Tete-a-tete. Andrey Gubanov, head of the MTS retail network, about the market, MTS plans and satisfied customers

Hello.

At the beginning of December 2022, a significant change took place in MTS:

Andrey Gubanov. On January 1, he took office.It is no secret that MTS retail has been constantly changing over the past five years, looking for a new format, management teams have come and gone. The appointment of Andrey Gubanov definitely looks like a new page in the history of retail, since until 2020 he worked at M.Video-Eldorado, including the merit of creating the m_mobile brand for this retail chain. Winning format, great sales. But the most important thing is that Andrey is a retail person who grew up with the Russian market and knows everything and everything on it, as well as understands the processes that take place in the market.

The best feature of this destinationit can be considered that it was widely discussed in the market. The very fact of the appointment was a very significant event, it indicates that serious changes are coming in MTS retail and they will be noticeable. To understand how MTS retail lives, what directions it is looking at, I went to a meeting with Andrey and tried him a little about the market, about future plans and about what is happening today. Here is the result of our conversation, it turned out very interesting.

EM. Operator retail has always been special.There is a large operator behind him, and there is an opinion on the market that in this case you can not count money at all. What does retail mean for MTS today, who are you for the operator?

A.G.We are a point of physical contact for a client, an MTS subscriber. All MTS services are intangible, they cannot be touched. There is a word intangible in English, it better conveys the concept of intangibility. BigaI part of the impressions about MTS consists of a pointphysical contact, therefore, for MTS, retail is, first of all, a place where the client must come out not angry and offended, but, on the contrary, satisfied and happy. A wonderful operator, it solved all my problems, I will continue to use it, but it turns out that the operator still has KION or something else that I did not know about. Selling SIM-cards as such, like selling phones, is not an end in itself. This is an important element of retail, but not the main thing.

EM. Before the pandemic, MTS often gave noticeable discounts on phones, people came to you at retail for them, including non-MTS customers. Discounts used to be the key to equipment sales, they are no longer the case.

A.G.Everyone always has discounts, 70-80 percent of smartphones on the market are sold with one or another promo, that is, with discounts. It is important to find a balance here and not to allow extreme sports. A year and a half ago, extreme sports at MTS just ended, as can be seen from the numbers within the company. There is nothing wrong with the fact that clients of other operators come to us, no, we are open to everyone. After all, it is good when those who do not use the services of MTS come to you, it is very difficult to hook them with other channels of communication.

A person buys a phone where it is convenient for him orprofitable, it's not good and not bad, it's a market reality. Our subscriber can buy a phone in stores of other operators or somewhere else. In the market, it is customary to consider belonging to an operator by the first SIM card in the phone, that is, MTS is in the first slot, which means that we record such a client as ourselves, he took the phone in our retail and uses it in our network. Most of our sales now are people who have MTS as the main operator, the share of such subscribers is higher than the market average.

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EM.Often, when coming to MTS for a phone, people are faced with the fact that they are offered a SIM card as a gift, or even two. Sometimes sellers refuse to sell the phone if you don't want to take the SIM cards. The experience for the buyer is at least annoying, will you refuse it?

A.G.We must and will sell and offer SIM-cards, we are a retail operator, and we need to sell services, including SIM-cards. We will continue to offer SIM cards in the future. But we will also ease the pressure so that the client does not feel that he is being forced to do something that he does not want to do. The main thing is to create the right mood and atmosphere, there are many tools for this. It is not profitable for anyone to sell something by force, it does not inspire confidence. Our goal is to create a comfortable place for communication between MTS and a person.

EM. When you enter the MTS store, a consultant almost always approaches you. Do you want to change something in this aspect?

A.G.The size of our stores is such that you like it or not, but you will see a consultant, we do not have electronics hypermarkets. The question is not whether it is necessary to approach or not, but how to approach a particular buyer. I always study how sellers work, I ask them to sell me a phone. Perhaps it is ugly in relation to the seller - to put the question so vaguely, but it very quickly reveals all the details of the work. We usually have a dialogue like this:

• Sell ​​me a phone, please.
• What do you want?
• Good!
• Do you want Apple or Samsung? (so ask those who are more experienced)
• He did not decide.

