Sprint (and other cell phone carriers) are like pizza
Tom Dougherty, CEO – Stealing Share
4 December 2014
Cell phone carriers are now fighting on price. That’s not a winning strategy.
Cell phone carriers are going the way of the pizza. OK, just follow me here.
As we’ve noted numerous times, the major pizza outlets have left brand behind to simply play on price. They have taught consumers that, when they call for a delivery, the first question to ask is: “What’s today’s deal?”
The same could be said for the cell phone carriers, who have dwindled their brands down to simply what kind of deal I can get today. It’s not a perfect analogy (they never are), but Pizza Hut, Domino’s and Papa John’s dominate the pizza market, while AT&T, Verizon and Sprint are basically the only cell phone carriers left. (T-Mobile is still around but rumors persist that it will merge with Sprint soon.)
“The problem with this approach (basically buying market share) is that it is so temporary and it doesn’t create preference. You just have a bunch of bargain shoppers who leave you just as quickly as they came to you in the first place.”
To lure in new customers, Sprint is now offering Verizon and AT&T users to cut their rate plans in half if they come over the Sprint side. It turns out the deal isn’t as great as it sounds (more on that later), but to the consumer it looks like it’s another daily deal. If it wasn’t for the contracts (although Sprint will pay up to $350 per line in your termination fees), consumers could just do what we do when ordering pizza does. Just call and ask, “What’s today’s deal?”
The problem with this approach (basically buying market share) is that it is so temporary and it doesn’t create preference. You just have a bunch of bargain shoppers who leave you just as quickly as they came to you in the first place.
Sprint isn’t the only one. AT&T is offering a $150 bill credit when you sign up. Verizon is doing exactly the same thing. Some smart app developer could just produce an app that tells you who has the best deal this month and you could change back & forth, saving money and even keeping the same phone number.
This is craziness, only made worse by the fact the deals aren’t all they are cracked up to be. In the Sprint deal, if you are part of a family plan, then the entire family has to sign up and you must still buy a new phone from Sprint.
There is a better way, of course. Verizon, AT&T and Sprint should focus on the emotional drivers for cell phone users that will enable them to keep customers (and attract new ones) without having to discount everything. (Think of what Apple has done with the iPhone.)
Pretty soon, we’re just gonna order up a new plan each weekend like ordering a pepperoni pizza.
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