Eye on the Consumer: Moving Customers from Consideration to Purchase
Smart home products have been on the market for several years, yet we are no nearer to solving the riddle of how to increase consumer purchases in a significant way. While consumers arguably have become more tech savvy over the past four years, their intent to buy has continued to exceed ownership in a majority of connected product categories.
According to Assurant’s most recent report on connected consumer sentiment, entitled “The Connected Decade,” from 2016-2019 the share of people considering the purchase of a product in 15 out of 20 categories (categories include: a wide variety of smart home products such as: smart TVs; smart speakers; Wifi security cameras; smart doorbells; connected pet devices; wearable health devices, etc.) continued to surpass the share of those who have bought.
There are various reasons why sales haven’t taken off as many predicted, including cost, complexity, perceived value and interoperability. A common thread among these barriers is the fact that the consumer experience before and after the sale has not matched expectations.
There is a broken link in the chain between the consumer and the retailer and OEM when it comes to connected product purchases. Research shows that improving this connection will require delivering services that give people the confidence to buy no matter where they purchase.
Consumers Need Confidence
While purchase intent has stagnated over the past four years, consumers increasingly are saying they would buy if they have the peace of mind and confidence that comes from complementary services such as technical support, extended warranties and identity protection.
In 2016, 61 percent of those surveyed said they’d be more likely to go through with a connected product purchase if given one or more of these add-on services. That number grew to 63 percent in 2017, 73 percent in 2018 and 85 percent in 2019. That’s a significant rise in four years.
To better understand the growth in demand for support services, it’s important to know that consumers report that on average more than one in three (36%) of their connected devices develop issues that require third-party assistance to solve. Also, resolution for some of these issues has not improved with time.
The annual share of consumers that experienced challenges with installation did not change between 2016-2019. Neither did consumers’ problems connecting their product to a mobile phone or Wi-Fi.
That’s why added-valued services like tech support can potentially make a difference between consideration and a sale. Providing consumers easy access to personal guidance on how to install, connect, use and troubleshoot a purchased product has proven to produce net promoter scores (NPS) as high as 91, turning customers into advocates who actively refer others.
The Risk and Opportunity of 5G
Another emerging factor that could impact purchase intent is growing awareness of 5G. A considerable hype is building in the market thanks in part to marketing campaigns of the major wireless carriers touting the arrival of 5G. This buzz could influence people to purchase 5G-enabled connected products.
It’s still early days, however, and most people do not yet have an in-depth understanding of what 5G entails. The majority of respondents (65%) in the Assurant study said they only have a moderate awareness.
The risk is that the current buildup in excitement around 5G will create false expectations among consumers, just as the early hopes around the smart home caused some of the barriers the industry still faces today. 5G is poised to be a game changer by the end of the decade, but in the near-term there is a great deal of infrastructure that must be built before consumers see the full benefits of the technology.
The opportunity for the CE industry is in educating consumers. The more people learn about 5G the more they think it will have a “significant” or “enormous” impact in the next 10 years.
The majority of those most knowledgeable about 5G think it will have a major impact on themselves (68%) and society (76%). This sentiment is not quite as strong for consumers with moderate awareness who see the potential impact on themselves (34%) and society (55%) at a lesser degree. In terms of demographics, younger consumers tend to have a greater understanding of 5G with 42 percent of Millennials having a high awareness, compared to Gen X at 28 percent, Gen Z at 24 percent and Baby Boomers at 11 percent.
It’s easy to see a future when 5G becomes the tipping point for consumers to not only upgrade their smartphones but their appliances and electronics as well. Helping customers better understand 5G’s potential benefits and the timing of when they can realistically expect tangible solutions in the marketplace can help engender trust, and in turn broaden the market opportunity over the next several years.
As with today’s connected products, providing value-added services like personal guidance and support for tomorrow’s 5G-enabled products will play a crucial role in getting customers to move from interest to purchase.
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.