Ask any cable subscriber to describe interactions with their provider and you’re bound to hear about time spent on the phone ordering services, troubleshooting problems or making changes. Want DVR? Make a call. Need to add a channel? Make a call. Yes, more customers are starting to become comfortable with online self-service options, but there will always be a need for live sales and support.
Ask a smartphone customer to describe interactions with their provider and you may hear about time spent on the phone. But you’re almost certain to also hear about time spent in that provider’s retail location checking out new devices, getting help learning how to use a new phone or seeking help with technical issues.
Until now, cable has largely existed in a world where the service was fairly well understood and customers were not required to purchase devices. Looking ahead at cable product and service lineups that will become the norm in the not-too-distant future, it’s clear that trying to process all of the options, benefits and value via a phone call will become nearly impossible. Customers will want to experience the services and devices in person, making retail storefronts an eventual necessity.
Would you like home security with that today?
Cable is vying for not just a larger share of subscriber wallets, but a larger share of the connected home and life. Comcast and Charter both announced ambitious MVNO plans to sell mobile phone service last month. Several operators already have attractive home security packages in the field, which continue to be upgraded with more functionality and features. Virtual reality services are on the horizon and subscribers will need a place to trial packages and figure out which headset works best for them. They’ll need a place to see firsthand if HDR and 4K packages bring a new visual experience worth springing for. In short, they’ll need a lot more than a phone to do business with their provider.
Cable isn’t new to the brick and mortar business. Comcast has long sold services via big box retailers like Walmart and Best Buy. But this sales channel has always been dwarfed by telesales and online sales. More recently, Comcast has begun launching its own XFINITY branded stores, with improved ordering and demo capabilities. This strategy is also being deployed by other MSOs as they prep rollout of the aforementioned emerging services.
Retail locations will position operators to enjoy new opportunities to grow sales, build deeper customer relationships, and offer omni-channel sales features like in-store pickup. But these new horizons bring several challenges that are not present for mobile carriers that have found success via experience stores.
Here are four key areas where expanded brick and mortar pursuits will present hurdles for cable operators and what operators should consider as they face these challenges:
Partnering with a national retailer
Yes, cable has had some success striking partnerships with big box electronics stores. But as it seeks to broaden these partnerships, its geographically-scattered footprints will create complications. To start, any national retailers will have locations that are not within driving distance of a particular MSO’s customers. Therefore, these locations should not even offer services from that MSO. This forces national retailers to treat an operator’s services as a local product that can be sold in some stores, but not others. For example, Comcast does not sell service in New York City or Los Angeles, so Comcast wouldn’t have a presence in this retailer’s stores.
Once stores have been narrowed to those in or near the operator’s footprint, there is the additional complexity of serviceable addresses. Not all addresses in an operator’s footprint are serviceable. In some rarer cases, not all addresses in the same building are serviceable. The customer’s address must be verified before the customer can purchase services. The traditional (and still the best, for now) solution is an in-store sales representative that can check serviceability for the customer. This makes sense for billed services that also require a credit check. For prepaid services where no credit check is needed, there would be great benefit in a self-service solution. In store kiosks and mobile websites are two potential self-service solutions.
Still, as opposed to wireless carriers that have a national offering and similar partner in-store real estate needs nationwide, big box retailers will have more challenges working with operators that do not have a national presence.
Another challenge that MSOs face when seeking to sell products via large retailers is that these retailers have stringent requirements around how bulk shipment of devices should arrive from partners and vendors. MSO shipping processes and partners today focus on direct shipments to customers’ homes and are not set up to meet these requirements. MSOs will need to engage new logistics partners to support the bulk shipment requirements of big box retailers.
Partnering with local retailers
Casting as wide a net as possible will require operators to partner with local electronics retailers to ensure customers have a nearby physical location to visit.
One immediate challenge posed in this scenario is that small, local retail locations can vary dramatically in foot traffic and sales volume. When partnering with these stores, operators should expect to experience the 80/20 rule where the vast majority of sales are coming from a small number of locations.
Furthermore, many of these top sellers have already been locked into exclusive arrangements with incumbent wireless providers. Because these stores are not centrally-managed, new onboarding and management processes are difficult to scale. Operators will then want to consider partnering with master agents that have existing relationships with these stores through another product. Master agents can also help identify locations that are a good fit for the product and will have established processes for onboarding and management that can be leveraged. Comcast addressed many of these challenges by partnering with Sprint to sell XFINITY Prepaid services from Boost Mobile locations (Comcast taps Sprint's Boost Mobile Stores for Prepaid Offer)
Operator-owned experience stores
In the above scenarios, customers are visiting a familiar retail location where they are mentally-prepared to do business and purchase products. But going directly to an operator-owned store will be an entirely new experience for consumers. They won’t have any sense of reference regarding what to expect, what to buy and if doing business with their provider in this manner makes the most sense for them. Whereas they are probably most comfortable renting devices from their operator, they will now find themselves shopping for equipment that they will own.
As operators launch branded stores, they may also be faced with a high percentage of customers that want to treat these locations as just another service center, focused more on exchanging faulty equipment, paying bills and purchasing traditional services. Long lines that this type of traffic creates could tie up sales reps that could otherwise be helping new customers or may keep new customers away completely.
To overcome these challenges, MSOs will need to consider how these new retail centers can offer a differentiated experience for customers to reset engrained behavior. For instance, today, most cable customers are used to going to small, local, non-descript cable service centers. While it might be tempting to try to scale these locations, they’re better left intact to continue serving these routine, administrative needs. Instead, new experience stores should be located in high-traffic metro areas, busy marketplaces and popular malls alongside other high-end experience stores such as those operated by Apple. These locations should have bill self-pay kiosks for subscriber convenience, but also to not tie up reps that should be focused on demoing and selling new gear and services. Operators will need to give strong consideration to whether they want these stores to also double as service centers for additional customer convenience or to take advantage of more foot traffic. If this strategy is pursued, there should be separate staff and a discrete area of the store where this business can be conducted.
A New Frontier, But Cable Can Conquer It
As cable operators have steadily added new services, devices and experiences, they have gradually conditioned subscribers to expect more and more. These new locations will eventually become a necessity to show off and educate subscribers about the next wave of services that cable has to offer. Whether partnering in some areas or going it alone in others, operators should be planning today for how they will make the most of a new or scaled foray into retail.
Bryan Adamson is a principal consultant and Matt Dorney is a consulting manager with IBB Consulting, helping to lead operator retail expansion strategies.