The data is clear. Millions of people have lost their jobs, businesses have been closed, and it’s not clear whether jobs will return. Amidst all of this, carriers, retailers, and OEMs need to keep selling phones in order to keep their own workforce employed. How do companies drive the consumption of new devices during a recession?
First, Make Old Phones More Lucrative
The mobile phone market wasn’t in the best place to begin with before the pandemic started. According to analyst firm Canalys smartphone shipments fell by 2% in 2019, and the average customer hanging onto their phone for 3 years. Manufacturers responded by making the flagship versions of their phones more expensive. It was a good strategy for the time – making high-end phones more expensive was a good way to capture revenue at a time when fewer people were buying. No one could have predicted the coronavirus would disrupt global commerce to such an extent.
It may take a while before manufacturers can pivot back to making less expensive flagship phones – if they choose to do that. Meanwhile, they still need to move inventory towards a populace that has less spending power. Right now, one way to do that is by making trade-ins more valuable.
There’s every chance you may have heard this message from us before, but it bears repeating. Trade-ins are a great way to lower the cost – for consumers – of upgrading their old device. Meanwhile, carriers, retailers, and OEMs don’t lose much in the way of economic margins, because they can resell the phones that were traded in. What is more, there’s far more than one way to position trade-ins. While many are focused on the idea of trade-ins as a way to offset up-front costs, there are other methods to consider:
- Decrease the Monthly Installment
Right now, a substantial fraction of the mobile phone market – around 34 percent – pay for their phone in monthly installments as opposed to up-front. Ideally, you want these consumers to hop on a new installment plan as soon as their current one is paid off, but it’s likely that many will now keep their old devices once they own it in full. If they can use their trade it to lower the monthly payments on their installment plan, then you have a better chance of selling them on a new device.
- Introduce Organic Trade-Ins
Normally, carriers only offer trade-ins during a transaction in which a customer buys a phone. Here’s the thing – a large number of consumers never trade in their phone, yet the phones are just sitting in a drawer collecting dust. Carriers can reach out to these consumers, offering trade-in for the unused phones to lower their current bill.
- Trade-In Value for Things Other Than Phones
Going along with our last point, if a customer wants to trade in a phone and has never done so before, it’s possible that they could want something other than a new phone in return. For example, if the customer has two phones and trades in one, they might want to use the value of the trade-in to pay off the bill for the phone they’re keeping. Additionally, they could use the trade-in to purchase accessories like wireless chargers or expensive headphones.
These trade-in programs can help people who are concerned about their expenses make the decision to purchase a new phone. In order for people to make this decision, however, they need to know that these trade-in opportunities exist.
It’s Time to Double Down on Trade-In Programs
Carriers are already doing a lot to make life easier for consumers hit by the economic crisis. By signing up for the voluntary “keep Americans connected” pledge offered via the FCC and declining to shut off phone and data service for customers who can no longer pay their bills, carriers are helping to keep customers afloat and in touch with their loved ones. By offering expanded trade-in programs, carriers can extend their help even further by making it possible for consumers to upgrade their devices.
Here at HYLA, we’re dedicated to helping carriers, retailers, and OEMs operate convenient and environmentally friendly trade-in programs that help consumers access the latest and greatest mobile technology. If you want to learn more about what we stand for and how we can help your trade-in program, feel free to contact us today!