Sprint Nextel's (NYSE:S) Boost Mobile prepaid brand is planning to reward loyal customers (and help decrease its churn) by chopping money off their bill.
The carrier said that for every six months Boost customers make on-time payments, it will shave $5 off their monthly bill. Thus, customers on Boost's $50 monthly prepaid unlimited plan could wind up paying $35 per month after 18 months, and customers on Boost's $60 monthly unlimited BlackBerry plan--using devices from Research In Motion (NASDAQ:RIMM)--could see their bill drop from $60 to $45 per month.
Bob Stohrer, Sprint's prepaid marketing chief, told Bloomberg that customers who cut down their bills through the plan--which is called "Monthly Unlimited with Shrinkage"--will stay at that pricing indefinitely. The move likely is geared to improve churn; Sprint reported prepaid churn of 5.61 percent in the second quarter.
Sprint, though, noted the promotion also is intended to raise Boost's brand presence. The carrier currently operates a panoply of prepaid brands, including Virgin Mobile's Beyond Talk and PayLo brands and its Common Cents Mobile pay-per-minute brand.
"The idea of lowering their [Boost subscribers'] bills ($5/month for every six months of on-time payments up to $15/month) may very well resonate with prepaid customers, because the on-time payments become a routine for them," wrote Current Analysis' Maidy Whitesell. "Many customers may opt to sign up for the automatic payment to avoid missing the payment due date. As a result, this will effectively increase the company's cash flow and overall revenue. However, it remains to be seen if the new plans will make the huge impact that was created by the $50 Monthly Unlimited plan in 2009."
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