And here comes the most interesting part,what phone they start selling me. I can see that I can afford very expensive models. But in many cases, the seller decided to play it safe and tried to sell me a phone for 10-15 thousand rubles. In rare cases, they offered the iPhone or something more expensive, but were still afraid to offer the newest and most expensive one. The fact that the seller does not feel the buyer, what to offer him, makes such dialogues extremely ineffective both for the seller company and - and this is the main thing - for the buyer

Ideally, the operator should understand who to himcame in, the phone of which segment the consultant should offer. But for us, the goal to sell the phone is secondary, it is more interesting for us to talk about the new tariff, about the services that we have.

For example, MTS Bank and I are trying to make suchservice like a pre-approved loan. A person comes to the store to change a SIM card, and the seller informs him that he can get an approved loan for 60 thousand rubles, which will allow him to quickly and painlessly change his phone or buy something else in the store. Moreover, we understand that our client has not changed the phone for four years and, perhaps, he will take advantage of this offer of the bank, which is part of the MTS ecosystem.

We need to clearly understand what we offerto each client who comes to the MTS store. It is more profitable for us, as an operator, to switch a person to a tariff that will be more interesting to him than to sell a new SIM card. Loyalty is a hackneyed word, but our task is to make sure that the client is satisfied. And then our customers will be disposed to spend money in our stores, to trust us.

EM. And how to determine the client when he entered the store?

A.G. For example, biometrics.

EM. That is, the camera will read the face? But how ready are people for this? Do you have any fears that it will alienate someone?

A.G.Recently I came to one bank, went to the terminal to get a ticket for the queue. I did not give biometrics at this bank, but the inscription appeared on the screen: "Andrei Borisovich, go to such and such a window." Was I ready for this? Probably not. But the fact that it is convenient for me as a user and does not carry any visible risks is obvious.

EM. Well, that is, facial recognition will be introduced in MTS stores?

A.G.I will say more, MTS stores are used to collect biometrics from those who are ready to provide it. We have a large network of stores, the client can choose the store that is located near him. To date, more than 20 million people have voluntarily handed over their biometrics, this is one of the largest databases in Russia. And in MTS stores you can get services without having a passport with you, by logging in with your face, of course, if you have registered it in our system.

EM. How do people feel about this? Sellers?

A.G.Our research shows that people like this approach, they do not always have a passport with them. The satisfaction index of such clients is higher, they have mastered a new and simple technology. In addition, such a system protects the seller from all sorts of errors. A person with a stolen passport can come to the store, and this is a big problem for the seller. With face recognition, the seller disclaims responsibility for working with the client's documents; this system cannot be deceived.

MTS includes VisionLabs, a companyspecializes in face recognition and does it perfectly. We have more opportunities than other players. We do not see rejection from customers, the penetration of such a service is growing.

EM. How might this look in practice? I go to the MTS store, and what happens next?

A.G.At a minimum, the seller should address by name, the system should prompt that Eldar Murtazin is in front of him. We are very actively working on a recommendation service to give the seller "hints" from two or three points: what you might need today in our store, what is interesting to offer.

Now the communication script in the store looks likeotherwise, the seller asks: “Eldar, how can I help you today? What you need?". Such a scenario kills the very possibility of dialogue, leaving only one option. We will make sure that the seller receives recommendations that are relevant for each client. For example, Eldar watches a lot of series, let's mention in the conversation that an interesting series came out on KION that you might like.

EM. Sounds like the use of big data, which forms a dialogue for the seller.

A.G.So it is, but we do not want to offer everything in the world, only two or three recommendations, moreover, what may be of interest to a particular person. Not what we currently focus on in retail, because for various reasons we believe that this is a good product. It is probably pointless to offer iPhone to Eldar Murtazin, we are wasting both the seller's and the client's time. Dialogue must be productive. But I emphasize that such "tips" for the seller are not a panacea, the seller still plays a huge role. We create a tool that allows him to become more efficient, but in no case turn the seller into an extra who voices what is written on the screen in front of him.

EM. How often do you change the motivation of sellers?

