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 Original business models are few and far between, and most end up on the ash heap of history. But Cellular Sales of Knoxville is proving its method of cell phone sales and service may be the wave of the future.
“We are connected to the front lines and emphasize the sales representative,” said CEO Dane Scism.
Cellular Sales has come a long way since its inception. It was founded almost 20 years ago, but not until Scism bought the company did it become what it is today. A management company operating authorized retail stores for Verizon Wireless in the South, Midwest, and Atlantic regions of the country, it is the largest Verizon-exclusive dealer in the US.
The company’s retail foray began in the early 1990s when it decided to open a retail kiosk in a mall in Knoxville full time. Back then, cell phone companies only went to malls during holiday seasons. The company didn’t really look at it as a true retail location, but more of a lead-gathering operation. But Scism saw the promise of the company and took it over in 1993.
Risk and reward
That was when Cellular Sales created a unique sales process and management formula. Scism calls Cellular Sales an upside down company. It has a small management team supporting contracted front-line sales reps. Its salespeople essentially run their own business and interact with customers, assuming all risks and rewards. This makes for an interesting dynamic by which salespeople become the personal sales reps for their customers, instead of just the guy or gal who sold them a phone.
“Happy cell phone customers know the name of their rep. We have Internet support and 800 numbers like everyone else, but we try hard to push our customers to their own independent sales rep,” Scism said. “We think that
is why we’re up so much in this economy because even though we are a significant retail business that will do about $300 million in sales this year, our same store numbers are up 50% because we have professional outside sales people on the front lines.”
Because the company places a lot of emphasis on the point of sale and personal service, Scism feels Cellular Sales is in a better position to take advantage of customer demands. The company’s growth is a testament to the foundation of that belief, as Cellular Sales now has 252 locations, with 61 more scheduled to open by the end of the year.
“We could be nationwide if we wanted to now, but we aim for controlled growth at about 30% per year,” said Scism. “We don’t have debt or private equity in the company, and we are growing faster than intended this year because same store numbers are up more than expected.”
Beyond that, the company is an anomaly because it represents only one carrier—Verizon Wireless. The typical mentality says if carriers will pay similarly for non-exclusive dealers, then why would anyone carry just one? But Scism recognizes a fundamental truth about sales—salespeople tend to sell what is in their financial interest to sell, and non-exclusive carriers tend to sell whatever will give them the highest commission.
“If we represented all the carriers, our people would do what is best for them. They would do fewer customer upgrades and lots of carrier switches. That doesn’t make sense for the carrier because customers are very expensive to acquire,” Scism said. “It makes more sense for the carrier to enter into long-term, exclusive partnerships.”
Light at the top
Managing this nontraditional organization required breaking it down into regional territories with two regional directors for each. They function like small business partners would, but they work in management teams and profit-share with the company, just like the front line people all run their own business and profit-share on every transaction. The corporate headquarters, which just moved into a new building in Knoxville that also houses an improved call center, handles some centralized functions like accounting and marketing. But everything else is run closer to the point of sale.
“We have 17 different regions, and we try to keep the numbers to about 3 million to 5 million potential customers per management team,” Scism said.
It is the service mentality that truly defines what Scism and Cellular Sales are trying to do. Scism personally chooses each regional manager to be sure each has a heart for service. Managers might have 15 to 40 stores to oversee, but their personal cell phone numbers and email addresses are clearly posted in each retail outlet for customer feedback. Even Scism’s email address is easily accessible on the company’s Web site.
“We also do some secret shopping and customer surveys, and there is a customer survey report Verizon sponsors called the Net Promoter Score that we score high on,” he said.
Despite the economic landscape that has hammered the retail industry in general and cell phone sales in particular, Cellular Sales is still seeing growth because it doesn’t carry debt and is in position to take advantage of market conditions. Last year, the biggest impediments to continued expansion were the over-inflated prices of commercial real estate and a lack of available sales talent. The economic downturn has brought commercial real estate back to earth, and many in-demand salespeople are now on the market.
“This is a good time for a rapid growth period, we just have to be careful about how we manage our cash flow. Other than operations, there are only three variables in our industry to manage to,” said Scism. “We need better stores, better people and better coaching.”
In fact, in the last few years the company went through capital improvement projects to improve its stores and looked for better retail locations, even in areas where stores were performing well. It has engaged in a massive recruiting effort, touting the benefits of its business model. And the company commissioned a study with the University of Tennessee’s business school to study its locations and hiring and training practices. As the company grows, it is conceivable that it may need to add more layers of corporate structure and additional management offices, but Scism doesn’t want Cellular Sales to be bogged down by a large corporate ego.
“All we sell is air and a mark that we don’t own, so it is hard to market our own name too much when it isn’t really necessary,” he said. “After the sale is when people realize how well we do. There is more of a need for that personal service now than there was 15 years ago because customers want a dedicated rep with a service mentality.”
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