Verizon is quietly scaling back a perk it includes in its wireless and internet plans as it works to retain price-conscious customers.
The carrier has been struggling with customer retention in recent years amid several price increases.
On an earnings call in January, Verizon CEO Dan Schulman said that the company lost roughly 2.25 million wireless customers over the past three years, citing price hikes without added value, friction in the customer experience, price perception and elevated competition as the top four reasons behind the losses.
In an effort to slow down customer losses last year, Verizon quietly rolled out billing credits to some customers impacted by price increases. It also launched generous device promotions to attract new customers and retain existing ones.
Verizon removes its three-year price lock guarantee from myPlan
Another move to improve customer retention was the launch of its three-year price lock guarantee in April last year, which was added to several of its wireless and internet plans. However, Verizon has quietly axed this perk from its myPlan offerings.
On the carrier’s website, the three-year price lock guarantee, which doesn’t apply to taxes, fees and perks, is no longer mentioned anywhere in myPlan offering descriptions. However, its home internet options still contain the perk.
Verizon’s artificial intelligence chatbot revealed that the pricing promise was removed from myPlan offerings on June 16 when its new Simplicity Plan was introduced, according to a recent report from Droid Life.
Related: Verizon hikes prices on multiple discounted offers for customers
The chatbot also said that customers who enrolled in a myPlan offering before June 16 can retain their price lock guarantee. However, those who joined or made line changes to a myPlan option on or after June 16 can no longer benefit from the price lock promise.
The move comes after then-Verizon Consumer CEO Sowmyanarayan Sampath said in a press release announcing the price-lock guarantee in April last year that the company is “committed to delivering” what customers “want and need” by “offering more control, value and simplicity.”
He also touted the price-lock guarantee as “industry-leading” and a way to provide “peace of mind” to customers.
Verizon is reshaping its pricing strategy as competition heats up
The change also comes during a time when Verizon has been raising prices this year.
For instance, in May, it increased the price of its Netflix and HBO Max streaming bundle by $3, and later raised the price of its Unlimited Ultimate phone plan, which contains the three-year price lock guarantee, by $5.
However, Verizon has also recently been introducing lower-priced phone plans and additional savings, a move it hopes will attract and retain price-conscious customers following price increases.
In June, it launched its Simplicity plan, which offers wireless service for $45 a month ($30 if autopay and Switcher discounts are applied).
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It also rolled out its Verizon One plan, which includes combined mobile and home internet service for $70 per month, and introduced a loyalty rewards program that omits activation and upgrade fees for customers.
Amid these changes, Verizon started to see improvements in its wireless business. In the second quarter of this year, it welcomed 184,000 postpaid phone customers, according to its most recent earnings report.
It also saw its wireless retail postpaid phone churn (the percentage of customers who ended their wireless service) hit 0.92%, down from 0.97% it reported for the same quarter the year before.
“Lower consumer postpaid churn, healthier net adds, and a lower cost of acquisition and retention,” said Schulman on an earnings call in July. “Those numbers tell you that we have already begun to compete differently.”
“Simplicity, Verizon One, and the loyalty program are the customer-facing expressions of that shift,” he continued. “They’re designed to drive volumes, further reduce churn, and enhance the lifetime value of our customers.”
He also doubled down on the company’s promise to “not raise prices without adding corresponding value” for customers.
It is crucial for Verizon to focus on offering affordable wireless options to customers, as a March survey from Oxio found that 58% of Americans begin to reconsider their wireless plan after a bill increase, and for 79%, affordable pricing is the top priority when choosing a wireless provider.
Also, Verizon is navigating intense wireless competition, which elevates the risk of more customers switching to other carriers.
In a July analyst note, Morningstar stock analyst Michael Hodel said that his firm expects competitive pressures in the telecommunications industry to remain elevated over time.
“Competitive intensity is ratcheting up, with firms pushing to maintain growth as the wireless and broadband markets rapidly mature,” said Hodel. “We expect rational competition to prevail over the longer term, with only a modest impact from satellite providers like SpaceX. However, irrational competition remains a risk as the shape of the telecom industry changes.”
Related: Verizon acquires 35-year-old wireless carrier as it shuts down
