Sprint (NYSE:S) wants new customers so badly it's willing to offer them dramatically better deals than the ones extended to its existing subscribers.
The company has announced a plan where it will offer users who switch from Verizon (NYSE:VZ) and AT&T (NYSE:T) unlimited calling and text coupled with the same amount of data their previous plan offered. Sprint will also pay up to $350 per line in early termination fees.
Sprint CEO Marcelo Claure said in a press release:
It's as simple as this: Bring Sprint your Verizon or AT&T bill along with your phone and we'll cut your rate plan in half. That's a 50% savings on your rate plan every month. And this great deal is not just a promotion. This will be the customer's ongoing price.
That strategy may lure in Verizon and AT&T customers, but it's not likely to win the company any points with existing customers, who will continue to pay the same rate with no guarantee their price won't increase going forward.
While cable and phone companies have long used introductory teaser rates to lure in new customers, those deals eventually expire. In these situations, a customer may pay a lower price for the first 12 months of a 24-month contract, but once the promo period ends, they pay the standard rate.
The major difference with Sprint's "Cut Your Bill In Half" offer is the promotional rate does not expire. The half-off price is the standard rate the new customer will pay going forward.
In some ways, the company is begging its 50 million or so customers to leave for another carrier if only so they can be wooed back by Sprint down the road.
Sprint needs to do something
Since Claure became CEO in August, he has attempted to invigorate the moribund wireless carrier. While the new boss lacks the pro-wrestler-style showmanship of T-Mobile CEO John Legere, he has made bold moves. This included killing Sprint's confusing Framily plan, offering the iPhone for Life deal on Apple's latest phone, and introducing the aggressively priced $100 Family Share Pack (another offer that excluded existing customers).
These efforts have not resulted in the kind of massive turnaround that Legere has delivered for T-Mobile, but there are early signs that being aggressive and going after new customers might work.
Sprint reported a $192 million loss in the second quarter, down from a $398 million loss in the same period last year. The company also saw postpaid phone gross additions grow by 37% month-over-month in September and, perhaps most encouragingly, they increased year-over-year for the first time in 2014.
Claure needs to reward his loyal customers
The half-off offer represents a tremendous deal for AT&T and Verizon customers. It should also keep some unhappy users of the largest two wireless providers from joining T-Mobile, which might help Sprint maintain its position as the No. 3 carrier.
Still, it's hard to predict how Sprint's existing user base will react to new customers getting a permanently better deal. Some of them -- perhaps many of them -- will realize that to get the best offerings from Sprint, you need to be a customer of another wireless carrier.
Claure should be saluted for taking unprecedented steps to turn his company's fortunes around by stealing customers from his much larger rivals. Now, however, it may be time for him to turn his focus on the people who have stuck with Sprint through its struggles and to reward them for staying on board.