Wireless carriers' family calling plans are increasingly popular with customers; pricing is an important factor.
Posted Apr 3, 2006
A report by Harris Interactive sees wireless carriers' best success in attracting and retaining customers with family calling plans, which have become increasingly popular over the past few years. "Hot Issues Facing the Industry," shows that two in five (41 percent) of U.S. adult mobile phone users have a family plan, and 97 percent of these consumers say they never had a family member leave their plan. Even more subscribers could sign up as one-third of mobile phone users who are not currently in a family plan say they will consider one when their contracts expire.
"Wireless consumers clearly love family plans, because they deliver great value," says Joe Porus, vice president and chief architect of the technology research practice at Harris. "Wireless service providers offer such plans to build subscriber loyalty and reduce churn. However, this might not prove a winning strategy for providers in the long term. When contracts near expiration, consumers shop for the best deal, and if a better family plan presents itself the entire family will jump to the new provider. So in the long run family plans could contribute to lower margins and have little impact on churn."
The survey shows that about three-quarters (71 percent) of family plans primarily consist of two members, spouses or partners, but the network of family plan users extends far beyond couples. Other members include parents (19 percent); adult children ages 18 and over (18 percent); and children ages 10 to 15 (10 percent).
According to the survey, there is a mix of factors that impacts a purchasing decision, but for those in a family plan, coverage/quality of service (32 percent) is almost as important as the price/monthly fee (41 percent). Other factors like the available phones (14 percent) and customer service (13 percent) play a slightly smaller role.
"These plans are designed to attract and keep more customers," says Jeff Kagan, an independent telecommunications analyst. "Carriers know that high churn rates have been rampant over the last 15 to 20 years. Carriers want a stable customer base. With a single consumer, if someone decides to change a plan, it affects only one person. With the family plan, multiple people would need to switch." Changing providers becomes much more cumbersome then, hence the 97 percent plan-retention level cited in the report.
However, according to Kagan, those retention numbers could suffer when wireless carriers start joining forces with cable and satellite providers to offer customers subscription packages that offer broadband for Internet, television and wireless and landline communications. The combined value of these so-called triple-play packages would tend to outweigh that of family plans.
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