In the digital era, so many complex processes of the past have been simplified. I search for what I want to buy and make it happen in a few clicks. Often, my orders arrive the same day. I receive and pay my bills online. Personalized and targeted online advertisements keep me “well informed” (and overwhelmed!) about other options, and I can easily change how and where I buy what I need from day to day.
But with customer simplicity comes complexity for vendors. How to retain me as a valued customer? How to ensure I don’t choose a different service provider because it’s so easy to do? How to expand revenue, especially for monthly subscriptions?
Many companies' financial goals include subscription-based services and the annual recurring revenue (ARR) associated with them. However, churn is a metric that every CFO watches daily, knowing the impact that customer retention will have on company value. Top of mind is how to create a “sticky” package that will delight the customer and minimize churn.
The sticky benefits of mobile bundles
In the broadband internet and cable industry, streaming services like Netflix and Disney were the beginning of package enrichment. Today, wide availability from various providers combined with direct log-ins unaffiliated with the underlying network provider doesn’t add enough stickiness for the customer.
Interestingly, mobile devices and connectivity continue to be a very sticky offering. Mobile operators learned quickly that bundling new devices with attractive financing was a great strategy to retain customers, and it was good for device manufacturers like Apple and Samsung. Today, that lesson has been learned by many other industries eager to bundle mobile devices and connectivity with their own offerings to increase customer retention rates.
Amazon now offers low-cost mobile services with unlimited talk, text, and data to enhance the value of Amazon Prime. Is this because there is a high margin to be made with its partnership with Dish? No, not at all. The value to Amazon Prime is customer retention, which is why Amazon Prime offers a lifetime price of $25 per month for this mobile connectivity — but only if you are an active Amazon Prime subscriber. Nova Energy in New Zealand uses the same strategy in a different industry. It bundles mobile services with monthly electricity and utilities, unifying them into a single monthly bill.
Cable operators lead the race
Cable operators in the USA and Canada are now eagerly jumping into the game, becoming MVNOs with direct partnerships with Tier 1 MNOs, including T-Mobile, AT&T, Verizon, and Bell Canada. Or, in some cases, working through MVNEs to activate and deliver mobile services. The bundling of broadband internet services, cable TV, mobile connectivity, plus popular streaming services is driving a significant revenue surge for the cable industry, according to MoffettNathanson analyst Craig Moffett. Light Reading reports that U.S. cable operators snagged about three of every four post-paid mobile net subscriber additions in Q1 of 2024 with a continued advantage over AT&T, Verizon, and T-Mobile for fixed/wireless convergence.
As consumers, we want to get what we need, have it delivered quickly, and minimize the complexity of payments, especially these days when keeping up with all our subscriptions can be a challenge. With the direct ownership of comprehensive cable/broadband infrastructure, existing relationships with a wide variety of popular streaming services and gaming applications, and now with the addition of mobile connectivity services as an MVNO, the cable industry may become the winner in the race to attract and retain customers with a “Super Bundle” strategy.
With its potential for revenue growth and low churn metrics, the strategy is poised to delight the financial markets with ARR growth. For me, one bill delivered through an intuitive and customer-experience-centric digital platform will keep me smiling.
By Joy King, VP of GTM Strategy, Optiva
Joy leads Optiva’s GTM strategy. She has three decades of software industry experience. Previously, she led product & GTM Strategy, including product management & marketing, for Vertica, a high-performance unified analytics platform leveraged by the telecom industry. Before Vertica, Joy led telecom industry marketing for HP and HPE. Her experience has created a passion for what’s possible, and she’s determined to make it happen.