Windows of Opportunity

>From grocery stores to gas stations, movie theaters to music festivals, the window of sales opportunity is wide open. Smart carriers are jumping on the chance to place kiosks in a variety of nontraditional locales, team with retailers that only last year may have passed on a partnership, and develop robust e-commerce initiatives.

E-commerce is one of the fastest-growing distribution pipelines in many industries. By now, many carriers have established Web sites, most with e-commerce functions that are performing with varying degrees of success. Bell Atlantic Mobile (BAM) helped set the industry standard when it launched an automated on-line store through which customers can research price plans, select phones and accessories and place orders with no human intervention.

"Many of the Web sites in the industry are nothing more than fancy e-mail systems," said Mario J. Brassini, BAM executive director distribution channels. "You can research a calling plan on-line, but then they send you an e-mail or call you to do the credit check."

He said the on-line store took six months from conception to launch and is the first new internal distribution channel BAM had introduced in three years.

Traffic to the site is split between those who purchase on-line and those who do research and then head to a local store. But either way, the Internet is bringing in new customers. Although he would not specify sales figures, Brassini said the site doubled sales from September to January and doubled again from January to June.

"In addition, for every service package we sell, we sell two accessories," he said.

In fact, the accessory portion of business has become so successful that in April, BAM expanded to allow anyone in United States to buy accessories on-line, not just those in a BAM service area.

THINKING OUTSIDE OF THE BOXBack in the brick and mortar world, thinking outside the traditional distribution box means situating kiosks once reserved for selected stores in all kinds of locales and partnering with retailers large and small to extend reach. Best Buy, Circuit City, Office Depot, Radio Shack and Wal-Mart are just a handful of the large national chains that are on the wireless ball; the number of local stores is even larger.

When it comes to thinking locally, Powertel proves that no distribution opportunity is too small when it comes to marrying a sales force with sponsorship marketing. The company takes its grass-roots sales approach to new areas, including more than 200 festivals and events annually.

"We'll sign up for a 500-person road race or sponsor a high school baseball team, all the way up to large music festivals," said Tom Konz, director of marketing for Powertel's Atlanta MTA. "It may not mean a lot to Sprint or AT&T to be at a race with 500 people, but when they see us time and again in front of them supporting their cause, over time it pays off."

The best kiosk locations are good shopping environments.

"We probably wouldn't do anything at an NFL game because generally people are there to see the game and don't want to stand around and listen to a sales pitch," Konz said. "Something like an art festival or the lobby of a movie theater is more conducive to someone walking through with a family, and families are a good target for us."

Aside from the possibility of picking up new customers on the spot, Konz said extending the reach of kiosks adds to Powertel's advertising dollars.

"It gives people the impression that we are everywhere, and it may only cost us $1,500," he said.

Like most other carriers, Powertel seeks exclusivity for its kiosks at consumer events. For example, the company was the sole wireless communications sponsor at Atlanta's Music Midtown Festival. Powertel set up a message center offering passersby the chance to make free calls -- Konz said the booth logged 62,000 calls -- or post messages.

Although it is impossible to quantify sales from Music Midtown, Konz said an event of that size can generate anywhere from 300 to 500 new customers. For future events, the company will have a "phone in a box" so products can be sold directly at a booth.

The ability to activate a new customer directly at a kiosk site is important in opening new distribution channels, said Scott Campbell, a director at management consultant firm PRTM.

"Over-the-air activations are to a level of reliability where carriers can provide phones through the mail or activate instantly in a kiosk," he said. "These are all new channels enabled by the evolution of technology."

For Powertel, this evolution means the chance to set up shop anywhere it has a captive audience for a short period. The company is hanging temporary shingles at local Jiffy Lubes, purchasing 15 oil changes and giving one to each new customer who activates. Other sales reps are casing apartment laundry rooms with rolls of quarters as gifts for new customers.

"These kinds of things increase the productivity of our own brick and mortar stores and give the salespeople a chance to get out of the store," Konz said. "It doesn't add a lot to cost of acquisition, and we can be specific about who we are going after and what our sales approach should be."

MAKING THE GRADE?With so many new channels available in short succession, the question of how long to give a new distribution outlet before declaring it a success or failure is more important than ever. To determine whether a sales channel is up to snuff, PRTM's Campbell advises evaluating the following:

* Total sales volume

* Revenue numbers vs. other channels

* Cost of the infrastructure to support the channel

* Level of customer complaints

* Staff turnover.

To determine whether a channel is attracting the best customer base, he said to survey:

* Lifetime revenue of the channel

* Churn rate

* The ability to provide a heightened level of personalization.

"We can probably tell within three to six months how well we are doing and if it is worth expanding," Brassini said.

BAM assesses factors such as total sales volume and sales per location, as well as how operationally intensive the channel is.

"Your partner is looking for certain things, too," he said. "Are they making better margins? Clearly you are taking up space on their shelf. It has to go both ways."

Brassini said expanding nontraditional distribution is among his top priorities for the second part of '99. BAM has a new deal with more than 35 Merit gas stations in Philadelphia through which it sells its Mobile minutes prepaid cards and services, and replenishment cards, and it is working on a host of deals ranging from drug stores to discount shopping clubs.

"We can't do this fast enough," he said. "One of the things that held us back from selling in nontraditional places was the complexity of thesale. You had to sell the phone and a plan. Now that we have a prepaid plan, there's no complicated training and sales process. Now certain distributors who wouldn't carry you before will take you on."

In July BAM sealed a deal with Radio Shack for the 875 stores in its service area to sell its prepaid service.

Brassini said the deal took four months of negotiations, and that BAM is working to keep the Radio Shack sales force on top of the technology.

"We've had to educate all the Radio Shack sales folks on how prepaid works, and we helped develop POS (point-of-sale) systems," he said.

As more indirect distribution channels open up, the ability to tailor products and services to a given market is more important than ever. This often means outsourcing bundling and packaging duties, according to Bob Laikin, Brightpoint CEO.

Providing custom packages to carriers is the fastest-growing aspect of Brightpoint's business.

"Over 50% of our business is value-added programs," Laikin said. "Five years ago it was less than 5%. We are seeing programs for e-commerce, affinity programs with credit-card companies and airlines, and a lot of the carriers are going after data applications. For all of these channels, they want flexibility."

"Most carriers and manufacturers are looking for differentiation in the packaging," he said, which includes everything from promotions tagged to Valentine's Day, a specific film or a professional sports team.