Consumers Liking Phone Upgrade Plans

Roughly a year after the major wireless carriers began introducing wireless upgrade subscription plans, nearly a third of consumers have enrolled in them. 

According to new research from The NPD Group, upgrade plan enrollment has increased from 7% in September 2013 to 31% at the end of March 2014. Furthermore, nearly three-quarters of consumers (73%) said they were either “somewhat” or “very” aware of the plans’ availability.

“[The adoption rate] certainly feels quick,” Stephen Baker, vice president of industry analysis at NPD, tells Marketing Daily. “It’s interesting that after T-Mobile jumped out and forced others to have plans of their own, they are clearly resonating with consumers.”

The greatest appeal for most consumers is the ability to keep up with the latest technology (cited by 84% of smartphone users as the most influential reason for signing up for the early upgrade plan. Sixty-two percent said the ability to finance a phone through installment payments was appealing.

“The bottom line is consumers appreciate the levels of flexibility they can have with these plans. They have to pay a bit more, but they feel it is worth it,” Baker says. “In total, what this offers consumers is freedom and control of the experience.”

Despite the heavy awareness, there are still many consumers who haven’t signed on to the plans. While 32% of these consumers said they were simply not interested in upgrading, 25% said they were unaware of the plans, and 19% said the plans were never mentioned at the point of sale.

“The success of the early upgrade plans has been tempered by ongoing challenges in the ability of the carriers’ retail channels to explain and sell the value of these programs,” Baker says. “We found that a significant number of potential buyers did not receive information, or properly understand these plans at the point of sale. Carriers could potentially add to the success of these new plans by properly addressing these issues.”

Tags: research, telecom
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