From Christian Formby, President at Assurant Europe
The widespread introduction of 5G in the UK presents some compelling opportunities. The fifth-generation mobile network will make it possible for an increasing number of people and businesses to operate remotely, possibly leading to economic growth across rural areas and all four corners of the UK, not just our major cities. It will also pave the way for the continued rise of smart cities and interoperability between the smart home, cars and public transport, pushing the ambition for widespread sustainability.
As mobile network operators seek to attract customers to 5G, we expect trade-in solutions to become more prominent in the future. According to Assurant’s Connected Decade research study, half of UK consumers are willing to upgrade their device to get access to 5G. As such, the opportunity for mobile network operators with the right 5G and trade-in offers to gain not only increased brand loyalty from current consumers, but also to rapidly capture new market share, is significant, and not to be missed.
From Keith Demmings, President Global Lifestyle at Assurant
As we think about the progress 5G will enable through lower latency speeds and increased data capacities, the possibilities are almost endless. Smart cities are within reach, real interoperability between smart homes, cars and mobile devices will be solidified, and enterprise applications for industry-specific advancements are expected to be enormous. The first and most immediate step toward this progress will sit with mobile carriers as they begin to release more 5G devices to the consumer market. Premium 5G smartphones can come with a price tag of around £1,000 per device, making cost a barrier to adoption for large segments of connected consumers. On one hand, carriers have their work cut out for them when it comes to educating different consumer types on the value 5G-enabled devices provide in exchange for their cost. On the other hand, it’s now critical for carriers to have the right trade-in, upgrade offers, and asset disposition programmes to drive adoption of 5G mobile devices and monetise the disposition of the 4G devices that are returned.
At their core, trade-in solutions incentivise customers to upgrade to the next generation of devices. As we look to a world of 5G and the 5G network standard, we expect trade-in offers to become more prominent in the future. A couple of things are going to happen: (1) consumers are going to look to upgrade phones to get the next generation service 5G offers, and (2) carriers are going to upgrade the devices they offer to improve their retention and to market additional products and services to customers. As a result, the trade-in value that a consumer can get from trading in their current device becomes an important part in the economic equation of how to motivate a customer to move to a 5G device. In Assurant’s Connected Decade research study, consumers indicated that 5G offers will provide the first major incentive for switching carriers that we’ve seen in years. Half of UK consumers would be willing to upgrade their device to get access to 5G. Carriers with the right offers stand to gain not only increased brand loyalty from their current consumers, but also the ability to capture new market share quickly.
One of the critical determining factors will be the trade-in offer. At Assurant, we’ve developed a proprietary device pricing engine that we use at point-of-sale with our carrier partners. Our pricing engine looks at real-time supply and demand to make sure that we can provide the optimal price point to consumers to stimulate a trade-in. The end result is that we’re able to help our carrier partners upgrade their customers and win new customers from a competitor; and, equally as important, to make sure we can resell that device in the market at a margin that makes the trade-in offer viable for the carrier.
Our asset disposition algorithm, which we’ve invested in heavily over the last few years, looks to all of our disposition channels around the world to pinpoint where the best place is for us to sell each returned device. By taking this global approach, we’re able to move mobile products quickly and avoid sitting on inventory. To put this in perspective for scale, we sold U.S. $600 million of used phones in 2019, up from U.S. $500 million in 2018. As 5G adoption grows over the next decade, we project that number to increase considerably.
As we work with leading mobile carriers to capture and monetise this innovative shift in the market, the insights shared here as part of our Connected Decade research study help provide the basis for serving connected consumers across the UK, and the world. Once you’ve read through the findings, I hope you’ll reach out to my team to discuss other market insights that are informing the programmes we provide to help carriers.