T-Mobile’s Better Value Plan & Who Loyalty Plans Really Target

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the two hundred and seventy eighth episode of The Week with Roger, a conversation between analysts about all things telecom, media, and technology by Recon Analytics. I'm Don Kalgo. Good. And with you, as always, is Roger Entner. How are doing, Roger?

Roger Entner 0m23s

I'm okay. How are you?

Don Kellogg 0m25s

I'm pretty good. Some interesting news this week. T Mobile has a new family plan. Why don't you tell us about it?

Roger Entner 0m31s

Yeah. So $140 family plan for three lines. It's a pretty good deal. On their website, they're, like, dunking hard the other carriers and saying, oh, look at how much richer that plan is, Which yes and no, right? They're throwing in like $30 satellite stuff, which is great if you need satellite stuff, but if you never leave an open area, do you really need it?

Roger Entner 0m56s

Right? Same with like connected things. The interesting thing here is, a, that it's just for three lines when the battleground is actually in one or two. I did then the math, and I'm like, oh, are the three lines at T Mobile actually cheaper than two lines at the other guys? And the answer is no, but just like by 5 or $10.

Don Kellogg 1m22s

Right. This is because T Mobile's offered a third free line on most of their plans.

Roger Entner 1m26s

Exactly. And the logic breaks out down here. If I would have been them and I wouldn't have cared about, like, 5 or $10 of ARPA, I would have said, like, my three lines are cheaper than you too. Go away. Right?

Roger Entner 1m40s

This is true value. Then the other thing that was like really, really interesting, you know, holidays are always, depending on how you view it, dangerous, enlightening, you name it. So I spend a lot of time over the holidays digging through our data. And one of the things that becomes really, really interesting when you look at it is these loyalty plans where the implication is like loyalty equals people are not leaving are actually not loyalty plan like retention plans, but they're actually acquisition plans. We see it very clearly in our data that people are switching because of these loyalty plans.

Roger Entner 2m22s

They are not not switching. One of the things in our data set, we ask people, Why would you choose a carrier and why would you leave? And we ask tenure. How long have you been with a carrier? You can do like the fine tuned analysis of like the people who have switched in the last couple of like three months and the people who say that they switch in the next three months, because we have like these obscenely large data sets.

Roger Entner 2m47s

You can like really focus on these people. And over a longer time period, then you have like a really robust data set. And it becomes so clear. Loyalty plans are acquisition tools, not retention tools. If you treat a customer not well or if the signal is not doing what it's supposed to do, people will leave.

Roger Entner 3m6s

All of the loyalty, all of the free streaming video, you know, you don't have to pay the gas tank when you have a Hertz. When you bring back your car, it doesn't do diddly. But it does a lot to get people to switch. And that for me was like, oh, wow. Really?

Roger Entner 3m24s

I'm like, that's a really good insight.

Don Kellogg 3m26s

Isn't that another way of saying that there's a group of people that stay, and there's a group of people that switch. Right? And, like, there's you throw incentives at the kind of switching pool, but the switching pool is gonna get whatever offers out there. And it's just kind of a you know? We know that the majority of wireless customers have been with their provider for five years or more.

Don Kellogg 3m44s

Right? So particularly at, like, Verizon and AT&T.

Roger Entner 3m47s

Ten years. Average ten years now. Ten years.

Don Kellogg 3m50s

Right. So switchers are just different fundamentally? Yes and

Roger Entner 3m53s

no. Right? I've done a lot of switching analysis these days. Also, not only mobile, but also like home Internet. And one of the interesting things with home Internet and when you look at the cable guys is that there's a loyalty penalty, which, by the way, also exists in mobile.

Roger Entner 4m10s

There's a loyalty penalty. The longer you go with the carrier, the more money you spend, and the less happy you are. It's less so in mobile, but you can see it very, very clearly in home Internet. That's a huge opportunity.

Don Kellogg 4m24s

Well, yeah. I mean, exploding bills are a whole other thing, right, when you raise somebody's price on the second year.

Roger Entner 4m30s

Yeah. But when they're with you 10 no. No. No. Exploding bills is, for one or two years.

Roger Entner 4m35s

I'm talking, like, people who are with their carrier for ten years and fifteen years. I'm talking about, like, five years and out. These people are, like, simmering and are getting more and more pissed.

Don Kellogg 4m48s

Well, yes. But, I mean, I guess the point on home Internet is a lot of times there may be one high speed option too. Right? So, mean, I think one of things that we've seen with FWA is FWA prized loose people who didn't have a lot of options prior to that coming in.

Roger Entner 5m1s

Exactly. Exactly. But it's also a really, really important thing, especially the cable guys have painted themselves in a corner where you can't do much or your revenue like tanks. How do you make the people happy you're charging the most when you're mostly dependent on that and when you have, like, attractive new offers that you can't give your existing customers because rerating your base is financial suicide? You're creating a simmering, like, bomb that eventually blows up.

Don Kellogg 5m34s

Right. But getting back to the T Mobile plan, one of things I thought was interesting is that current T Mobile customers are only eligible if they've been there for five years or more. So I think it is getting at kind of this population that you're talking about that isn't necessarily switching as much. Or if you're coming in, you have to bring in two lines two lines. As we said before, the switching pool tends to be more skewed towards younger single line type folks.

Don Kellogg 5m58s

So in some ways, this is trying to kinda get it another another part, and it's not fully rerating the base. I'm a T Mobile customer. I looked at looked at my bill, and this plan actually will save me money, so I probably will rerate to it. That's interesting.

Roger Entner 6m11s

Yeah. But you're on a crappy T Mobile plan.

Don Kellogg 6m13s

I don't know. We'll see.

Roger Entner 6m16s

Well, apparently, one's better. Right? Yeah. Alright. Good.

Don Kellogg 6m20s

Alright. Well, we'll talk to you next week.

Roger Entner 6m21s

Talk to you next week. Thank you.