Recently I was thinking about the prepaid wireless market, comparing carriers’ strategies and how consumers are reacting to marketing. The prepaid wireless market is especially competitive – since consumers have so much control. Once their prepaid minutes are used up, the customer can buy more, or they can use a different carrier or phone. Worse, some customers may have multiple prepaid plans with carriers and switch back and forth between them. Prepaid wireless service is definitely a tough market to stay connected with your customers.
TracFone, a leading prepaid wireless carrier with over 9 million active subscribers, has been known for its high customer retention rates among prepaid carriers. I wanted to investigate TracFone’s strategy for keeping retention rates high, so I looked at its online customers’ consideration of competitors’ websites using a new Compete product called Behavior Match. Behavior Match measures overlap of a targeted segment (TracFone online customers) with domains (competitor websites) against the overlap of the general Internet browsing population (IBP) to the same sites. An index over 100 means that the targeted segment frequents the given site more than the average consumer does.
With a Composition Index of 333, Virgin Mobile leads the pack in terms of TracFone online customers’ consideration. TracFone customers are over 3X more likely to visit Virgin Mobile’s website than the average American Internet user is likely to. The inclusion of several online agent sites could mean that TracFone customers are interested in comparison shopping or that they need extra support in making their decisions. The exclusion of Big 4 sites (vzwshop.com being the lone exception) is also interesting in that it signals that prepaid and regional carriers better suit TracFone customers’ needs.
Since Virgin Mobile is the most considered competitor, I took a deeper look into the interaction between TracFone online customers and Virgin Mobile consideration.
This chart shows the percentage of TracFone’s online customer base that is considering Virgin Mobile. Since Q3 2006 TracFone online customers’ consideration of VMU has more than doubled. There is a distinct upward trend here and it indicates that TracFone is increasingly exposed to VMU. To be fair, not all of the TracFone customers will make the switch to VMU, but the steady growth in consideration indicates that more of them will.
This is an alarming trend. Acting on this type of insight would require targeting TracFone customers that are considering Virgin Mobile specifically, which can be tricky. Obviously TracFone can’t advertise on Virgin Mobile’s website, and advertising on contextual sites (like tech review sites) can be expensive. In this example we evaluated TracFone against competitive sites, but Behavior Match can be used to index over one million sites on the web, so it could be used to target segments of consumers in almost endless ways. (Check out this automotive-focused blog post for a different perspective.) TracFone could find intentionally non-contextual sites that these specific customers visit in high concentration, and advertise retention programs to them there.
In the already hyper-competitive prepaid wireless market, every advantage helps. It will be interesting to see if TracFone can reverse this trend in the coming quarter, year and beyond.