Case Study: Handset Subsidies for Profitability

Client:

A major European wireless carrier

Challenge:

Our client saw handset subsidies for smartphones in North America increase at a disproportional rate.The assumption was that market differences explained the difference in subsidy levels.

Solution:

Using our Customer Lifetime Value (CLV) methodology, we established a net present value measurement by handset type.Armed with a profitability report by model, we then identified some of the least profitable handsets receiving the highest subsidies and suggested reallocating those dollars to the more profitable models. Result: Our client changed their handset mix and compensation plans resulting in a more profitable handset line up that also attracted more customers.