Does Verizon discourage iPhone sales? Tales from the inside

This article may contain personal views and opinion from the author.
Does Verizon discourage iPhone sales? Tales from the inside
You’ve probably seen the stories: the carriers aren’t happy about how much of a subsidy they have to pay Apple for each smartphone, and as a result some carriers may have an incentive to push competing handsets. As an experiment, CNN called around to Verizon stores in New York and discovered that sales associates were quick to push 4G Android phones over the iPhone when given an open-ended request, but were less inclined to do so when asked directly for an iPhone. And now an analyst has revealed that the Droid RAZR MAXX outsold the iPhone on Verizon during Q2 of this year, in part due to “aggressive marketing" of 4G LTE phones.

Verizon of course denies any particular bias, but what do they say behind closed doors? To find out we spoke with Verizon sales associates, and what they revealed was…well…revealing.  The representatives we spoke to reiterated that Verizon definitely does not make it official policy to push one mobile OS over another – during training sessions that were scheduled around the same time as the CNN article sales reps were reminded that it isn’t Verizon policy to “dissuade” people from buying iPhones.

It turns out that’s not the whole story though, as Verizon’s sales targets and compensation models paint a somewhat different picture. To be fair, Verizon’s main goal is to make money – like that of every other carrier business – and the easiest way to do that is to upsell customers from feature phones to smartphones. The reasons for this are obvious: smartphone customers must add data plans to their voice and text options, which adds quickly to a carrier’s bottom line. Verizon's specific target for smartphone sales varies by region, but according to our contacts can reach as high as 80% - that is 8 out of every 10 phones sold "should be" smartphones. Those numbers aren’t totally crazy – around 70% of mobile phone sales in Q2 were smartphones in the U.S., and some places do much better than the average.

Of those smartphone sales, Verizon has also set sales targets for how many phones should be 4G LTE devices – a number that we’re told is can be as high as 60%. So for a high-volume region where 80% of phone sales in an area are smartphones, the goal is that 60% of that number (or 48% of all phones sold) would be LTE devices. The kicker of course is that the only 4G LTE phones available on Big Red are powered by Android.

Store and regional managers get reviewed (and compensated) based on how well their numbers match up against sales targets. Sales associates are also rewarded for selling 4G phones; we’re told that in at least some regions they receive an extra $25 bonus for each 4G phone they sell. The results are predictable: managers and sales associates alike do their best to push 4G phones. They certainly won’t stop you from buying an iPhone or a BlackBerry, but you’re likely to hear about the benefits of 4G before you do.
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