enjoy the modern, touch-screen design, but isn’t really all that interested in e-mail access. It has a large, 3.2” screen with tactile feedback, which aids in both text typing and Web surfing. Unlike the iPhone, it comes with a stylus if you prefer to keep your grubby fingers off the phone. Other neat features include integrated GPS navigation, Bluetooth, HTML web browsing, instant messaging, and a 2 MP digital camera that can also shoot short video.

Sony Ericsson W350 Walkman: Deemed the “slimmest flip phone” in Canada, the
W350 measures just 0.4” deep, and weighs a mere 2.8 ounces. As the name implies, it’s a phone that will appeal to customers who want to use it for music playback as much as to chat. It works with the stereo Bluetooth A2DP standard, which means you can listen to music through a stereo-enabled Bluetooth headset (or headsets), and also supports FM radio playback. Dedicated music keys are on the face as well.

Samsung CLEO: Scheduled for launch in early November, the CLEO is the phone for
fashionistas, available in pink, gold, and champagne. It’s not all beauty, however, with brains like a QWERTY keyboard, 1.3 MP digital camera, stereo Bluetooth, and the ability to accommodate a microSD memory card up to 8 GB in capacity.

© 2008 Bomar Publishing Inc. All rights reserved. Unauthorized reproduction or retransmission of this content without the expressed written consent of the owner is strictly prohibited.
This article appeared in the October 2008 issue of Marketnews Magazine. www.marketnews.ca