Hundreds of people open cell phone stores around the U.S. every month. If you are opening one for the first time, be sure to avoid some common mistakes. While this is by no means a complete list of everything you need to think about, these 3 tips will certainly help!

Align your employee compensation plan with your carrier commission agreement

Invest some time to REALLY understand how you get paid and how you make money. You’re wireless carrier will outline your compensation in your carrier agreement. Ask your Account Executive to give you some guidelines as to what you should expect your “mix of business to be”. In other words, look for some general guidelines on which plans will represent which percentage of the business, and ask for similar current info on the handsets.

Many newcomers to the business go to the most lucrative plan and handset, and in their mind that becomes the benchmark for what they make. Don’t make that mistake!

Once you have a feel for the overall mix, you then want to make sure that you build your employee compensation plans to incent your employees to sell the plans that make you more money. If you don’t you can fall into the trap where employees take the “path of least resistance.” They’ll sell the cheapest plans and the cheapest phones and won’t add features. This does you AND your customer a dis-service. Plus, at the end of the day, you’ll make less money.

Take the time to build your point of sale properly

They say the devil is in the details. Many newcomers to the business (and quite frankly many veterans) simply do not spend enough time in the details. This is especially important in the beginning, and can save you many headaches, time and ultimately money in the long run.

If you are not analytical – assign someone on your team who is. One way to do this is to think ahead a few months. What information are you going to want to look at? What reports will you want to run? What financial information will you want to be able to drill down to? What information will you need to reconcile your commissions and pay your people? How many locations do you plan on having?

If you look into the future it will help you determine what you need to do now. Once you’ve identified what and how you will want or need to look at things, then you can plan on how to set up your point of sale system now. There are lots of decisions to make…how detailed to track rate plans, how to identify inventory items, whether or not to track feature add-ons, whether to use the built-in employee commission systems and so on.

As they say…do it right the first time…it will pay huge dividends in the long run.

Build some reserve into your cash plans

If your new wireless business is based on a trailing commission model, then you should build some cushion and reserve into your cash flow plans. It is a fact of life that short-payments occur in the wireless industry. This can be caused by a multitude of reasons. Employee fraud, innocent mistakes, carrier mistakes, customer fraud and many more. If you plan for and reserve against such shortages you will be in a stronger position if shortfalls occur. This doesn’t mean you may never get your money, but you should plan wisely.

The wireless business is also capital intensive when it comes to inventory. Be sure you understand the inventory needs of your business, and be sure to account for the quickly changing handsets. Over the last few years handset lifecycles have shortened dramatically and consumer demand can shift fast. Keep a keen eye on your inventory. I’ll save the inventory control best practices for another day!

It’s a dirty word…chargebacks, but as they say it comes with the territory. For cellular dealers, especially those new to the business, chargebacks can cause huge surprises and problems for their business. Giveth, then taketh away. That’s what happens. So your wireless sales representative activates a customer on a new wireless plan. The customer buys the fancy new phone with all the bells and whistles. The customer is happy, the sales rep is happy, and you are happy. But…3 months later the customer doesn’t pay their bill and gets shut off. Ding, ding! Cha ching.

Your dealer agreement states that the carrier can charge you back for up to 180 days (6 months) if the customer does not stay on their network. So next commission run, your commission on that sale is charged back. You are out the money.

But wait, what about the phone? It cost hundreds of dollars, and you paid for it. But wait…what about the commission you paid to the sales rep? That’s also come out of your pocket. Freight on the phone you shipped to the store. Gone. Cost to process the transaction, paperwork, time. Gone. How about in the case where the customer returned the phone…you got the phone back, but now you have to return the phone, spend the money on freight, spend the time to process, look for the credit on the equipment, and so on. That’s why at ExpertCommissions, we say…”the best kind of chargeback is the one that never happens!”

Many of the leading point of sale systems for wireless dealers and cellular agents have commissions reconciliation modules and claim to handle it all for you. But there are several important things that these systems do not do. Think of it this way, your point of sale system is really like a cash register (ok, maybe that’s unfairly oversimplifying things, but you get the point). Today’s point of sales systems for the cellular industry are very powerful. But they are basically collecting static data.

Here’s what most of them do when it comes to commissions reconciliation:

• Track all of your customer information (who they are, what they bought, rate plans and features they activated).
• Allow you to import your monthly carrier commissions file and do a straight match against your point of sale data

Many cellular point of sale systems will also give you exception reports that certainly help you track down missing payments, and track sales personnel that may be gaming the system.

But as I’ve said already, these systems are static. They do not account for the dynamic nature of the wireless business. For example, customers changes ESNs, they change mobile numbers and they change rate plans. All of these changes can throw off your POS systems straight matching system.

Additionally, most cellular point of sale systems do not help you in any way to manage your disputes with your carrier. This can be a complicated process as sometimes disputes can go back and forth multiple times.

There are other areas that point-of-sale commission reconcilation modules can fall short on. These include:

• Invalid chargebacks (identifying chargebacks you were never paid on in the first place)
• Incorrect payment amounts (so you got paid, but was it the right amount?)
• Income lost from missed tiers and volume incentives (a missed payment could impact a volume tier)
• Residuals

The cellular commissions reconciliation process is a complicated and ever changing one. Knowing the tricks of the trade can make you money.

The cellular dealer business is a very simple but very complicated business. Right? Seems easy…you sell the phones, activate the rate plan and your wireless carrier sends you a check every month. Simple. But as industry insiders know, it’s just not that simple. Since the industry began dealers and agents struggle every month with their commissions payments almost always being lower than expected.

There are so many issues to deal with.

Which rate plan was actually sold? Which cellular features are added? What about handset equipment rebates. The cellular carrier had a monthly promotion, there are rate plan feature commissions, monthly volume rebates. Did the customer actually qualify for an upgrade? And then there are employee issues. Wireless dealers constantly struggle to get their employees to enter data correctly. There are lots of systems. They all need training and can change frequently. And of course, unfortunately there are the bad employees committing fraud. On the flip side they may simply be poorly trained employees that make innocent mistakes. Mistakes that cost you money.

Here’s the good news…we can help! At ExpertCommissons we’ve seen just about it all. We can guide you through the process and do it for you, so you get to focus on growing your cellular business. While you’re doing that, we’ll be scouring through your data to find you more money. Call us today.

The hidden costs of a cellular chargeback

It’s a dirty word…chargebacks, but as they say it comes with the territory. For cellular dealers, especially those new to the business, chargebacks can cause huge surprises and problems for their business. Giveth, then taketh away. That’s what happens. So your wireless sales representative activates a customer on a new wireless plan. The customer buys the fancy new phone with all the bells and whistles. The customer is happy, the sales rep is happy, and you are happy. But…3 months later the customer doesn’t pay their bill and gets shut off. Ding, ding! Cha ching.

Your dealer agreement states that the carrier can charge you back for up to 180 days (6 months) if the customer does not stay on their network. So next commission run, your commission on that sale is charged back. You are out the money.

But wait, what about the phone? It cost hundreds of dollars, and you paid for it. But wait…what about the commission you paid to the sales rep? That’s also come out of your pocket. Freight on the phone you shipped to the store. Gone. Cost to process the transaction, paperwork, time. Gone. How about in the case where the customer returned the phone…you got the phone back, but now you have to return the phone, spend the money on freight, spend the time to process, look for the credit on the equipment, and so on. That’s why at ExpertCommissions, we say…”the best kind of chargeback is the one that never happens!”