Pre-Paid Wireless: Trends
Sales of prepaid wireless service appear to be increasing following several years of decline, according to industry experts. Additionally, prepaid wireless service providers are evolving their plan offerings to match postpaid plans, and loyalty rewards are emerging from multiple providers.
1. COVID-19 Could Drive Consumers Back to Prepaid Options
- Prior to the outbreak of COVID-19, there was a steady decline in the number of new customers signing up for prepaid plans, as shown in the graph below.
- Following COVID-19’s spread, however, this trend is believed to be reversing based on industry experts’ opinion.
- Phil Kendall, executive director for Strategy Analytics, said post-paid subscribers are currently seeking cheaper options.
- Susan Welsh de Grimaldo of Strategy Analytics demonstrates that the number of consumers looking to upgrade to costlier plans has decreased from 25 percent to 20 percent from April to May.
- Jeff Moore of Wave7 Research said that the return to prepaid sales will happen “without question” for at least the short-term.
- Cricket Wireless and Metro by T-Mobile are lower cost prepaid wireless brands that customers are likely to turn toward if saving money is their primary motivation, per Mobile World Live US Editor Diana Goovaerts.
2. Prepaid Wireless Providers are Evolving to Match Postpaid Features
- In an effort to keep customers on prepaid plans, attract new customers from postpaid plans, and attract new customers to the wireless market altogether, prepaid wireless providers are evolving their plans and features to be more similar to what costlier prepaid plans offer.
- Verizon Wireless is the leading example in this trend as it now offers “prepaid family plans, unlimited plans, and support for BYOD” [Bring Your Own Device].
- These offerings are all new to Verizon within the past few years, signifying how recently the need for evolution in prepaid plans to stay competitive in the market.
3. Loyalty-Based Rewards Emerge for Prepaid Customers
- Wireless service providers are seeking additional methods of creating incentives for customers to stay with or adopt their prepaid wireless plans with newly-launched loyalty programs.
- In June, Verizon launched new prepaid plans that become less expensive over time. The plans lower by $5 after the first three months and $10 after nine months, in addition to up to $15 less for signing up with Auto Pay.
- AT&T is offering discounts to customers who prepay in larger amounts to commit to a longer relationship with the company. Rather than paying $40 a month for 8 GB, for example, customers can pay an annual cost that works out to $25 a month.
Pre-Paid Wireless Carriers Marketing their products in Non-financial Stores
Two examples of prepaid wireless carriers marketing their products in non-financial stores are the campaigns of AT&T and Verizon at Walmart.
1. AT&T and Walmart
- In 2019, AT&T partnered with Walmart to promote an exclusive prepaid plan.
- The offer was advertised in-store with their own displays and large posters.
- The messaging focused on the benefits of the offer such as high-speed data, a mobile hotspot, calls and texts to Mexico and Canada, no annual contract, and no credit check.
- It also emphasized which plan is exclusively available at Walmart.
- The main tactic was to offer Walmart’s customers something exclusive. In this case, after fulfilling certain conditions, they could get 25 GB of high-speed data at the price of 8 GB.
- The campaign only lasted for the better part of July 2019. The associated visuals, both in-store and online, didn’t include any additional messaging, apart from the details of the offer and the information that it’s exclusive at Walmart.
2. Verizon and Walmart
- In October 2016, Verizon partnered with Walmart to create exclusive prepaid offers.
- For each prepaid plan purchased in Walmart, customers would get between one and two GB of bonus data (the amount has changed several times).
- The main marketing tactic is to provide customers with an exclusive deal, with each ad including information that the offer is only valid at Walmart. Additionally, the ads emphasize Verizon’s reputation and the quality of its services, as well as list all the available plans.
- Ads include taglines such as “America’s best network. No annual contract.” and “Not just prepaid, Verizon prepaid.”
- Additionally, there are also in-store ads that talk about specific updates to the offers such as the one that says “Verizon Prepaid. Now with Always-On Data. Stay connected even after you have used your high-speed data.”
- Some ads also include details about the offer, including information like “Carry over unused data” or “Unlimited talk to Mexico and Canada.”
- According to a review by Smartphone Matters, the offers were advertised both in the wireless prepaid sections at Walmart and before the stores.
Additional Findings — Tracfone’s Total Wireless
- While we didn’t find enough information to describe Tracfone’s Total Wireless promotion at either Walmart, there is one image available.
- In 2017, the Total Wireless plan offered bonus data for Walmart shoppers, though it was only available in certain stores.
Marketing Efforts by Pre-paid Wireless Carriers in Financial Stores
Verizon Prepaid and Boost Mobile’s logos are at the front of Detroit Check Cashing. Boost Mobile is also featured on the billboard by Easy Money Cash Center. However, there are no details on their in-store and on-premise advertising in financial services stores.
- Detroit Check Cashing store’s front includes large logos of Verizon Prepaid and Boost Mobile.
- Boost Mobile was included on Easy Money Cash Center’s billboard.
