How Do Cell Phone Stores Make Money

I have an unreasonable, perhaps demented, fascination with the gadget sales process.

I wrote about it for some years over at CNET and, now that I've been promoted to ZDNet, you surely can't expect me to change overnight, can you? (Though I promise to try.)

I've generally found salespeople to be either a touch indifferent or a little forthright. Sometimes, even both.

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Yet, after one particularly peculiar day going to three different carrier stores, I was contacted by many store employees who were desperate to correct me, ululate or even reveal the inner parts of their souls.

None was more detailed than Louis. No, that's not his real name. But, hey, if it's good enough for the royals of England, we'll use it here.

Louis is a long-time Verizon store employee. We're talking a long, long time. And we're talking Solutions Specialist, which is what Verizon calls its salespeople.

A salesperson's job isn't just sales.

Well, when I say "salespeople," the job has expanded somewhat.

"In addition to meeting a sales quota, I also have to take bill payments, stock shelves, help grandma learn how to use the iPhone her grandkids forced her to buy and troubleshoot any and all warranty issues that arise," he told me.

Once upon a time Verizon employed specialists in those areas. "The company fired all those people," Louis said.

It's not that when the firings happened he got a raise or a reduction in quota. "If anything, the targets got harder," he insisted.

"Most people don't understand that selling the phones alone is detrimental to my job security," explains Louis.

Yes, you might mutter, but salespeople are incentivized to sell accessories, right? That's what makes them more money.

"Selling accessories and add-ons isn't what makes us the most money. It's what keeps us employed," said Louis.

It is?

Here's how Louis described his monthly targets: "We're required to sell at least 90 dollars in accessories per device sold, obtain a 60-70 percent take rate in monthly insurance and migrate or maintain at least 60 percent of our contracts on unlimited."

Still, Solutions Specialists might have to be good at math, but surely they make a hefty commission.

"Our commission checks are made by using a formula that essentially combines renewals and gross adds [new lines of service] multiplied by the percentage to our revenue target we are charged with," explained Louis.

You got that? I'm not sure I do. It sounds as if it's quite hard to get a large commission check, though.

We know Verizon will soon get rid of us.

Louis knows his time at Verizon isn't unlimited. He says he's constantly fighting an uphill battle that he ultimately cannot win.

"We know the accessories are overpriced. We know there's tons and tons of competition. Hell, our own company makes us directly compete with authorized stores usually within a stones throw from our locations," he said.

That does seem odd, doesn't it? Destructive, even.

Still, an even bigger issue is that Verizon is encouraging people to buy online. The company isn't, said Louis, investing in more salespeople.

Verizon didn't immediately respond to a request for comment.

Louis isn't only disgruntled at his bosses. The customers make him suffer, too.

"My biggest gripe as a commissioned employee is when customers purchase everything they want or need for their device online or from a big box retailer like Walmart, and then walk into my store and get the phone," Louis told me.

He doesn't begrudge them the money they save -- "I like a bargain too." Why, though, don't they buy the phone at Walmart, too?

"I understand also that most people don't understand that selling the phones alone is detrimental to my job security," said Louis. "I just feel like if you are comfortable buying everything under the sun from an online retailer or from the electronics counter at Wally World, then you can buy the phones there too."

There's just no business etiquette anymore.

Listening to Louis is a little like listening to many a retailer who feels that Amazon has destroyed their career and the rise of the internet has made society a touch putrid.

At heart, though, he's not really bemoaning Verizon as much as he's tired of watching human beings progressively lose their sense of human decency.

Once he was valued. Now he just feels he's being used.

"I work pretty hard to feed my family, and I'm honest in how I conduct business. If someone comes into my store and I spend an hour going over plans and phones and all that jazz, I'd expect at least the courtesy of the opportunity to actually sell the products we discussed," he told me.

He doesn't often get that chance.

Instead, people end up buying everything elsewhere. But, if something goes wrong with the phone or their plan, where do you think they go? Why, they go and see Louis.

I'm sure he's always pleased to see them.