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AT&T Not Counting On Switchers, Aims For High Value Customers

August 12, 2015 - Written By David Steele

There are many different kinds of customers that cellular carriers can have, based on demographics, monthly spend and usage habits. Carriers can use marketing information in order to bias their advertising towards a certain kind of customer, depending on what they are trying to sell. In a simple sense, if a marketing agency has identified that a significant majority of adults aged between 18 to 25 use a front facing camera on a smartphone to take and share selfies, it may advertise a new selfie-focused smartphone on websites frequented by this age range, in order to get the maximum coverage of its marketing material. With this in mind, AT&T has stated that it does not have a focus on trying to get customers to switch from competitor carriers and instead, the carrier is concentrating on keeping its high-value customers. AT&T has also recently released its guidance notes for both this year and following, showing an improved business outlook following the purchase of DirecTV, the satellite television company.

AT&T has disclosed an increase in customer numbers, up three million for postpaid customers compared with this time last year. Prepaid customers showed a higher increase at four million. By not chasing other carriers’ customers, AT&T has avoided the relatively high cost of acquiring customers – it has not engaged so much in the aggressive price promotions, low prices and relatively high churn of customers who follow the best deals. Instead, AT&T has invested in improving its network and making services easier to use, so as to make life easier for customers. One important metric for this is that calls to AT&T’s customer care number have fallen by over a million a month over the last twelve months. AT&T’s Cricket and GoPhone brands have performed very well in a cut throat and competitive market; from January to the end of June, AT&T gained more prepaid customers than the rest of the industry combined, together with increasing revenues.

Looking to the business and stockmarket metrics, AT&T’s free cash flow is expected to rise from $12 billion for 2015 to over £13 billion for 2016. The company is expecting revenues to grow at a double digit growth rate, which is noticeably quicker than earlier forecasts. It seems that looking after its customers and improving the network has significant benefits for AT&T’s business over the medium to longer term.