Shift in technology drove loss of market share but created new margin opportunity
Situation Motorola was an industry leader selling analog cellular phones to LA Cellular (AT&T Wireless) with over 80% market share. In early 1998 a small Finnish company entered the United States wireless market with an exclusive industry changing deal it negotiated with AT&T Wireless nationally – the AT&T Wireless Digital One Rate plan. Within weeks Motorola purchase orders were cancelled and our market share dropped due to Motorola phones no longer being featured at a competitive price point. Despite the orders being cancelled, Motorola sales representatives did not receive quota relief so I had to find a new and unique way to achieve my sales targets.
Leadership After reviewing the past sales, and understanding the cost structure of Motorola products, I discovered an opportunity to create a new program that focused on accessory sales. In an industry where the cost of churn is exceedingly expensive to a carrier due to the cost of acquisition exceeding the first-year contract term, it became increasingly important for LA Cellular to develop a program that retained their customers without investing in providing them a new phone.
Result I developed a program that targeted customer retention and offered incentives to consumers that previously purchased Motorola phones and were no longer under contract. In conjunction with Motorola supply chain, packaging, and finance, a new bundle was created that consisted of a spare battery, carry case and car charger. This new accessory bundle was immediately purchased and promoted by LA Cellular as a loyalty program for customers that were willing to renew their contracts. While this program was unable to deliver on the top line revenue targets, it exceeded gross margin targets and was immediately recognized by Motorola management as an innovative approach to achieve sales targets. Additionally, it was the top producing accessory sales program in its time.