Sales Director Opia
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Break free from depressingly long refresh cycles by locking in loyalty

15th Jun 2016
Sales Director Opia
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The market for consumer electronics is getting tough. Overall sales of PCs and tablets are in decline, while currently many consumers view buying a device such as a laptop as a one-off purchase, holding on to it for five years, despite the steady worsening of its performance.

Then, when consumers do upgrade they will look for the best deal, irrespective of brand.

If manufacturers and retailers are to break out of this long replacement cycle and encourage greater brand loyalty, they need a mechanism that locks in customers with something better than price-drops. It also needs to be a promotional tool that works beyond PCs and will enable brands and retailers to build loyalty for other technology-led products that are indispensable, such as white goods or kitchen gadgets.

So the answer is not price-slashing. All that achieves is a steady margin-erosion and the expectation among consumers that there is always a discount deal to be had if they hold out for it.

Future value

Instead, it is time to consider the benefits of working with the concept of guaranteed future value. This means offering customers the certainty that they will get a fixed percentage of its value, but only if they upgrade with the same brand within a fixed period of time. This is working in the car market and is ripe for some data-backed adaptation in the consumer electronics and white goods sectors.

In the laptop market, a promotion of this nature would offer customers a 50 per cent rebate of the value of their current purchase when they come to upgrade with the same brand within two years. The stipulation would be that it would have to be a device of equivalent or greater value.

When explaining this to customers, the benefits to them should become apparent. Why are they still using an old version of their operating system on a laptop that is riddled with viruses and takes a couple of light years to boot up, when they can have the latest model at a discount? If they just want the best deal irrespective of brand, then surely this guaranteed future value deal must make sense.

Big advantages

For the customer, the deal does more than just delivering the same technology they had before, but working properly – it gives them a device that is more advanced with greater functionality.

For the brand it means that instead of selling one laptop to the customer every four or five years, it sells one every two years. That is doubling the volume of sales from within the existing customer base, while simultaneously addressing the problem of declining unit prices as a result of competition and technological innovation.

This is surely a much better strategy for any brand or retailer than engaging in costly battle to claw market share from rivals.

Unfortunately, the potential of this type of innovative promotion is not always fully understood even though the risk is carried by the promotions company, which indemnifies itself, using its expertise in the field in combination with data analysis.

Wide-ranging potential

These promotional tactics are so flexible they should not be limited to the laptop and tablet market. They can shorten the five-year refresh cycle that is typical right across the consumer market for products such as smartphones and TVs. New models of TV’s and of course, smartphones are constantly coming to the market, giving a direct incentive for consumers to upgrade.

Equally, such promotions can work with white goods such as washing machines, or kitchen gadgets such as the more expensive espresso machines, albeit with a smaller percentage of guaranteed future value being offered.

They can also be used in connection with the fast-growing market for drones and for the public liability insurance that should accompany their use. 

Risk-backed promotions of this kind that are based on data analysis and implemented by companies with experience can double a brand’s revenue and profit by locking in the loyalty of a customer – potentially for their lifetime. They are sure to become popular and any retailer or manufacturer needs to put them to work quickly.

For brands that want to steal a march on their rivals, they offer a far better alternative to a series of dogfights in which everyone spirals to the bottom.

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