U.S. Cellular CEO Kenneth R. Meyers yesterday revealed a notable aspect of U.S. Cellular strategy for the company’s retail operations. The wireless carrier no longer views its retail outlets as a cost of doing business; instead the stores’ operational costs are covered through sales of high-end accessories.
“We need to continue to drive more profit into our stores,” said Meyers. “They used to be a point of activation for your wireless service. Now with the depth of accessory lines that we have – from speakers to drones and other things – we’re creating a destination. People come in for other reasons and then [we are] capturing the wireless opportunity while they’re there. By selling more higher-end accessories in those stores, we’re starting to generate margins significant enough to cover the distribution costs.”
Meyers made his comments at the Deutsche Bank Media, Internet and Telecom Conference, which was also webcast.
U.S. Cellular Strategy
In pricing wireless services, U.S. Cellular aims for a level about 5% under one of the leading national carriers, Meyers noted. That strategy enables the company to “stay in consideration” with people who are shopping for a wireless carrier, he said.
“Once they’re in the store our people can close them,” said Meyers.
Another key focus area for U.S. Cellular is the small- and medium-size business and county government market. Organizations such as those with operations in U.S. Cellular’s footprint “need the depth of coverage we provide in those markets,” Meyers commented.
U.S. Cellular now has completed deploying LTE throughout its service area, which should increase the company’s appeal to SMB and government prospects.
In transitioning to LTE, U.S. Cellular also has opened up new opportunities to generate roaming revenues. When the company’s primary network technology was CDMA, it could only offer roaming to other CDMA carriers Verizon and Sprint. But now that all major wireless carriers have shifted toward LTE, U.S. Cellular also has opportunities to broaden its roaming revenue base by adding AT&T and T-Mobile.
Currently U.S. Cellular offers subsidy-based pricing, as well as pricing based on equipment installment plans. The company has not seen demand for a leasing program of the sort that some national carriers have begun to offer, Meyers said. But “if it became a competitive issue, we would,” he said.
Clone This Idea?
The U.S. Cellular Strategy of selling high-end accessories to attract customers and boost retail revenues might be one that some other Tier 2 or Tier 3 wireless carriers could borrow for their own operations. And selling drones might be just the thing to motivate an employee looking for a new challenge.