In the current economic climate, consumers are more reluctant to spend more on devices whose prices continue to soar while advances in manufacturing mean devices last longer. In fact, data shows that smartphone sales in North America have dropped by as much as 14 percent between 2017 and 2023 as consumers hold onto them for longer periods. Looking ahead, Statista indicates that consumers will keep their devices as much as 20 percent more by 2026 than they did in 2015. One North American carrier even noted this as a challenge in their quarterly IR report, stating that “subscribers are increasingly bringing their own devices or keeping their existing devices longer.”
The result? Marked lower equipment sales, as noted in a Counterpoint Research report, leaving operators looking for new sources to sustain the ARPU.
The mobile device insurance market in North America is expected to nearly triple by 2032, creating an ample opportunity for mobile operators to leverage insurance attachment and grow their ARPU. And customers may very well be looking for it, with an MCE survey of 23,000 carrier customers showing one quarter of consumers required a repair over a two-year period. In other words, customers will continue needing repairs and the market for offering more insurance is ripe.
In the past, operators have typically depended on the sale of new devices to existing or new customers as leverage to upsell insurance. But the new reality of the mobile consumer market poses some serious challenges in their efforts to drive more insurance attachment. Technology, however, can enable them to streamline it and improve customer satisfaction.
In their pursuit of increasing insurance attachment, mobile operators face two problems:
- Inconsistent, non-standardized device evaluation: Without a consistent standard used to evaluate a device’s OEM make and model information and hardware and cosmetic condition, carriers are at risk of high degrees of variance and not privy to critical device information, thus putting the operator at greater financial risk.
- Limited enrollment periods: Carriers only offer insurance to non-new customers during limited enrollment periods throughout the year, limiting their opportunities to generate more insurance attachment with new customers outside of those periods.
To overcome this, operators require an optimized model of digitization technology and embedded intelligence as a requisite to drive a successful insurance program. As risk averse institutions, mobile operators can leverage an array of digital intelligence tools to tackle device grading variance and leverage opportunities to proactively sell insurance. It starts with digital mobile device intelligence.
Let’s start with a simple retail example whereby a new customer enters with their own device and purchases a new plan. With a digital device diagnostics test – executed via a carrier on-device app or retail computer that connects to a device – a sales representative can quickly extract the OEM make and model information and assess all the functionalities digitally in accordance with a standardized grading scale. Moreover, once the test is completed and a grade is assigned digitally, the representative can then offer a price custom generated by the carrier’s system and enable the sales to occur, preventing variance and risk and safely enabling representatives to earn commissions.
With existing customers, to overcome the enrollment period limitation, carriers can leverage their digital app’s diagnostics capabilities with emerging intelligent technologies like AI to identify customers eligible for insurance and offer them to come to the retail hub to complete a purchase. For example, a carrier’s on-device app running a diagnostics test could reveal no damage found with the device and an AI chatbot could make a contextualized offer to the customer to insure it. By connecting the on-device offer and the in-retail insurance attachment, digitizing the process can ensure a seamless customer experience and reduce financial risk.
Digitizing the user journey with an omni-channel experience to increase insurance attachment, at scale is no easy feat. But with the right digital-first, strategic, platform approach, it can empower a mobile operator to increase customer satisfaction and revenues.
Learn more about MCE Systems’ digital-first device lifecycle management (dDLM) platform and see how it enables more opportunity to upsell insurance across different customer engagement channels.
