Consumer Cellular Accelerates Retail Rollout
By Joseph Palenchar On Nov 21 2011 - 5:01am
PORTLAND, ORE. –
MVNO Consumer Cellular, which
targets the 50-plus age group with an unusual no-contract
postpaid service, is making some big changes in distribution
and product selection.
In handsets, the company launched its first smartphone,
the $165 Motorola Bravo, which is also its first 3G phone.
In 2012, the company will make the switch to an
all-3G lineup and expand its smartphone selection,
CEO John Marick told TWICE. The company
is targeting three to four smartphones next
year out of about six to eight total handsets.
In distribution, the company is expanding beyond
its direct-to-consumer roots by rolling out
sales through online and brick-and-mortar retailers,
having launched its postpaid but no-contract
service and handsets through 800 Sears stores
midyear as part of a nationwide test following a
30-store West Coast test in 2010. This month,
Consumer Cellular added 826 Walgreens
stores in Florida as a test.
Consumer Cellular service is also available
through the Sears and Walgreens online stores.
The Sears test was successful, and the company’s
products will be integrated into Sears’s in-line displays
in March 2012, Marick said.
The retail expansion followed the company’s first retail
foray in 2010, when it entered select RadioShack franchise
stores. The MVNO is currently in 265 franchise stores.
For its retail expansion, the company is targeting national
retailers because most of the company’s advertising has
been national, Marick said, pointing to ads in AARP’s magazine,
Reader’s Digest, other print publications targeted to
the 50-plus market, and national cable-TV networks. The
company ramped up TV advertising in 2010. It also does
The over-50 market will account for a third of the U.S.
population by 2013, Marick noted.
Consumer Cellular launched in 1995 as a direct-to-consumer
marketer to enable it to grow nationally in a costeffective
manner, Marick said, but the MVNO is
now heading into retail to reach consumers who
prefer to buy in stores, he said.
Mainly through its direct sales, the company
already enjoys more than 700,000 subscribers
and projected 2011 revenues of $185 million.
With its retail expansion, the company forecasts
2012 sales of $250 million, 900,000 subscribers,
and an employee count that will grow to
700 from 2011’s 450. That compares with 2005
revenues of $17 million.
When it launched in the mid-1990s, the privately
held company targeted what were then
known as cellular “convenience users” in a market
dominated by business users and wealthy
consumers. A few years later, Consumer Cellular
shifted its focus to target the 50-plus demographic
with products and services appealing to low-usage
consumers who are not early adopters. That includes
simple affordable plans starting as low as $10/month for
users who are nearing retirement and are looking to control
costs, he said. These consumers don’t need unlimited talk
or high-data-usage plans because their children have left
the nest, he said.
In an unusual strategy for carriers and MVNOs, Consumer
Cellular offers only postpaid no-contract plans, appealing
to older consumers who have good credit
but don’t like contracts, Marick said.
Other strategies targeted to this group include
the ability to switch to lower cost plans without
penalty. In contrast, major carriers let subscribers
switch plans during a contract only to a more
expensive plan and require them to recommit for
another two years.
The MVNO’s target customers also want
an added level of customer support that carriers
don’t give, so the MVNO offers a no-risk
30-day/30-minute trial during which consumers
can return their phone without paying for usage,
he said. Customers also get their $35 activation
fee returned and a mailing label so they incur no
costs to send the phone back.
The risk-free trial period goes to 45 days for
AARP members, who also get a 5 percent service
Although individual carriers offer some of
Consumer Cellular’s benefits in their postpaid or
prepaid services, none delivers all of the benefits
in one package, Marick contended.
In 2012, Consumer Cellular will focus on
targeting its marketing and advertising messages
to different niches within its target audience,
Marick said. He noted that AARP, for
example, has different versions of its national
magazine for different age groups. Similarly,
Consumer Cellular has one large-button
phone with high-brightness screen targeted
to people ages 65+.
Although the MVNO sells phones at a subsidized
price without contract, the company believes
it has reduced its risk through its service
plans and service policies. The company’s churn
rate, despite lack of contract, is less than 2 percent,
lower than typical prepaid churn rates of
3.5 to 5 percent but only slightly higher than
the postpaid churn rates of 1.25 to 1.5 percent
of leading carriers AT&T and Verizon Wireless,
The company also reduces its risk because it
subsidizes its handsets less than postpaid carriers
The company offers Nokia, Samsung, Doro
and Motorola phones from free to $165 on the