Sprint Calls on Prepaid Market to Stem Losses

While wireless network providers like AT&T and Verizon Wireless battle it out for contract customers, Sprint is looking the other way for growth.

The money-losing provider of mobile services is seeing more gains in its prepaid business -- customers who don't want contracts -- and Sprint wants to make the most of it. In mid-May, Sprint will roll out a multi-brand strategy aimed at "different facets of the no-contract crowd."

Sprint's Boost brand appeals to prepaid callers who are looking for calling plans with unlimited minutes. Sprint-owned Virgin Mobile is positioned as a youth brand, with the emphasis on data-heavy features such as texting, instant messaging, and web searches.

Its Assurance Wireless unit, meanwhile, targets low-income customers in a limited geographic area. The carrier also plans to add a new brand that will target a more cost-conscious "pay as you go" audience.

So what does all this mean for its brand messaging?

The multi-brand strategy entails that it can't simply rely on one price-oriented message. Sprint's Prepaid President Dan Schulman tells the Kansas City Star, "We can address unique market needs without using a single blunt tool like pricing as the dominant weapon of choice."

Still, adding prepaid customers doesn't replace the need for contract customers, who could help bolster Sprint's flagging revenue.

Sprint has been a perennial money-loser, and the first quarter of 2010 didn't look any better; in fact, the company lost more money in the first quarter of this year than it did in Q1 of last year.

That's one reason CEO Dan Hesse has been appearing in ads (above) that make a "Sprint Free Guarantee" to offer new subscribers a 30-day money-back offer. By promoting the trial, the company hopes to convert customers to two-year contracts.

Hesse remains hopeful, indicating that customer loss rates have dropped from two years ago. He told analysts that "improving service quality and brand loyalty both help on the customer front each day."