Carphone Warehouse’s retail operation has changed radically over the last year and clearly left some staff reeling as a result.
The New Pay Deal introduced in July 2009 saw a 50% rise in basic salaries, but it came with the abolition of individual commission. Rewards are now based on a scheme called Compass – a balanced scorecard that provides the basis for the company’s performance management scheme. It also forms the basis for bonuses, which are now calculated according to customer service, rather than the number of connections or handsets sold.
The store and individual employee performance is now measured using the NPS (Net Promoter Score) system that collates customer scores and feedback. Carphone has renamed it the World Class Service Score (WCSS).
From the Carphone management’s point of view, the changes – however painful for some – were imperative in the tough world of UK mobile retailing. The question is: how does it get customers to choose its stores? One answer is the range of products and services it offers; the other is the excellence of the customer service.
And providing excellent service is exactly what the changes at Carphone are designed to achieve, according to Steve Blan, the company’s UK sales and customer director and the man behind the changes.
‘The key point is to ensure Carphone has the reputation for being impartial,’ he says. ‘It’s not about getting rid of commission or saving money; it’s all about providing the best customer service. That is our main differentiator.’
All the networks
With Vodafone returning to the fold last year, Carphone now sells all the networks and all the tariffs, as well as offering a wide range of handsets and other devices.
‘We can now offer independent advice across the board,’ says Blan. ‘It
doesn’t matter what network or handset is sold – it’s about the customer service.’
Blan says that prior to his arrival, the company’s focus was entirely on the financial numbers, but he believed the primary focus should be on the retail staff. ‘What I wanted to do was develop our people by training them, getting them engaged, providing them with knowledge and expertise and making them feel part of the company, but to be accountable at the same time.’
Blan introduced a new standard operating procedure based on a flow of people, quality, customer, finance and vision. ‘If you focus on getting people to do the right thing by giving great customer service then the money will follow,’ he argues.
So retail staff need to be well trained, with the right expertise and to be engaged in the process. But to earn the trust of customers they also have to be impartial, hence the removal of the old-style individual commission. Nonetheless, they still need to be incentivised and this is where the WCSS comes in.
The WCSS rules, Blan points out, are lifted straight from NPS and the scoring system has been subject to a great deal of worldwide research to corroborate its findings.
Customers are asked to score their sales experience from 1-10, with 10 being the best. People who score 9-10 are promoters of the store – loyal enthusiasts who will keep buying and refer others, fuelling growth. Those who score it 7-8 are passives – satisfied, but unenthusiastic customers who are vulnerable to competitive offerings. Customers who score it between 0-6 are detractors – unhappy customers who can damage a brand and impede growth through negative word-of-mouth.
Some Carphone staff have complained that customers are not necessarily aware of this and think an 8 is a very good score. Blan doesn’t deny this, but says: ‘We want our sales staff to be world class – so they’ve got to get 9s or 10s, as that is the only way we will enthuse customers into promoting Carphone. An 8 is a good score, but those customers are neutral.
‘We get 40 comments per store per month and with 800 stores, that’s a lot of customer feedback we can use,’ continues Blan. ‘It tells us what is important to customers and the two things that are most important to them are: having knowledgeable and expert staff; and the service proposition we are offering. It’s things like staff offering to swap over the contents of an old phone to a new one – customers like that kind of extra service.’
And that kind of service is becoming even more important following the boom in sophisticated smartphones. Staff not only need to explain how these complicated new phones work, but how they can be interconnected with a host of other electronic devices such as laptops, gaming machines and TVs. So Carphone’s focus in 2010 is on increasing staff knowledge and expertise.
‘We have doubled the budget for training this year,’ says Blan. ‘Our job is to explain, not just the phone or other device, but how to get the best use out of it. We will be introducing a new service model with more structure to deal with this, hence the need for more training.’
He says that the key goal in 2010 is to provide unprecedented service. ‘We can see a direct correlation between performance, staff engagement levels and profit,’ reveals Blan. ‘Last month the North East region was the most profitable – it also had the best engagement scores and the best WCSS – so it works.’
Some staff claim they have lost out under the New Pay Deal, which boosted basic salaries to £17,000. Previously, some 50% of salary could come from commission and certainly top performers are unlikely to earn the same under the New Pay Deal.
Blan responds: ‘I could put any kind of incentive out there and some would benefit and some wouldn’t. But substantially more people have gained financially under the New Pay Deal. There was concern that we might lose some of our top salespeople, but in fact we didn’t lose a lot.
‘We spent more on payroll last year than the year before and it was meant to be cost neutral,’ admits Blan with a rueful smile. ‘We put more payroll into the basic element, rather than the variable. That gave people a lot more stability with their income. Benefits such as maternity pay and sick pay all rose, as they were calculated on the higher pay rate.’
Others say they find the reward system too complex. Blan confesses he is puzzled by this. ‘It requires a store to hit its profit target, which releases a pot of money. How this gets divided up depends on the store’s WCSS. If it is +80, the pot is doubled for the store. If they don’t meet the scores, the pot is halved,’ says Blan. He adds that there are a ‘lot’ of stores scoring +80.
However, some staff complain that their scores can be hit by negatives that are beyond their control, such as returns of faulty phones.
Blan doesn’t disagree, but points out that customer perception, whether it is a fair one or not, is the reality the company has to deal with. If customers are dissatisfied, even for reasons beyond staff control, they will not be promoters of the Carphone brand.
That said, there are times when outside factors can damage the company’s image too much. The high level of returns on the Sony Ericsson Satio last year was one such case and so Carphone took the decision to stop selling it until the problems were ironed out.
Major change programmes rarely come without pain for someone. In this case, some Carphone retail staff clearly feel they have suffered financially. But have the changes succeeded in their overall goal?
It seems the answer is yes. Blan says: ‘We have a three year plan to really put customers back at the centre. We’ve achieved a lot in 12 months and we are ahead of the curve. We had our best Christmas period ever despite the recession.’
Blan is not content to rest there, saying there is still more to do in the UK. There are changes coming to the Compass targ