Prepaid wireless offers loyalty lessons for streamers
Prepaid cellular and streaming video providers use similar discounting approaches to promote loyalty, but streamers can learn even more from the prepaid space.
Many approaches translate easily from prepaid wireless to streaming video and vice versa.
By offering discounts to customers who prepay for multiple months (or years), both prepaid wireless and streaming video providers incentivized subscribers to stay longer. These providers may amplify the effect by treating this approach as a “membership” with exclusive benefits, as Amazon does with Prime.
Multi-month prepaid plans offer a discount in exchange for longer tenure.
In early June, AT&T announced multi-month deals for its prepaid wireless service. By paying up front for multiple months, customers can earn a volume discount. For example, AT&T’s prepaid 8GB plan costs customers $40/month (with AutoPay) if they choose to pay month-to month. But prepaying for the plan for 3 months shakes out to $33/month, while the 12-month prepay option is $25/mo.
These longer-term prepay options enable customers to save in the long term, but the required upfront payment ($300 for the 12-month plan) could be difficult for many consumers right now, given the high unemployment and economic downturn driven by the COVID-19 crisis.
Some streamers also adopted a volume discount approach to encourage subscriber longevity.
Disney+ ran four waves of pre-launch promotions for Disney fans ahead of the streaming service launch in Nov. 2019. The deals featured various discounts when pre-paying two or three years of the service.
Disney+ had 10M sign-ups at launch, likely bolstered by its pre-order offer strategy, according to Comperemedia data. For Disney+, the pre-order sign-ons will help mitigate (or at least defer) churn, since these subscribers will be customers for a minimum of two years.
Recently, several prepaid wireless providers have started offering discounts based on customer tenure. Other brands, like Fizz Mobile, reward customers with inventive loyalty programs. Streamers could take similar approaches to incentivize subscribers to stick around.
Major players in prepaid wireless are embracing a model that rewards customers for sticking around.
In late June, Verizon announced decreasing rates for its prepaid customers, who will save $5 off their monthly bill after three months service, and an additional $5 after nine months.
The new tagline, “Stay with us, save with us,” was evident on the Verizon prepaid site, as well as in new marketing promotions.
Verizon’s approach looked similar to plans introduced by Boost in 2014, which Boost recently brought back. Upon taking control of Boost Mobile on July 1, Dish resurrected the “$hrink-it!” plan. Customers will receive a $5 discount after three on-time payments, another $5 after six.
Metered consumption models for streaming video could eventually become a reality. Although streamers haven’t attempted this approach yet, if they adopt it in the future, they could refer to the prepaid wireless space for opportunities to reward loyalty tied to data consumption.
Canada’s Fizz Mobile gamified its customer rewards program.
Through Fizz Mobile’s program, customers earn badges and rewards points for achieving various goals, such as referring friends, gifting data to others, and helping answer questions from the Fizz community. Points lead to freebies, such as data upgrades or short-term perks. The longer a customer stays with Fizz, the more rewards they can earn.
Streaming providers might consider a rewards program that takes a gamified approach. Here are a few activities that might be rewarded:
- Customer referrals
- Hosting social watch parties via the platform
- Subscribing for 6, 12, or more consecutive months (as previously outlined)
- Completing in-platform “scavenger hunts,” where customers would have to watch a wide variety of content to identify particular moments, themes, products, etc.
What’s next: Metered consumption
Metered consumption would make streaming video look even more like prepaid wireless; this approach would offer additional loyalty opportunities.
Streaming services haven’t moved in this direction, but it’s an intriguing idea that consumers would pay for service based on how much content they consume. If streaming providers moved to this sort of model, there would be ways to reward customers by giving them bonus upgrades, opening up “unlimited streaming” weekends from time to time, and much more. This approach would also discourage subscribers from sharing their passwords with others.
While this approach would open up opportunities for providers, it might be tough to transition subscribers away from an “all-you-can-eat” model.