Wireless carriers need to focus on both acquisition and retention
December 6, 2013
As competition increases, wireless carriers are stepping up price promotions and special offers to acquire and retain customers, but this could spell trouble for the operators down the road.
With operators like Ting and AT&T offering new deals and pricing, it may help them acquire new consumers, but that does not mean that they will necessarily retain those consumers. Acquisition is one thing, but retention takes a whole different kind of strategy.
“It’s a slippery slope,” said Lara Albert, vice president of global marketing at Globys, Seattle. “No. 1, the problem with these kinds of special discounts and promotions is what do you do over the long term. Especially for those that are doing deep promotions around data because in some sense operators are changing the value proposition where customers may expect to get bonuses up front and it may create a problem down the road, so you have to be careful about that kind of promotion.
“For an operator like Ting, which is more unknown than the established brands, there’s got to be an equal if not greater focus on how do I treat these customers once I get them, not necessarily customer service, but how do I continue to reinforce value, what retention and loyalty tactics do I have in play, things of that nature,” she said. “Because that’s probably of greater importance.
“Prepaid operators have already had to switch from acquisition mode to how do I get these customers to recharge every month. You’re already seeing operators starting to invest more in understanding consumers once they have them in the door rather than deals for acquisition sake.”
As competition increases, wireless carriers are stepping up price promotions and special offers to acquire and retain customers.
AT&T has announced a lower price value plan to grab consumers from its traditional competitors Verizon and Sprint. Newer and less known wireless provider Ting is trying to enter the game with its own promotion as well, offering free coffee to consumers who check out the service.
“We'll likely see more special pricing and discount options, not just because of the holiday season where promos hit all retail industries, but also because many of the differences between operators are disappearing,” said Richard Karpinski, senior analyst at Yankee Group, Boston. “All of them offer the iPhone today and all of them have LTE services to offer.
“So they'll have to look for other ways to differentiate,” he said. “The challenge for marketers at the mobile operators is to make their offers stand out while not confusing customers. It is already a great challenge for mobile customers to find the best deal with the best operator in their market.
“Successful promotions will offer clear value and differentiation from rivals and meet a specific customer need. Price cuts will work, but smart marketers will segment their target audience and try different approaches for different customer sets -- and double down on the campaigns that work best.”
AT&T has launched new Mobile Share Value plans that are meant to help consumers save money and share data.
The plan will be available starting Dec. 8 and will provide no annual service contract options. According to AT&T, this can help customers save $15 a month.
According to Globys' Ms. Albert, AT&T is struggling to keep up with Verizon, and this new pricing plan is a way of picking up their game.
“Pricing is an important part of the mix along with network and handsets that you offer,” Ms. Albert said. “It’s the quality of that offering against the price. Obviously Verizon is known for having the best network, so AT&T feels that they should be priced slightly under.
“But they’re also known to have a much better network than Sprint and T-Mobile, so I’m not surprised by the move, but I think at the same time, price is only part of the equation and what AT&T doesn’t want to do is get into a price war with any of the lower cost providers because all that’s going to do is lower the value of the network and cause their customers to be more price sensitive,” she said.
“So it’s part of the equation. I think it’s done with the mindset of the different players in the space and what AT&T’s advantages are and how they’re going to compete against [Sprint and Verizon].”
While AT&T is trying to appeal to customers with new pricing, Ting is offering special deals to get its name out there.
Ting is a new wireless provider that launched in February 2012 and as of September has 36,000 active customers.
Since it is small and competing with giants in the space, Ting is leveraging promotions to raise awareness about its offering.
The company is currently offering a promo code for $5 at Starbucks to consumers that provide their AT&T or Verizon credentials. Ting will then calculate how much the consumers will save by switching to Ting.
Ting also offers its current consumers the ability to take a friend out for coffee and tell them about Ting. The operator will refund the bill up to $10.
According to Scott Allan, director of Ting, Toronto, 90 percent of consumers will save money with Ting. The premise of Ting is that it does not try to play games and trick consumers into paying more.
“Traditionally in wireless you have two billing models, one is unlimited where you overpay basically but don’t have to worry about consuming service, but the truth is that most people use far less than they think and overpay, or if you use a lot they’ll kick you off or slow you down,” Mr. Allan said.
“The other model is this pick-a-plan model were if you happen to go over your plan you get treated like a criminal and pay a lot,” he said.
“We said why don’t you pay for what you use. Our pricing model break services into text, voice and data, and at the end of the month you pay. It’s always fair. We don’t game our customers.”
Rebecca Borison is editorial assistant on Mobile Marketer, New York
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