Smartphone Buyers Eagerly Enroll in Upgrade Plans

Smartphone buyers are quickly adopting the early upgrade plans offered by their wireless carriers. Upgrade plan enrollment has more than quadrupled since September 2013, going from 7 to 31% by the end of the first quarter (Q1) 2014, according to a new report from NPD.

The rapid acceptance of these new plans can be attributed to the high level of awareness among mobile phone owners. Overall, 73% of mobile phone owners who were asked if they were aware of the early upgrade plans being offered were ‘somewhat’ or ‘very aware’, with about half of these people being very aware. “As one might expect, older consumers are less interested in frequently upgrading their phones; but, surprisingly, Android smartphone owners are as interested in upgrading as their iPhone counterparts,” said Stephen Baker, vice president of industry analysis, adding that 22% of Android and 25% of Apple owners are extremely interested in upgrading their phone more frequently.

Keeping up with the latest technology was cited by 84% of smartphone owners as the most influential reason why they signed up for an early upgrade plan. Money was next on the owner’s mind, with 62% saying being able to finance the phone in monthly installments influenced their decision. These were also the top two reasons that, in the end, most attracted the owners and helped convince them to enroll in an early upgrade plan.

There are also many smartphone owners who are perfectly happy with their device. Thirty-​two percent were simply not interested in upgrading, 25% said they were unaware of the plans, and 19% said the sales associate never mentioned the possibility. “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,” said Baker. “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.”

At least 28% of U.S. adults intend to purchase a new smartphone or upgrade an existing phone in the next year according  to Ad-​ology Research. A significant number of these consumers, 36.3%, enjoy high household income of $50,000 to $100,000, which puts them in a more comfortable position to afford upgrade plans. About 30% of these consumers say they've taken action as a result of a smartphone or text message ad they've seen in the past month. Smartphone plan vendors may want to consider using these types of ad campaigns to reach their target audience.

AudienceSCAN data is available as part of a subscription to Ad-​ology PRO. Media companies can access AudienceSCAN data through the Audience Intelligence Reports in AdMall.

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.