Boost Mobile plans to differentiate from competitors by focusing on add-ons that target subscriber privacy and online security, rather than promoting content and entertainment e.g. popular SVOD, and music streaming services. Last week Boost Mobile launched a Privacy Premium product which is priced at $5.99 per month for subscribers with an Android device. It includes Wi-Fi encryption to keep email and browsing safe, call screening features to identify and block unwanted or spam calls, and visual voicemail which transcribes voice messages to text.
It’s not that other operators don’t offer or provide similar security and privacy products, but Boost is making it a key part of its messaging and positioning, with offerings around financial services, gambling, and healthcare to come.
There has always been a cohort of consumers concerned about privacy and security. A Strategy Analytics survey of 2,500 US consumers in 2019 shows that a significant 28% noted security features as one of their most important factors when choosing a new smartphone.
Additionally, 20% indicated the availability of ‘more secure phone technology’ as extremely important when deciding on when to replace their smartphone, compared to 24% with the availability of phone technology that ‘better protects my privacy.’
Our research shows that the importance of privacy and security also rises with age group and is notably greater for African Americans versus Caucasian and White Americans. The survey also indicates Boost Mobile customers place a higher importance on security features than the average for the US: over 32% versus 28%.
Given the growing volume of news about data breaches, hacking attacks, identity theft, successful phishing attempts, online ad-tracking, and spam/ robocalls, I expect this cohort of consumers will continue to increase in size - as more people are directly and indirectly exposed to this range of threats and inconvenience. Put simply, demand for these types of tools will only continue to grow.
Against this backdrop of greater threats to privacy and online security, the launch of Privacy Premium by Boost Mobile is smart and represents an opportunity for it to grow revenue while managing churn.
We estimate between 1 in 5 and 1 in 4 US smartphone owners view security and privacy as very important, which equates to a decent 1.8 M-2.25 M addressable market of Boost Mobile subscribers. The next question is what share of this segment is willing to pay for these tools and how much are they willing to pay for greater assurance and protection? If we assume 10% as a significant attach rate this equates to between 180K - 225K of Boost Mobile subscribers. Boost is charging $5.99 per month for its Privacy Premium. Therefore, Boost would be adding $13-$16 M of additional revenue annually plus lower churn rates for subscribers taking both services. A 1% reduction in churn and saving on having to acquire that 1% back again is going to be 1% x 9 M subs x $150 or $13.5 million per annum, where we estimate $ 150 as the maximum cost per gross addition (CPGA). If around half of the 2% who take this service become loyal customers, then this equates to a $13.5 M saving on top of $13M - $16M in additional revenue for Boost.
Despite the underlying demand for privacy and security it remains important for providers of security and privacy tools, like Boost Mobile, to improve their understanding of the following issues as they go-to-market with value added services:
- What does demand look like for privacy and online security tools separately and when bundled together?
- How does this demand vary by segment and how does the profile fit with my subscriber base?
- What share of consumers are willing to pay any premium for these tools?
- What is the pricing sweet spot for a service like Privacy Premium?
- How well is my brand positioned for offering privacy and online security products?
- What other features/benefit enhancements could be targeted to these segments?
Understanding consumer perception and behaviour related privacy and security is complex. If these are areas of interest to you it’s worth checking out our some of our previous research on this topic: -