For 2016, Verizon Wireless are pursuing the quality customers. They are largely abandoning the prepay market and instead concentrating on those customers who are able to pay bigger bills in exchange for a better quality of network and service, at least going by Verizon’s ideals. This strategy is nothing new and shows Verizon’s maturity in the smartphone market: the business wants steady, reliable and loyal customers so that it is able to deliver regular cashflow and profits for its stakeholders (or shareholders). And whilst there is nothing wrong with this method of business, it can alienate those customers who have what economists call “price sensitivity,” in other words, those customers who place more emphasis on price than other customers.
In the last few years, all four of America’s national carriers (AT&T, Sprint, T-Mobile USA and Verizon) have been increasingly vocal on Twitter, calling out the other networks and their claims, network download speeds, prices and similar. It’s been a fiercely competitive markets, too, with different networks offering various deals and incentives to encourage customers to switch – but each of the four carriers operates in a slightly different way. For Verizon, it appears that this strategy has taken a new turn as yesterday the business announced a number of changes to contracts including increasing the price and data allowance with each tariff level. The business also added the option to allow customers to throttle their data allowance rather than cause overuse charges when a data allowance is reached (and this change is small but significant). However, the media and Verizon’s competitors have jumped on the chance to complain about Verizon Wireless’ price charges.
The subject of today’s article is Sprint’s Chief Executive Officer, Marcelo Claure, Tweeting an amusing comic strip entitled “Historically Bad Decisions,” which you can see below. It shows a couple picking Betamax over VHS, a trojan horse being welcomed into Troy, another couple sneaking onto the Titanic, the Beatles being turned down and a customer deciding to switch to Verizon despite the data plan costing twice as much as Sprint’s offering. Now as smartphone customers will understand, there is much more to determining a good cellular plan than price but providing one gets usable service with either plan, it is difficult to argue with a half price data plan. Later on, Marcelo tweeted about Verizon’s three pronged plan, stating: “Step1: Raise prices, Step2: Tell them you aren’t raising prices, Step3: Tell them to be thankful.” Shots fired, perhaps – Verizon and Sprint are at different points of the business model, but nevertheless it’ll be interesting to see how this one pans out.