Mashable reports that AT&T’s CEO, Ralph De la Vega is considering a pricing strategy that charges heavy users of data (read iPhone and some Blackberry Bold users) a higher price for data usage. Maybe this will surface as a surcharge, or just creating a variable data plan rate. Either way, this feels counter to the very basics of effective customer relationship management.
I can kind of see where what may have been the genesis of this idea: We charge people who talk on their phones more than those who talk less, right? shouldn’t the same apply for data? But, here’s why it’s different:
- If you’re using a lot of data, you’re more than likely to own an expensive smart phone. If you own an expensive smart phone, the more likely that your NEXT phone purchase will be an expensive smart phone and the more likely that purchase is going to come sooner rather than later. As AT&T, you don’t want to lose the revenue from that future purchase.
- If you’re using a lot of data, you’re more than likely already paying for an expensive data plan on top of an expensive voice plan. As AT&T, you don’t want to lose that rich, recurring revenue stream.
- If you’re using a lot of data, you’re more than likely very engaged with social media and you just might be an influencer amongst your social group when it comes to technology adoption. As AT&T, you don’t want socially influential people telling their friends how much they got screwed by you and how they can’t wait to move on to a new carrier
- If you’re using a lot of data, you’re more than likely the kind of customer that handset manufacturers love to try and attract. As AT&T, you don’t want handset manufacturers to bypass you with their latest and greatest handsets because you’ve turned off (or worse yet, outright lost) all of your technology early adopters / heavy users.
Notice that these things aren’t necesarily true of heavy voice users today. Also notice, that this decision may shift lucrative handset sales revenue to the competition, reduce retention rate for ongoing service revenue, create a set of influential detractors for the brand all of which may ultimately affect their supply relationships. Not good.
So, Mr De la Vega, I for one suggest you reconsider. And, while you’re at it… can you please reserve the best discounts and promotions for your existing customers who you want to keep instead of new ones who you’re courting?
Without meaning to disagree with your well taken comment, it did remind me that At&t has apparently (according to newspapers) been suffering from an incredible strain on its networks due to iPhone users’ heavy use of the Internet.
An interesting stat that I read is that iPhones only make up about 20% of all Smartphones but 60% to 70% of mobile Internet usage. I have a Blackberry myself and can easily imagine why this stat might be accurate.
The strain on At&t’s network has apparently been so much that download speeds are apparently slow or even glacial.
So you could say that “putting a tax” on heavy data usage is a customer friendly strategy so that those who most need it will find enough bandwidth to get their jobs done.
Kind of like metered parking.
(which too is annoying though)
With all that in mind, I think it becomes a pretty sophisticated question to decide which path (progressive data fee or not) is the better path for the carrier.
Akin
I took a break from posting over the holidays so am just replying to your comment now.
first, please don’t apologize for disagreeing… understanding and debating others’ points of view is the main reason I started blogging in the first place.
To that end, In your analogy of metered parking, consider the overall model of the parking authority in a most cities. They often offer metered parking targeting customers who occasionally park at a given location for short periods of time, day parking in designated lots for people parking at a given location occasionally but for longer periods of time and monthly parking permits for people that are heavy users of a given parking lot.
Like mobile phone contracts, the per minute (or per MB) charge drops as you purchase a more bulk parking package (daily parking is typically less expensive per hour than meter parking if you stay the whole day and monthly parking is typically less expensive per day than daily parking if you park every day or even every weekday)
AT&T is effectively charging their monthly (high volume) partners more because they park there a lot.
To go a step further though, a parking lot’s profitability doesn’t change based on the type of car that a customer parks there (the phone)