How to Avoid 5 Pitfalls of Rapidly Scaling Prepaid Retail Operations

2024 is a year of rapid retail expansion for some prepaid telecom brands and their store operations, with thousands of prepaid locations opening across the US this year.

Agents are grabbing onto that business and rapidly scaling door counts to meet the demand, but that path is marked with the pitfalls of steep growth.

Here are five common pitfalls and mistakes we’re seeing in the prepaid retail sector, along with tips to get your new operations right first time, so every store and retail channel is set up for long-term success. 

1. The lack of customer data and high-capacity reporting is stopping retailers making informed business decisions.

In the rapidly evolving prepaid space, it can be tempting to take the ​“quick and dirty” selling approach in order to stand up as many new stores as possible. After all, prepaid retail doesn’t need a credit check, record check, a contract, or financing — just a phone, a record of its IMEI, and a network. What’s more, customers don’t even have to give prepaid wireless retailers any truthful information about themselves. When revenue growth and resource optimization are of the essence, why should these retailers put effort into tracking the kind of information that is only required in the postpaid space — right?

This approach, however, is a false economy. As prepaid grows, the dearth of information about customers and sales patterns has started to create significant problems. ​“The lack of data businesses have around prepaid is the biggest obstacle to their long-term success,” explained Kelly Jardine, Director of Enterprise Client Experience at iQmetrix. Without data about who their customers are, prepaid wireless retailers are unable to make informed decisions about their operations. 

Some of the newer prepaid brands entering the market are tackling this problem by requiring more data from customers, offering discounts for additional customer data, and implementing robust reporting and analytics software that scales effortlessly as the business grows. 

2. Many disparate systems create a spaghetti bowl of technologies and clunky transactional processes.

With so many players in the prepaid space, from carrier brands to primary agents to sub agents, and then when you throw in in activation portals such as VIDAPAY, and more besides, there are myriad technology systems that must plug into each other for every transaction, activation, and accurate reconciliation to succeed. This has created a spaghetti bowl of technologies that is nothing short of chaotic, and rife with clunky and onerous processes for your employees. This, in turn, takes away from engagement and upselling time with customers, and damages the customer experience and their loyalty. 

Today, there are software solutions such as Interconnected Commerce that can untangle this technological mess and integrate all players’ systems, including activations portals like VIDAPAY, creating a frictionless experience for prepaid retail operators, employees, and customers. Additionally, having a superior integration with VIDAPAY that pulls detailed customer information into your retail management system dramatically helps with the data and reporting issue mentioned above.

3. Fraud is rife in the prepaid sector — both externally and internally.

There’s no doubt that fraud is an issue in prepaid wireless retail. Retailers are standing up new stores at a rapid pace, very often in geodemographic markets that are lower on the socioeconomic scale, and bringing in pools of new and untested employees within those markets. The above-mentioned gaps in system integrations can create opportunities that are ripe for internal fraud, in which unscrupulous employees exploit transactional loopholes for their own gain. 

Kirby Loeck, VP of National Sales at Victra, a Total by Verizon authorized retailer, told iQmetrix, ​“With all these systems, there’s often no checks and balances. You won’t even see you have an issue until it’s, say, a month or so later when you’re trying to reconcile payments, and then you have to play catch-up.”

At the same time, the risk factors from external fraud perpetrated by customers are also higher in the markets where prepaid stores are largely popping up, exponentially increasing the retailer’s vulnerability. Loeck added, ​“Our asset-protection risk scores, between our prepaid stores compared with our postpaid stores, are vastly different.”

Retailers operating in this high-exposure space must prioritize using systems and solutions that mitigate security and fraud risks, and work with technology partners to identify and tackle unique challenges in this area. 

4. Basic inventory management systems can’t scale with stores, which creates problems with product availability and visibility.

When you’re running just a few locations, inventory isn’t too hard to keep track of using simple solutions. But, as your retail business takes on rapid growth of prepaid stores, your inventory management needs change just as quickly. As agents open multiple stores in a short space of time, and grapple with a radically more complex supply chain system and store-to-store transfers, many previously functional inventory management systems and practices no longer hold up. This creates a lack of product availability and obscured visibility into inventory across your stores and suppliers, ultimately damaging sales and the customer experience.

Some of the more sophisticated prepaid retail agents know that efficient inventory management isn’t an area that you can expect to take shortcuts and still succeed, and that adopting advanced inventory management solutions is essential to ensure they always have the right product in the right place at the right time. 

Loeck said, ​“Any dealer opening new stores needs have systems, tools, analytics, artificial intelligence, and so on, to tell them they need X amount of inventory at these stores and why. As a dealer, I can’t spend time doing this myself, I need to focus on revenue growth. So those tools are critically valuable and not just in telling me what I need, but then also giving me data and guidance to help me place the orders and route them to the right location.”

5. In today’s prepaid market, it’s tough to generate initial demand and then retain customers — especially when you need to focus on sales.

With so many new prepaid stores opening, creating demand and getting customers into those new stores is no small feat. And once you do get them, with no contracts in place, how do you keep them from drifting away?

Loeck said, ​“How you market to those customers, how do you keep them in your pipeline, and how do you get them back into your store? In the prepaid space there is a residual component, so how do you keep getting the residual off that customer, month after month after month? You need systems and processes to help with that.”

Some of this comes back to the processes discussed earlier, as well as the data and reporting that is so essential to informing how to create future demand. ​“We might not get that customer data in the carrier integration side, so let’s change the behavior of our sales base to capture that information and use this to help drive future traffic and future transactions,” added Loeck.

And let’s not forget, customer loyalty is often fostered by good experiences in the purchasing process itself. Today’s wireless consumer is smart, savvy, and unforgiving of sub-par retail experiences. This means you need well-trained associates and intelligent systems that work together to create space and offer targeted prompts for upselling add-ons, the latest accessories (that you may or may not stock in-store), and anything else the customer is looking for — and then ensuring they are taken care of after they’ve left the store. 

To have a successful retail operation that will keep customers returning, your prepaid business needs to level up in all these areas. This means implementing a comprehensive end-to-end customer journey using a wide range of point-of-sale technology integrations, from initial marketing to retail analysis to point-of-sale integrations, all the way through to after-care, that will ensure you attract, engage, and retain your customers. 

Learn more about our industry-leading retail management solutions.