Over the past few years we’ve seen dueling headlines about whether it’s a good thing or a bad thing that nearly half of millennials are still on their parents’ mobile subscription. Either “It’s not mooching, it’s saving everyone money,” or “until you leave your family cell phone plan you’re not a real adult.”
Nearly everyone agrees that it’s a way for families to save money. Which can prompt the question, “What’s in it for the mobile carrier?” It turns out that carriers have accepted and even embraced the extended family model. This may be one of those rare cases of a win-win for the family and the provider.
Here are three reasons that today’s mobile carriers don’t mind millennials staying on the family plan.
Churn reduction: Retention is the new acquisition
Families are less likely than individuals to switch carriers. In a saturated mobile market like the US, where nearly every potential customer already has a phone and a plan, loyalty is key to retaining market share. And the fourth person on a plan is “becoming the anchor to keep an account at a carrier.” (Fierce Wireless) The average American household has 2.7 members, meaning operators have to be creative leveraging the social network of their customers to include family members or close friends who are outside the home, or sometimes even out of the country.
Churn rate for individual plans is 10%-20% annually, depending on the carrier. Family plans, with more moving parts, are stickier. With a longer customer lifecycle, mobile operators can get more creative with their marketing and education efforts to increase brand loyalty.
Payment predictability is higher for family plans
Parents of millennials tend to have better credit ratings, and more stable income, which means they’re more likely to pay their bills in full and on time, even if their millennial is traveling, or out of work.
According to a survey by Nerdwallet, parents are volunteering to keep their kids on their plans, and five of the top seven reasons are related to the financial status of their adult children. Family plans also tend to pool risk, meaning one family member can temporarily step up and pay a larger portion of the bill when another family member is laid off or otherwise stressed financially.
AI Marketing presents new options for maximizing annual revenue per user (ARPU) within family plans
While carriers give up potential revenue per user on group plans, sophisticated AI-powered marketing tools have the potential to sift through mountains of data to drive individualized, relevant cross-sell and upsell offerings. Personalized in-app, media and accessory sales can be targeted at individual users, offsetting the loss of plan revenue.
In addition, millennials are even more open than other users to artificial intelligence driving individualized experiences. 59% of millennials are likely to spend more for a service specifically customized to their usage (CSG). With the ability to deliver highly contextual messaging and experiences to individuals on a group plan, carriers with AI marketing capabilities can recoup some or all of the ARPU they lose when kids stay on their parents’ plan rather than opting for an individual plan.
So, if it’s ok with parents, it’s ok with millennials, and it’s ok with the carriers, then hopefully, it’s also ok with writers of future articles about millennials and their phone habits.
About Glenn Pingul
Glenn Pingul is VP of Scientific Marketing Strategies for Amplero, an Artificial Intelligence Marketing (AIM) platform that helps enterprises better connect with their customers. Prior to joining Amplero, he was a co-founder of the online video advertising ad tech company, Mixpo, where he was VP of marketing.
He has an extensive background developing digital marketing, analytics, and loyalty and retention strategies while serving in executive level positions at T-Mobile USA, Nordstrom.com/Inc., AirTouch Wireless (Verizon Wireless), Starbucks.com and The American Express Company.
Headquartered in Seattle, Amplero is an Artificial Intelligence Marketing (AIM) company that enables business-to-consumer (B2C) marketers at global brands to optimize customer lifetime value at a scale that is not humanly possible.
Unlike traditional rules-based marketing automation systems, Amplero’s Artificial Intelligence Marketing Platform leverages machine learning and multi-armed bandit experimentation to dynamically test thousands of permutations to adaptively optimize every customer interaction and maximize customer lifetime value and loyalty.
With Amplero, marketers in competitive, customer-obsessed industries like telecom, banking, gaming and consumer tech are currently seeing measurable lift across key performance indicators—including 1-3% incremental growth in customer topline revenue and 3-5x lift in retention rates.
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