Cricket Wireless 2011 Annual Report Download - page 15

We expect to continue to develop our product and service offerings in 2012 and beyond to better meet our
customers’ needs.
Customer Care and Billing
Customer Care. We outsource our call center operations to multiple call center vendors to reduce the cost
of providing care to our customers, while maintaining the quality of our customer care.
Billing and Support Systems. We outsource our billing, device provisioning, and payment systems to
external vendors and also outsource bill presentment, distribution and fulfillment services. During recent years,
we have upgraded a number of our significant, internal business systems, including implementing a new
inventory management system, a new point-of-sale system and a new customer billing system. We believe that
these new systems will improve customer experience, increase our efficiency, enhance our ability to provide
products and services, support future scaling of our business and reduce our operating costs.
From time to time since the launch of our customer billing system in the second quarter of 2011, we have
experienced intermittent disruptions with certain aspects of the system, which have limited our ability to activate
new customers and to provide account services to current customers. We believe that these system issues have
had the effect of reducing our gross customer additions and increasing churn, and these system issues could
impact customer additions and churn in the first half of 2012. Although we believe we have largely identified the
cause of these disruptions and are implementing plans to remedy them, we cannot assure you that we will not
experience additional disruptions with our customer billing system in the future.
Sales and Distribution
Our sales and distribution strategy is designed to continue to increase our market penetration, while
minimizing expenses associated with sales, distribution and marketing, by focusing on improving the sales
process for customers, and by offering easy-to-understand service plans and attractive device pricing and
promotions. We believe our sales costs are lower than traditional wireless providers in part because of this
streamlined sales approach.
We sell our Cricket devices and service through direct and indirect channels of distribution. Our direct
channel is comprised of our own Cricket retail stores. As of December 31, 2011, we had approximately 220
direct locations, which were responsible for approximately 22% of our gross customer additions in 2011. In
addition, we continue to target potential new customers through the internet. Some third party internet retailers
also sell Cricket services over the internet.
Our indirect channel consists of our authorized dealers and distributors, including premier dealers and local
market authorized dealers. Premier dealers are independent dealers that sell Cricket products exclusively in stores
that look and function similar to our company-owned stores, enhancing the in-store experience and the level of
customer service and expanding our brand presence within a market. Premier dealers tend to generate
significantly more business than other indirect dealers. As of December 31, 2011, we had approximately 4,200
indirect dealer locations, of which approximately 2,500 were premier dealer locations. We plan to continue to
increase the number of our premier dealer locations in 2012.
We also conduct indirect distribution through nationwide retailers. During 2011, we significantly expanded
our nationwide sales presence by offering Cricket products and services in thousands of additional nationwide
retail locations, and we expect to continue expanding our distribution through this channel in the future. As of
December 31, 2011, Cricket products and services were offered in approximately 11,500 nationwide retail
locations. “Top-up” cards for our Cricket Broadband and Cricket PAYGo services are also available in
approximately 6,000 convenience stores and other indirect outlets.
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