Sprint quietly launched a 17-day promotion Tuesday that promises free unlimited service for a year and specifically targets Verizon customers.
The offer popped up on the company’s website Tuesday morning without the usual news release to the media, Twitter posts by Sprint executives or traditional advertising campaign.
“It’s a pretty limited targeted pilot that we’re doing. We’re testing a bunch of different concepts here, which is why there was no press release, no tweeting,” Sprint spokesman Dave Tovar said.
AT&T and T-Mobile customers are eligible, too. For any switching subscriber, it amounts to a largely self-service deal.
Consumers have to bring their own devices, unlock those phones from their existing networks, order and install Sprint SIM cards to make those phones work on Sprint’s network, handle all account activities online including activation, and agree to electronic bills and an autopay arrangement for the $1.99 administrative fee, taxes on that fee and any regulatory fees.
Shoppers almost have to find the offer themselves, too.
Sprint plans no advertisements on television, newspapers, billboards, radio or other traditional media outlets. It is using only online ads and social media spots.
“We’re targeting Verizon customers specifically,” Tovar said. “We’re going to feed Verizon customers with digital ads online and through social media networks.”
Why expect all of that from consumers? Because it drastically reduces how much Sprint needs to spend to gain them as customers.
Sprint won’t have to buy a phone to lease to these new subscribers. Employees at stores won’t be involved, so their time is freed up for traditional customers. Sprint won’t have to pay anyone sales commissions on these new customers. And the cost of the digital ads will be tiny compared with a traditional advertising budget.
Tovar said eliminating those normal costs to bring customers in means the math works even for a free year of service.
Normally with a new unlimited subscriber, Sprint would start to break even after 12 to 14 months, with revenues starting to overcome the cost of attracting that customer. Because Sprint will incur little costs under the free unlimited service promotion, Sprint still expects to start to break even in 12 to 14 months assuming users remain and become paying customers after a year, he said.
Sprint will provide a $100 credit that consumers who switch could use to cover any exit costs from their current carrier deal, such as paying off the balance due on a device.
William Ho, an industry analyst with 556 Ventures, said the offer essentially shifts the costs of acquiring a new customer from the device side to the service side. He said Sprint also appears to have limited the offer to newer devices that should work well on Sprint’s network even though they were designed for a rival’s network.
Sprint’s online offer did stir some suspicions that the company might be trying to pad its subscriber counts as the second quarter comes to a close June 30, the same day the limited offer ends.
Analyst Craig Moffett, of MoffettNathanson Research, spotted the online offer early in the day and told clients that there are a lot of consumers “off-contract for whom a year of free service might sound pretty appealing.”
Tovar said subscriber counts in the quarter will be driven by the regular, heavily advertised Unlimited Freedom offer.