Retention Up In the Air For AT&T iPhones

By Sanya Weathers

Officially the retention series is over, but now I’m trained to think about retention on Wednesday. And it just so happens that we’re about to watch the most fascinating experiment in retention play out… AT&T vs Verizon for the soul of iPhone users!

Retention via exclusive contract does not count. When you’re the only game in town, you cannot point to your own sales, community, marketing, customer service, or cleverness as evidence of your cleverness. What AT&T has accomplished since the launch of the iPhone is totally meaningless (and yes, I’m aware that all their network updates in order to meet demand were expensive – but those updates didn’t sell a single phone). The Apple fanatics were going to get this phone if they had to use long pieces of string to connect with each other.

Now we’re going to see what really leads to greater retention. Will it be better networks in urban areas, or wider coverage nationwide? Will it be service? Will it be calling plan flexibility?

There are some things we can be sure of, drawing on our experience with games.

–    Perception will play a huge role. See above – coverage, service, plan options. The last one is the only thing you can quantify without a lot of qualifiers. The other things depend on the customer’s usage, location, and needs. Whoever wins the perception war will nab the customers.

–    The grass is ALWAYS greener in the new field. AT&T is going to lose a raft of people right away, people who have felt unfairly restricted by having no choice in carrier. Those people are going to storm across the fence to what they hope is greener grass, without stopping to think about the equally restrictive contract they’ll have to sign. Or stopping to think about anything, really. If AT&T spends ten minutes worrying about those users, AT&T is wasting time and money.

–    Price doesn’t matter. The fact that Verizon is going to be more expensive is going to be the least relevant factor in the whole debate. As with any product that relies on a “cool factor” and social approval/belonging, it doesn’t matter if one vendor has a lower price. What matters is the value the consumer thinks he’s getting for the money that he spends.

What would I suggest for the team playing defense here (or any other company facing a competitive challenge in their niche)?

–    Leave the light on for returnees. Remember that flood of people who are going to run to investigate the new but not really greener field? Many will come stampeding back if you don’t make it painful for them. Make restarting an account easy. Make retrieving old user information easy. Do not slap returnees with fees of any kind. This is your one shot to change a fickle user into a fan.

–    Don’t tout your price. Tout what your users get for the price you charge.

–    Highlight your differences. If customers think the difference between you and your competitor is so miniscule that the customer might as well flip a coin, you’re going to lose 50% of the time. What makes you different? Give people a reason to not flip that coin. (And if nothing about you is different from a competitor… get started creating some differences, or you deserve to lose.)