- While the above image doesn’t clearly show if it is located just outside the store, a larger photo suggests so.
- Most of the check cashing and payday loan stores’ websites don’t include detailed information on mobile top-up. However, Payomatic lists available carriers of prepaid mobile services on a dedicated page of its website. Logos are included.
- While ACE Cash Express doesn’t include carriers’ logos, it mentions several of them on the “mobile top-up” page of its website, including Verizon, AT&T, Boost Mobile, and T-Mobile.
- Similarly, Check Into Cash lists several carriers on its website.
- While not fully relevant to in-store marketing, one well-described example of marketing efforts by a prepaid wireless carrier is an effort by Verizon to promote its Visible and Verizon Prepaid brands.
- Another example is Boost Mobile’s campaign in partnership with Pitbull. An associated spot can be seen here.
Pre-Paid Wireless: Customer Journey
Research findings suggest that prepaid wireless shoppers in the United States are discerning consumers who want value for their money. Coverage, cost, data speed, customer service, and call, text, and data capabilities appear to be important purchase considerations for them. Prepaid wireless shoppers typically make the purchase at the retail store, but they are increasingly accessing online channels such as the carrier’s website for research purposes.
- Consumers who purchase a prepaid wireless service are motivated to do so because of their need for a cost-effective wireless service. They want a great service, but they do not want to pay more than what is necessary.
- Based on how fast-growing prepaid wireless service provider Cricket Wireless describes its customers, prepaid wireless customers are “smart, savvy, and discerning budgeters” who want to take care of their families and wallets simultaneously.
- The prepaid wireless option was initially offered as a means for individuals with no credit or poor credit to gain access to a wireless phone. Low-income and moderate-income consumers are typically the ones who purchase prepaid wireless services, as they are more price-sensitive than higher-income consumers.
- One article says there are several reasons one might choose a prepaid wireless service. Among these reasons are the fact that purchasing a prepaid wireless plan does not require a credit check and a contract, the fact that a prepaid wireless plan offers flexibility, and the fact that a prepaid plan can now support more than one line.
Purchase Considerations and Product Preferences
- Prepaid wireless shoppers have several purchase considerations when choosing a prepaid wireless provider. Their most important considerations are call quality (24%), company image (19%), service cost (17%), account management (15%), initial activation (11%), service plan options (8%), and customer service (6%).
- Prepaid wireless consumers are increasingly giving more weight to data payload or the apps that use data than to data itself because of the over-the-top (OTT) applications that are emerging.
- Price matters more to prepaid wireless customers than to postpaid wireless customers.
- IDC has published a report on the behavior and preferences of prepaid wireless customers, but unfortunately, the report is paywalled.
- Given what product experts consider are the best prepaid wireless plans, prepaid wireless shoppers are likely to go for prepaid wireless plans that offer the following features at the lowest possible price: wide coverage, unlimited data, talk, and text, standard-definition video streaming, high-speed data, and mobile hotspot and global texting capabilities.
Research and Purchase Channels
- Prepaid wireless shoppers appear to have three purchase channels to choose from. They can either call a sales representative, visit a retail store, or visit a website. These are the channels that J.D. Power consider when assessing the purchase experience of prepaid or non-contract wireless customers.
- The purchase experience that Cricket Wireless provides seems to be the kind of purchase experience that prepaid wireless shoppers want. Prepaid wireless customers have consistently given Cricket Wireless high ratings in J.D. Power’s purchase experience studies. According to J.D. Power, Cricket Wireless is the prepaid wireless service provider that has provided the best purchase experience in the past two years.
- Most prepaid wireless shoppers make their prepaid wireless service purchases at retail stores. One study reports that of wireless purchases, around 75% take place at company-branded stores, 10% to 15% take place at big box retailers, and another 10% to 15% take place online or via calls.
- Though they typically make their purchase at retail stores, wireless customers are “increasingly turning to online channels as a first point of contact.” According to J.D. Power, 20% of wireless customers who made a purchase via a call had started their research and shopping process on the carrier’s website.
- Prepaid wireless customers are known to switch plans or drop their service more frequently than postpaid wireless customers.
- When it comes to loyalty, postpaid customers tend to be more loyal than prepaid customers. Customer churn has long plagued the prepaid wireless industry.
- Not much can be found on the pain points of prepaid wireless shoppers, but J.D. Power’s latest purchase experience study shows that as far as purchase experience is concerned, the prepaid full-service carrier that customers are least satisfied with is Virgin Mobile, while the prepaid value carrier that customers are least satisfied with is TracFone.
- These carriers were rated using the following factors: cost of service, offerings and promotions, phone sales representative, store sales representative, store facility, and website.
- It seems customers are dissatisfied with carriers whose sales representatives did not take the time to explain their plans’ network coverage.
To gain insights into the customer journey of prepaid wireless shoppers, we looked into what prepaid wireless providers have shared about their customers or shoppers, including how they have described their customers or shoppers and what these customers or shoppers’ preferences are. We looked for surveys of prepaid wireless customers as well.