Sprint Nextel (NYSE:S) is reviving a $400 credit for families who switch to Sprint from another carrier and sign up for its Simply Everything Family or Everything Data Family plans.
While not exactly novel--Sprint launched a similar offer in August 2012--the amount of the credit is larger than what most carriers offer for switching over. The credit can be used to purchase new phones when customers switch three to five lines over to Sprint's plans. The offer ends Feb. 28.
Sprint's offer, focused on luring customers to its unlimited smartphone data plans, comes shortly after U.S. Cellular (NYSE:USM) launched a similar credit offer in an attempt to lure more customers to its service. U.S. Cellular said it will give new customers a prepaid debit card loaded with $300 if they switch two lines of service from their current carrier to U.S. Cellular and activate a smartphone.
Industry analyst William Ho said there are four main drivers for the promotions. One is that as postpaid phone penetration rises, one of the few ways to grow is to steal customers from other carriers. Ho also noted that both Sprint and U.S. Cellular have been losing postpaid customers.
"Sprint's iDEN customer defections have been a thorn in its side for 3+ years," he wrote. "U.S. Cellular as a regional carrier has not been effectively competing against Tier 1 competitors despite upgrading to LTE and upgrading its device portfolio."
Ho also noted that families churn less and tend to produce high average revenue per user. "The promotion grabs 3-5 subscribers and the carrier locks them in for two years.," he wrote. "The promotions specifically push customers into smartphones and data plans. Data is the monetary upsell and the sticky [value proposition]." Ho also noted that these efforts, at the end of the day, are about beefing up gross additions at Sprint and U.S. Cellular.
For more:
- see this Sprint post
- see this post from Bill Ho
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