A.G. Changing motivation more than once a year is pointless. Until the seller receives the third or fourth salary, he will not believe that the motivation is working, that he is earning his bonuses.

The problem is that sellers are very differentfrom each other. Someone knows how to determine by eye who is standing in front of him, what product can and should be offered to a person. Many do not know how. We have not yet given the tool described above to improve the efficiency of sellers. Therefore, we have the so-called tricks.

MTS has a lot of products, they are all wonderful andworthy, all of them need to be sold. Focus allows the seller to highlight the products that we want to promote. But it is also a tool to adjust sales. When everyone is running in one direction, sales of a particular product or category are growing, something else is sagging. Focusing on specific products or services allows us to correct this situation, this is an important tool. We will change our approach to this tool, improve it, all this is possible through better knowledge of your client.

EM. What is the staff turnover in retail today?

A.G.In our industry, there is a problem with staff turnover, it is inherent in everyone without exception. Our figure is about 8%. As funny as it may sound, the problem comes from the development of delivery services. It is easier for people to go to work as a courier, less responsibility, no need to communicate with customers, constantly learn. In the regions, we see a sharp change in the gender composition of salespeople, today 70% of our consultants are young girls. We compete for staff not even with other retail stores, but with large marketplaces where young men go to work.

EM. Well, if we talk about material goods, do you still focus on smartphones as the main product?

A.G.It is foolish to refuse smartphones as an anchor product that is interesting to customers. This is the largest market in terms of money, in pieces, the largest frequency. Then come headphones, watches and bracelets. As an operator, we sell network devices, although they are quite niche, but this is our history, and therefore we will always deal with it. In the format of our stores, you can also sell such a category as TVs, perhaps they will appear. We will definitely focus on smart home, we believe that this category will develop for a long time and successfully.

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EM. What should be the format of the store? Is it one format, a combination of different formats?

A.G.My personal perception, in which I convince the top management of MTS, is as follows. You should have about forty flagships all over the country, so that it would be interesting to enter them, large format. There should be about a thousand stores across the country that are good at selling both goods and services. Then there are 500-700 stores that are good at selling goods. The tail can be without goods at all or sell accessories, serve customers where necessary. Everything must be efficient from the point of view of both the operator and the retail economy. It makes no sense to spray products in all stores in an even layer.

EM. Now MTS has 3,300 own stores. When will the market start to reduce the number of stores? When will you start optimizing retail?

A.G.We follow the market, we see that the reduction has already begun. We are ready to take the lead in this matter. I emphasize that I have 3300 stores, the MTS franchise is not under my control. From experience, no more than 20% of those stores that we close flow into the franchise. The conclusion is simple - the total number of stores for both MTS and other players will be less by the end of 2023.

EM. In recent years, retail predicts death from online sales, marketplaces have become fashionable. Is there a threat from this format of trade?

A.G. This is an illusion.If you look at the sales of all operator retail, it occupies approximately the same share as before. Moreover, we do not compete with electronics hypermarkets either. I don’t want to go into philosophy and say that we have some other, special client, this is definitely not the case. The fact is that operator retail is somewhat isolated from other formats. And so we react to the promotions that other operators carry out, they influence us. But what happens in online stores or hypermarkets affects us to a lesser extent.

EM. MTS was the first to bring the Galaxy S23 and started selling them before all other networks. How can you evaluate the result?

A.G. How reassuring.We are great that we brought it on time, highlighted the presence of new flagships in our network in time. By the way, this is good for the operator, the appearance of new products brings us those who are ready to spend money on them. Not everything is perfect, the launch could have been better worked out in terms of retail. I have a high bar. We have gained experience to change some tools for future sales. But overall, the launch went well.

EM. You have a vision of what retail should look like, we partially touched on these issues in an interview. In an ideal world, how long will it take to change MTS retail?

A.G. Three years.There are many reasons for this, but let's look at it from an economic point of view. You can’t instantly change all the stores without exception - it’s expensive and pointless. Changes will be gradual, which will spread the costs. It is necessary to train people, they cannot be taught in one day or in a week, the process of transferring knowledge is important here. It is important not to show the changes, not to create a picture, but to build a retail that lives differently.

