In January, Boost Mobile began offering a flat-fee $50 wireless plan for unlimited minutes, texting, Internet, and push-to-talk. Consumers flocked: the little division of Sprint added almost 700,000 subscribers in Q1, after a net loss of customers just one quarter prior. When Sprint announced Q1 earnings on May 4th, Boost's surge in sales was the only thing stemming its parent's massive losses.
Boost isn't the only company to discover the magic in no-contract, no-fee, flat-rate wireless plans. They're up against stiff competition from MetroPCS, Leap Wireless, Tracfone, Cricket, Virgin, and T-Mobile, which may soon offer a Boost-style $50 unlimited plan to post-paid customers.
"This is a street fight," says Boost President Matt Carter. As in any battle, appearances matter. Boost followed its $50 unlimited launch with a rebranding campaign charged with an inauspicious task: take a youth- and urban-oriented brand with the slogan "Where you at?" and garner it a wider audience. The company settled on its multifarious "Unwrong'd" campaign, which, since March, adorns billboards, buses, and store windows nationwide.
This is the big turnaround Carter, a former athlete, has envisioned. "I love competing," says the Harvard MBA. "You've got to think like a champion."
Carter cut his teeth in marketing for Leap Wireless and Coca-Cola, among others. What did he learn about image and branding at The Real Thing? "Actually, I didn't learn anything about branding. I learned about distribution," he says. "Distribution in wireless has been vastly underrated. The real question is: do we have the right doors at the right locations?"
The quest for distribution dominance sparked another massive undertaking: the company plans to open 50 Boost-branded stores across the country in 2009. They currently have just three, in addition to about 20,000 smaller distribution points countrywide. That deployment will be overseen by VP of Sales Jeff Auman, who was brought in from Sprint in July. Carter himself landed at Boost from Sprint a year ago, after being hired as a clean-up guy who could reduce churn.
But while Carter says that Boost's 450-person team, a mere slice of Sprint's 35,000+ total, has "a lot of latitude" to be creative with their business model, he also says Boost won't be expanding into a something-for-everyone product line. He compares Boost's simple offerings—pay by the minute, by the day, or unlimited monthly—to southern California's In-and-Out Burger. "People are looking for simplicity. We give you that burger, fries, and a Coke. We're not going to appeal to everyone." Though the company doesn't offer smartphones ("We're not there yet"), Carter says that customers who grow out of Boost's offerings are encouraged to upgrade to Sprint post-paid plans.
It's tempting to think that Boost's success is a product of the country's economic woes, but Carter is convinced that its success will be permanent, whether or not recovery is on the horizon. "The economy has been a platform to communicate this plan," he says, "but would people ever go back to paying more for a cell phone? Probably not."
Boost's recent success hints at a larger customer movement away from pricey, contracted post-paid cell plans and towards pre-paid phones, the likes of which are dominant in Europe and Asia. "Prepaid is really the growth engine of the industry," says Carter. "We're trying to get post-paid not to be the default option." To avoid a price-war scenario—"We're not lowering our prices," Carter asserts—Boost will stay competitive by selling better and better phones. It plans on offering its first QWERTY device, the Motorola Clutch (above), this quarter.