US wireless operators are known to offer aggressive promotions to poach subscribers from rivals, usually with enticing service plans. But as subscriber growth stagnates and smartphone upgrade rates slow, carriers are using smartphone promotions as bait to lure consumers into switching carriers and buying more phones.

US wireless carrier promotions 2019

In the period between June 2018 and January 2019, US wireless carriers, both contract and pay-as-you-go, offered 3,389 new smartphone promotions, almost a thousand more compared with the same period last year.

Retailer advertising at big-box stores such as Best Buy, Target and Walmart accounted for one-third of these, with device trade-ins and ibuy-one-get-one-free offers coming in second. Promotional rewards were in the form of financial credits spread out over a period of 18 to 24 months or lowered monthly payments, to encourage customer stickiness.

Who offered most of the promotions?

Verizon towered over all others with more than 850 device promotions. One out of four smartphone offers was at Verizon. The carrier, which has traditionally been slow to react to the market and the competition, has been promoting its updated smartphone portfolio aggressively in response to T-Mobile’s Get Out of the Red campaign targeted specifically to Verizon switchers, which has been running for an entire year now.

AT&T and Sprint offered 574 promotions each, nearly twice the number of T-Mobile’s promotions. Sprint has continued to offer massive device discounts for almost two years now and is simply keeping its foot on the gas until it is safely a part of T-Mobile. T-Mobile and Sprint are awaiting regulatory approval to merge.

Also, most of Sprint’s device offers require a trade-in at the end of 18 months or continued monthly payments at the full, non-promotional price of the device, which helps to offset some these deep discounts.

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By GlobalData

T-Mobile was the surprising laggard in this category with a little over 300 offers – the fewest device promotions among contract carriers. T-Mobile’s lack of device promotions can be attributed to a shift in the carrier’s promotional strategy. Now that the carrier has stabilised and is attracting subscribers by the droves, it has shifted its promotional focus towards customer loyalty and stickiness by offering more service offers with line-port/line-adds and a focus on community (T-Mobile Tuesdays) to retain its customer base.

What carriers need to do

To address switchers and slowing phone upgrade rates, carriers should consider the lower value, single-line customer when designing promotions. Given family plan discounting and that most handset promotions require a new line, the single line customer ready to upgrade is arguably the ripest for switcher poaching.

Carriers should offer more Apple merchandise (AirPods) or services (Apple Music), either in the form of bundles or free/discounted accessories and services to drive new phone sales. These accessories are relatively low cost, tangible items that may drive a new sale faster (and cheaper) than a second free phone.