Sunday, December 10, 2006

Not Great for ARPU, Real Helpful for Churn...

Family plans have been really helpful to mobile service providers as a way of attracting more teen users, the last major customer demographic. And though family plans aren't great for average revenue per user metrics, they are quite effective at preventing churn.

Once teens sign up as part of a family plan, they are virtually committed and out of commission as a prospective new customer—often until they go to college or beyond. Only 12 percent of teens on family plans have switched service providers since they first got their mobile phones. As it turns out, hooking teens on a mobile provider is much more effective than getting a customer for their first new car, in hopes they will stick with the brand as they age.

The ARPU of a mobile user that is not on a family plan is $63.27, in comparison to the ARPU of $45.27 per person on a family plan, Yankee Group researchers note. Of course, these are "on average" figures. Many of us have teens using plans that are far in excess of these averages. At least 100 percent to 150 percent higher, in fact.

According to the Yankee Group, 81 percent of teens on post-paid service plans are on a family plan, up from 75 percent in 2005 and 54 percent in 2004. Some 70 percent of teens are on postpaid plans, so 57 percent of all teen subscribers are on a family plan.

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