With more than 4 million customers, Boost now reigns as the undisputed leader in the prepay category. In achieving this milestone, Carter continues to demonstrate why he is one of Sprintâ€™s most powerful strategic weapons in the telecom industry.
Fighting Stigmas and Stiff Competition
Sprint Nextel is currently the third largest wireless provider with 49.1 million total subscribers and generates 83% of their business in that category. It trails only AT&T and Verizonâ€“â€“the other two major playersâ€“â€“in subscribers. Although wireless capabilities have grown as an intrinsic part of social and professional life, the big three had to deal with quite a bit of static in the estimated $164.6 billion industry this year. William Power, senior industry analyst and CFA for Richard W. Baird & Co., predicts Sprintâ€™s revenues will decline 7.8% in 2009. â€śGrowth is clearly decelerating,â€ť explains Power. â€śAnd I think the biggest driver is that we are at roughly 90% penetration in this country. While there are more and more people carrying multiple devices, it has become more difficult [to grow at the rate] this industry has in the past.â€ť
The prepaid segment however, presented an opportunity for Boost. To make inroads in this sector, Carter first compiled data, concentrating on the needsâ€“â€“and frustrationsâ€“â€“of wireless consumers. The prepay modelâ€™s greatest advantage: No contracts. Since such agreements didnâ€™t require credit checks, however, there was a negative perception that prepay customers couldnâ€™t qualify for contracted services. Carter says, â€śTo overcome that you have to create a value proposition [for consumers] across all socioeconomic lines to consider that this is a smarter choice.â€ť He also focused on status and functionality by upgrading handset selections.
Other factors included building trust with consumers and developing an affordable pricing strategy. â€śIf you were to ask most people to rank the quality of their experience with [the telecom] industry, it ranks right up there among the worst,â€ť he explains. â€śThey find it riddled with deception. Your wireless bill is the one bill you open with trepidation each month. You never know what itâ€™s going to be. You thought you were paying $49.99 and it ends up being $60. But our plan is 50 bucks. Itâ€™s not $50 dollars plus all these other fees, so that became a differentiation for us. It gave us an opportunity to say, letâ€™s change the paradigm. So we gave you a predictable price point.â€ť
Boost also went a step further by extending national coverage while its biggest competitors offered local service. â€śThe two companies that have pioneered this space in a lot of respects were Metro PCS and Leap Wireless,â€ť explains Power. â€śBoth of those companies have enjoyed very good subscriber growth over the past several years. Boost re-entered the space at the beginning of this year with its Boost Unlimited product and I think what has resonated is that it is a nice value proposition, particularly in tough economic times.â€ť
Associating the brand with value helped diminish negative impressions of prepaid products. â€śToday people actually feel that this is a smart choice as opposed to a default choice,â€ť maintains Carter.