If you work for Carphone Warehouse, it is going to pay to be nice to your customers. Literally. The company’s sales staff are to be paid according to how polite and helpful they are, in an attempt to boost sales in what is a declining handset market.
The company has raised basic pay and is introducing a bonus scheme, which uses a measurement of the difference between positive and negative customer feedback to calculate staff bonuses. Employees will be judged on whether customers would recommend the company to a friend, as a proxy measure of their ability to generate repeat business.
“With complex products, consumers are looking for more than just a sales service,” Charles Dunstone, the chief executive, said. “They want someone who can explain products to them and a service where advice and consultancy is on offer.” Within 48 hours of buying a phone, therefore, customers will be sent a text by the company asking them to rate the service they have been given.
Mr Dunstone said that the model would be used in all its stores: “We believe that, over time, it will create even greater trust in the brand in the eyes of customers.”
The scheme is part of a revamp of the group’s traditional store format after several years of rapid expansion into an increasingly saturated market. In October, Carphone opened the first of a string of 300 sq m stores, up to five times the size of its traditional outlets and selling a full range of laptops, plus gaming, wireless TV and music services, backed up by an in-store technology support service known as the Geek Squad.
Carphone runs 2,400 mobile phone shops in Europe in a joint venture with Best Buy, the American retailer. It will be introducing a further 30 to 40 of its new mid-sized stores over the coming year, through a mix of openings and refits. It is a prelude to the opening of up to 100 megastores, each occupying 2,700 sq m, in Europe from next year. Up to 80 will be in the UK.
Carphone yesterday released annual results showing that earnings per share had fallen 17 per cent to 12.6p in the year that ended on March 31, broadly in line with expectations. It raised its dividend by 2 per cent to 4.35p a share. The shares closed down 1p at 171.5p.
Revenue fell to £1.385 billion, from £1.424 billion. The company made a pre-tax loss of £72 million, although it made a profit of £133 million before amortisation of acquisition intangibles and the gain on the Best Buy deal.
Mr Dunstone emphasised that comparisons with last year’s financial results were not easy because of the degree of change the company was undertaking. Carphone confirmed that plans to spin off its TalkTalk telecoms and broadband business from its retail division, which it runs in conjunction with Best Buy, to create two separately listed companies would be completed by March or July 2010.
Roger Taylor, the chief financial officer, said that the company was close to agreeing banking arrangements for the retail part. About £350 million to £400 million of bank facilities for the venture would be signed in the next week or two, he said. The company said that it would become Britain’s biggest provider of residential broadband when it completes a £236 million purchase of Tiscali UK, announced last month. It expects to generate more than £150 million in free cashflow for the Tiscali deal to boost earnings per share by 10 per cent in 2009-10.
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