What’s $2 More per Month?

The following post was originally published in September 2013

Beyond our banking partner, the phone company is probably the most important business relationship many of us have.  Just what would we do without our wireless internet access or mobile phone service, anyway? 

Have you ever stopped to really think about how much money you spend each month on home phone, mobile phone, and internet services?  Now, the telcos are looking at Revenue Enhancement in a big way. As price competition squeezes margins, many telcos are looking at new ways to add revenue to the monthly bill that you and I receive (full disclosure:  Stratum Five is working in this market vertical).  Recently, I was sent a direct mail piece from my mobility provider, inviting me to purchase one of several items – each of which could be paid for conveniently in very low monthly charges embedded into my phone bill.  The brilliance of this idea was less the fact that my phone bill could become a ‘charge account’, but more that the phone company created a way for its customers to ‘access’ a high fixed-price item for less than $2.00 per month.  Higher ticket items are billed for more months, while lower priced products may only be billed for 12 months or less.  Whatever the duration, the telco found a way to drive incremental revenue and to create further ‘stickiness’ with its customers, making switching carriers that much more difficult.

The Bottom Line

While cross-selling is often regarded as an incremental money-maker, there is strong evidence to suggest that service providers should look to new, ancillary offerings solely as a method to build customer loyalty.  Businesses might adopt the ‘loss leader’ mentality in retail and ask: “what ‘other’ services might our customers value, if we can bring it to them more conveniently or less expensively than any other provider?”  For help on how to build more profitable relationships, contact us today.