EM. Are you given the task of making MTS retail earn money?

A.G. The short answer is yes.The long answer is not an end in itself. There are different ways to make a store profitable. But if at the same time the MTS client leaves the store upset and offended, or stands in the cold for fifteen minutes to go there, the profitability of such a store will not bother anyone. MTS does not need such stores.

The operator has his own coordinate system forretail, and I am sure that retail can be profitable in it. But this coordinate system is very different from conventional stores. For example, we have 16 million people who come to stores every year to resolve their issues with MTS - paying bills, replacing SIM cards, and so on. This is service traffic, and it simply does not exist for non-operator retail. And the point of presence in the real world is extremely important for the operator, this is the place of communication with customers. But retail must be profitable, and it can be. This is a long answer to a question.

EM. What specific tasks do you face in relation to MTS retail?

A.G.So that there are no queues, so that customers are satisfied with the service, indirectly, so that the index of customer satisfaction with the operator grows. And, of course, what we talked about above, these tasks should not be solved for crazy money, we must be able to earn money and solve all these tasks on our own.

EM. Well, who and what are you for MTS, what is retail through the eyes of MTS and what is it for?

A.G. Contact. We give contact with the client.We are not a product in the MTS ecosystem. This is a place where a person can touch the products of different companies that are part of the MTS ecosystem. The purpose of our existence is to make the conditional KION happy, and through us his client will be happy.

In retail, you can change the coordinate system, but withoutfocusing on a satisfied customer does not make sense. For example, an operator could hypothetically cancel all sales of SIM cards in stores, selling them only online. Will the client be happy? Absolutely not. But in terms of reporting, the operator will show insane growth in online sales. And says nothing about how the client feels. We must evaluate any changes not only and not so much in terms of efficiency for business. We have to see how they affect our client. Trite, it will be convenient for him or not. If it is inconvenient and bad, then such changes are for the worse and they definitely do not need to be implemented.

EM. What will happen in 2023 in the retail electronics market?

A.G.Uncertainty arises from M&A transactions (mergers and acquisitions - Editor's note), they can change the balance of the market. But the rest of the retail market is quite predictable. Marketplaces have reached their peak or are near it, maybe they will grow a little. There will be redistribution within the telecom market, but it is M&A deals that dictate it, and nothing else.

In units, the smartphone market will remain aroundthe same as in 2022, last year the market was about 26.5 million pieces. The range from 25 to 27 million pieces is quite real. In money terms, at today's rate, the market will also remain approximately the same with minor corrections. The average check will increase slightly. You can not predict external events, they can greatly affect the market. But if you take them out of the brackets, then 2023 will be similar in most respects to last year.

EM. The preferences of buyers in 2022 have changed, many have begun to buy smartphones from Chinese manufacturers, is this a forced or deliberate measure?

A.G.We do not buy frank noname, quality goods on the shelves of MTS. For their money, Chinese smartphones are interesting, they offer a good price / quality ratio, they are not ashamed to sell. What we see is a lack of loyalty to Chinese brands, but it cannot appear in a short period, it will happen later, in a few years, when people live with these phones. Of course, this is not Apple or Samsung, but the cost of such solutions is different, they offer exactly what buyers want to see for their price. In their price segments, Chinese companies are excellent and even more profitable than Samsung, hence the growth in sales and market share of Chinese manufacturers.

This year the market will be widely representedsmartphones from Chinese companies with flexible screens are thin, well-made. Prices are still high, such models are not for everyone. But when they go down to the mass segment, they start to cost 40-50 thousand rubles, sales will skyrocket. The quality is already excellent, the only question is the price. And this also sponsors the growth of Chinese brands, they are able to produce devices at the level of the same Samsung.

EM. Thank you very much for the conversation. The questions are over.

A.G. Thank you.

The need to supplement or expand something, andlet alone explain, no. Andrey outlined the coordinate system of the MTS retail network, in which the company will build its future and present. No spaceships roaming the open spaces, a clear understanding of the goals and objectives, as well as ways to solve them. MTS clearly benefited from this appointment, and we will see the first changes with our own eyes already in 2023. I will watch with interest the transformation of retail from MTS.

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