In a previous column I highlighted barriers to consumer adoption of connected products that the consumer electronics industry continues to face. In this article I’ll explore the significant opportunities that exist for companies who can overcome the initial hurdles to purchase.
Assurant’s most recent research measuring consumer sentiment towards their connected lives shows that once consumers buy a connected product, they are highly likely to upgrade and purchase other connected products.
Consumers Want to Upgrade
Since the introduction of the iPhone, consumers have become accustomed to upgrading their smartphones as new models become available. They also have tended to become loyal to one brand, e.g. Apple, Samsung, etc.
We are starting to see the same behavior transfer to connected products. Research shows that repurchase intent for the same brand or type of product is high after the initial purchase. Among those who own a connected product, the likelihood of upgrading to a newer version is more than 50 percent for all but one of 30 different categories. (See Fig. 1)
The trend is most prevalent for product categories that see significant change with each new generation or are driven by seasonal demand such as holiday gift giving. It also applies to products that rely on rechargeable batteries, where the user experience can decline over time as the battery degrades.
At the top end of the spectrum are smart toys, smoke detectors, door locks, baby monitors and watches, where at least 69 percent of owners said they would upgrade. A whopping 78 percent of smart toy purchasers said they are likely to buy a newer version of what they own.
Even at the lowest end of the range, a full 45 percent of Bluetooth headset owners indicated they would upgrade. On average, 63 percent of connected product owners in all surveyed categories said they would likely upgrade to the same or similar product.
What are the products people are least likely to upgrade? In addition to Bluetooth headsets where 55 percent of respondents indicated a reluctance to upgrade, other categories with the highest rates of hesitancy include portable speakers (47%), robotic vacuums (44%) and wearable health devices (43%).
Like smartphones, consumers may not be as eager to upgrade to a newer version of a connected product if there isn’t a significant new feature or capability. According to a Strategy Analytics report, the average replacement cycle for a smartphone has increased to 33 months. The good news is that the buildout of 5G networks over the next several years is likely to serve as a catalyst for upgrades as new 5G-enabled products come on to the market.
Even so, the evidence is clear that once consumers buy a connected product, most tend to remain loyal and buy again. The challenge is getting people comfortable with purchasing in the first place.
Give Consumers the Confidence to Purchase
Finding that comfort level requires knowing what makes consumers nervous about purchasing. Even though technology has become more prevalent in our lives over the past four years, consumers’ intent to buy has continued to exceed ownership in a majority of connected product categories.
What’s holding them back? Some long-standing barriers include price, interoperability and dissatisfaction with the product or the buying process.
In 2019, the top cited frustrations with connected products were:
- Didn’t perform as expected (22 percent)
- Fear of pricey item breaking (19 percent)
- Unsure of how to dispose of an older product (18 percent)
- Inadequate self-help resources (18 percent)
Consumers have voiced these particular frustrations consistently over the last four years. The concerns span both demographics and income. Only those who are the most tech savvy are less concerned.
Relatedly, on average, technophiles own the most connected products per household and are the most frequent buyers of value-added services such as extended warranties, premium tech support and smartphone protection.
They aren’t the only ones who value these services. The desire cuts across generational and digital divides. While purchase intent has stagnated over the past four years, consumers’ demand for support and protection services has risen significantly.
Those who say they would purchase a connected product if given a complementary service like tech support or extended protection increased from 61 percent in 2016 to 85 percent in 2019. Clearly, providing easy access to these services could be the difference between consideration and a sale.
It also offers an opportunity to extend the customer relationship past the sale to when they might consider upgrading. Given the complexity of installing, connecting, using and troubleshooting many connected products, providing helpful support can engender trust and loyalty that can pay dividends with each new model introduction.
This approach has proven successful with smartphones, as it provides customers with assurance and added value from the moment of purchase. The consumer electronics industry has much to gain from taking the same tact.
Jeff Unterreiner is president of U.S. Connected Living at Assurant. He is focused on helping Connected Living’s clients deliver a better customer experience, increase revenue and build loyalty through premium support and protection offerings including lifecycle management, trade-in and upgrade solutions, extended service contracts and technical support.