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Many telcos are witnessing a reduction in store transactions. McKinseys retail sales approach can serve to
boost a telcos frontline results by 15 to 40 percent.
When markets slow, telecoms players need some powerful retail magic to draw in new customers and drive
up profits. To help them pull off this conjurers feat,
McKinsey has developed the Storanomics approach
to telco retail. In engagements across Europe, the US,
and the Middle East, Storanomics has triggered surges
in sales performance ranging from 15 to 40 percent.
Whats more, experience shows that impact is both
rapid and sustainable. One telco garnered an increase of
over 10 percent in monthly gross subscriber additions
(gross adds), while enhancing its customer satisfaction
by over 30 percent. The Storanomics approach relies on
rigorous execution that teams drive from the field with
significant guidance from top managers.
Missed opportunities
In many cases, telco managers misread their retailing
reality. They assume that opportunities out there are
mostly small and that any large ones will be difficult to
capture, take a long time to implement, and ultimately
generate only a short-term effect. McKinseys experience tells a very different story (Exhibit 1). Even after
retail improvement efforts, initial mystery shopper visits often reveal significant missed sales opportunities.
They also expose high variability across shops, markets,
and regions. In one instance, mystery shoppers noted
140 walkouts per day in one store and found that the
network engaged in only limited proactive selling activities. In another case, an operator discovered that total
Storanomics fundamentals
McKinseys Storanomics delivers sales uplift by
focusing on store-level retail improvements in three
areas:
Traffic generation seeks to increase store traffic from
attractive shopper segments.
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01
The retail experience up front and behind the scenes is often unoptimized
The retail experience up front and behind the scenes
is often unoptimized
Up-front customer experience
Competitor store or exclusive dealer right next door
Traffic generation
Traffic/customer
management
Frontline
execution
SOURCE: McKinsey
Traffic and customer management focuses on reducing the number of store walkouts, freeing up sales
reps and managers to concentrate on selling, and
improving customer interactions by reducing average waiting times. Objectives include increasing
product trial rates, enhancing the speed and quality
of service request handling, and lowering the number of stockouts.
Traffic and customer management. One telco discovered that up to half of the people entering its stores
with the intent to buy something ultimately left emptyhanded. Surveys revealed the key reasons behind this.
These included not finding the desired product, needing
more time to consider the purchase, finding that waiting
times were too long, being in a crowded store, or dis
covering that items desired were out of stock.
02
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Enablers
Store positioning,
network architecture, merchandise
Traffic/customer
management
SOURCE: McKinsey
At sales meetings (best practice: 70 percent of meetings on sales topics, the rest on peer training, finding
root causes, and working out action plans)
In informal huddles (to energize and set objectives)
During individual discussions (to set development
goals and career objectives).
Structural elements of performance management
include setting sufficiently stretched targets at the individual level, establishing a daily tracking and reporting
system including SMS notifications, and offering incentives that really mean something (e.g., best performers
earn at least twice as much as their lower-performing
counterparts). In one case, increasing the granularity of
reporting and breaking store sales down into separate
offer/success rate per type of traffic, followed by rigorous discussions, helped increase pilot store sales by
16percent. Other helpful techniques are sales coaching,
where managers intensively coach the coaches during
rollout, applying peer-to-peer coaching and other effective methods. Companies can also increase staff sales
capabilities by using tools tailored to specific situations,
e.g., laminated sheets to guide customers through need
identification and proposition or cheat sheets providing responses to the most frequent customer objections or effective cross-selling catch phrases. Other
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9. Actions to ensure sustainability beyond the obvious (e.g., link bonuses to sustainability)
10. Proactively manage opinion leaders in the network in line with the local context
into a single, radical big-bang package yields longterm results. The overall rollout effort is still sequenced,
i.e., stores are addressed one after the other, not all at
once, in order to manage complexity.
Storanomics at work
McKinseys experience is that successful Storanomics
launches tend to adhere to several principles throughout the three phases of this sales stimulation approach.
In the test and refine phase, telcos seeking to drive up
sales tend to move fast, typically piloting solutions in
their stores just two to four weeks after beginning with
Storanomics. They also commit to idea generation, narrowing down the set of potential actions before the rollout. One final aspect of the test and refine phase is that
it is highly people-centric. Not only do the improvement
activities focus on retail staff skills and mindsets, it is
their responsibility to make rapid, daily adjustments as
needed in preparation for rollout.
The rollout phase commences with clear communication of the pilot results and prioritization of stores.
Multivariate regression allows operators to explain
more than 60 percent of store performance variability
with structural reasons, so that an initial focus can be
placed on stores with significant operational underperformance. Then, the ideas are implemented in the stores
in ways that completely shock the system. Experience
shows that incremental approaches to boosting sales are
suboptimal, but bundling the tested and refined ideas
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Duarte Braga
is a Principal in McKinseys Lisbon office.
duarte_braga@mckinsey.com
Branislav Klesken
is a Principal in McKinseys Prague office.
branislav_klesken@mckinsey.com
Jan Mischke
is an Associate Principal in McKinseys
Zurich office.
jan_mischke@mckinsey.com
Steven Rudolph
is a Principal in McKinseys Boston office.
steven_rudolph@mckinsey.com