Boost Mobile introduces 'Shrinkage' customer loyalty program

Boost Mobile is aiming to shake up the prepaid market again, this time with a customer loyalty program that can drop a customer’s bill from $50 per month to $35 over an 18-month period. BlackBerry users can ultimately reduce their monthly unlimited bill from $60 per month to $45.The Shrinkage program is valid through the lifetime of the customer’s relationship with Boost.
The Sprint Nextel Corp. (S) business unit said the pricing initiative is designed to reward customers who pay their bills on time, and keep them on the Boost program, thereby reducing churn, said Andre Smith, Boost Mobile business director. Each time a customer pays his or her bill on time, they accrue a Boost credit. After six credits are accrued, the end user’s bill drops by $5. Credits do not have to be accrued in consecutive months so there are no penalties with the program, Smith said. “This will differentiate us in the no-contract space, which is fiercely competitive,” Smith said.
More than half of Boost customers experience breaks in their service plans over a six-month period, but turn their service back on within 10 days, Smith said. People don’t pay on time for three reasons: they forget, they don’t have the money or paying their phone bill is not a priority for them in their monthly expenses. Boost recently introduced a daily pay rate for those who don’t have the money for a monthly plan. The Shrinkage program is designed to help the other two groups. Boost also is planning an e-mail campaign and text messaging program to remind customers who want to join the program when their monthly on-time payment date is approaching.
“At a time when consumers are looking for ways to save their hard-earned money, we’re rewarding Boost customers by helping them shrink their monthly payments,” said Bob Stohrer, VP of marketing, in a prepared statement. “Throughout the year, we’ve enhanced our device lineup with Android and Blackberry devices and added more benefits to our Monthly Plan. Now, we’re introducing even more value, all with no annual contracts. Shrinkage is yet another demonstration of Boost’s commitment to ‘unwronging’ wireless.”
Boost’s Unlimited Monthly Plan includes unlimited nationwide talk, text, Web, e-mail, IM and 411 for $50. The brand was the first to introduce unlimited service for $50 per month in the no-contract space, a move that was quickly replicated throughout the industry. Since then, some no-contract plans are as low as $35.
Maidy Whitesell, wireless voice services analyst at Current Analysis Inc., noted the new offering should help Boost address its churn issues with the service reporting churn rates that have been in excess of 6% compared with less than 5% for many of its rivals. In addition the plan could also drive some Boost Mobile customers to sign up for its auto-pay option that could help stabilize Boost Mobile’s cash flow and revenues.
The no-contract space has become increasingly crowded, as it becomes more popular in the United States. AT&T Mobility recently changed its prepaid pricing and national retailer Wal-Mart Stores Inc. (WMT) has started its own branded offering, as well as reselling most of the other major brands’ prepaid services.
Boost also dropped the price of International Connect by 50% to $5 a month for new and existing subscribers who add this feature o their monthly plans by Dec. 31.