5G devices are a game changer for the mobile world with connected consumers eager to take advantage of faster network traffic that accelerates downloads, app performance and overall connection speeds. But, despite these clear incentives, we're seeing gradual 5G adoption rather than a fast wave.
Why is 5G Adoption Gradual? And What Can You Do About It?
- The Price-Generation Conflict. Assurant’s Connected Decade research confirms that millennials, an age group that often fits into the Technophile demographic, will lead the demand for 5G mobile devices. According to our study, 46% of millennial Apple® phone owners and 44% of millennial Samsung® phone owners plan to upgrade early for 5G. That’s compared with 28% and 27%, respectively, of all consumers. But this buying group hasn’t been in the workforce long enough to have amassed the wealth that sits with older generations. Early 5G devices were around $2,000 per, but price tags are starting to come down. Still, price will be a barrier to purchase for many consumers, particularly for this younger consumer group.
- 5G’s value isn’t fully understood. Many consumers are only slightly aware of what this next-generation technology means for them. Case in point: 65% of respondents to Assurant’s Connected Decade study said they have only a moderate awareness of what 5G will mean for them and for society. But the more people learn about 5G, the more they think it will have a significant or enormous impact in the next decade. Those who are most knowledgeable about 5G think it will majorly impact them personally (68%), as well as society (76%). Increased awareness of 5G’s impact correlates to a higher purchase intent of 5G-enabled products.
- The typical “adoption hurdle” to new technology still applies. There’s an evaluation period any time new technology hits the market. Consumers measure a product’s potential value compared with how they’ll use it and what they’ll do if something doesn’t go as planned. Consumer concerns include who they’ll turn to for help troubleshooting, fear a product will break, worry over extended warranty expenses, and lingering dissatisfaction with a previous product. The concerns account for a significant gap between connected product purchase intent and ownership. On average, only about one third of consumers who say they intend to buy a connected product actually make the purchase
Solve the Price-Generation Conflict with Trade-In and Upgrade Offers
Your earliest adopters, millennials and Gen Z consumers, need the most financial incentive. The right trade-in and upgrade offers will be critical to driving 5G adoption for them.
- Consumers will look to upgrade phones, driven by pent-up demand to upgrade to the next generation of 5G handsets.
- Carriers, retailers and OEMs will enhance and expand their trade-in and upgrade offers. This will improve customer retention and network efficiency. It will also help connected companies market additional products and services to customers.
As a result, the value that a consumer can get from trading in their current device becomes even more important in the economic equation. It will help motivate customers move to a 5G device and address profitability pressure associated with a rising upgrade rate.
Use real-time data to improve loyalty and accelerate market-share gains with the right offers. According to consumer data compiled in Assurant’s Connected Decade research, 5G provides the first major incentive for switching carriers that we’ve seen in years. Carriers with the right offers stand to increase brand loyalty from current consumers and the ability to quickly capture new market share.
Assurant helps carriers take advantage of this opportunity. We use a proprietary device pricing engine at point-of-sale with our carrier partners. Our engine looks at real-time supply and demand to ensure we provide the best price point to stimulate a trade-in. This helps our carrier partners upgrade their customers and win new customers from competitors. It also helps us ensure that we resell those devices in the market at a margin that makes the trade-in offer viable for the carrier.
Drive Understanding of 5G’s Value Across Generations to Increase Purchase Intent
So, what are “the right offers”? That depends. Knowing the characteristics and needs of these five connected consumer types will help you offer exactly what they want in a way that helps them understand the value 5G offers to them specifically.
Most likely for early 5G adoption:
Technophiles: Love all innovation
Millennials and Gen Z, i.e., digital natives
Sees the value of 5G and is generally very aware
Youngest, with average age of 39
Owns an average of 16 connected products
Biggest frustrations: Excessively long repair and difficulties with installation
What they want from you: Trade-in and upgrade offers to relieve the financial burden of adopting 5G devices, protection solutions and, if necessary, assurance of quick device repair
Utilitarians: Prioritize practical convenience
May not see the personal value of 5G
Most significant gender imbalance: 58% are women, with an average age of 45
Own an average of five to six connected products
Biggest frustrations: Disappointing device performance and fear of breaking a pricey device
Leisure Seekers: Enjoy digital entertainment
A mix of millennials, Gen Y and Gen X
Could be attracted by lower latency/improved gaming or streaming experience
Average age is 47
Owns an average of five connected products
Biggest frustrations: Expensive warranties and fear of breaking a pricey device
What they want from you: Affordable protection options in case their device breaks and multi-device tech support so they can connect their entire technology ecosystem
Most likely for later 5G adoption:
Home Protectors: Comforted by connected control
Most diverse segment and least likely to live in an urban area
Already highly engaged in connected living
Second most-frequent buyer of value-added services
Owns an average of seven to eight connected products
Biggest frustrations: Disappointing device performance and difficulties with installation
What they want from you: Multi-device tech support that helps them connect each component of their home and security systems
Technophobes: Engage infrequently with connected technology
Oldest segment with an average age of 49
Unlikely to adopt 5G devices until 4G devices are off the market
Likely to own one connected device
Relatively at ease with the limited connected products they own and don’t see value in changing
What they want from you: Onboarding and tech support to overcome the hurdles to connected technology use
Jump the Adoption Hurdle to New Technology by De-Risking Connected Purchases
Each connected consumer type has different needs for their connected purchases. They look to you to cut the risks associated with those purchases so they can feel confident about their purchase.
Most consumers (96%) say they intend to buy a connected device in the coming year; but, over the last four years, intent to buy a connected device hasn’t always correlated to actual purchases. On average, a third of consumers who intended to buy a connected product followed through on the purchase. So how do connected living companies close the gap between purchase intent and ownership? Importantly, 65% of consumers say they’re more likely to purchase if at least one support service is offered. Support services contribute to consumers feeling like they’re making a safer, more secure connected purchase. These services include extended warranties, insurance, technical support, refurbished options and trade-in discounts. The chart below illustrates how purchase intent for connected products increases when a support service is offered.
Just four years ago, more than a quarter of consumers felt extended warranties were too expensive. But last year in 2019, that number dropped below 20%. Now, 81% of consumers believe that the value of an extended warranty is worth the cost.
The best way to soothe consumer fears is to offer simple, clear extended warranties that are well suited for the device and consumer lifestyle. For example, Leisure Seekers – who are likely to own pricey entertainment systems, video game consoles and computers – want to protect their entire ecosystem. On average, an extended warranty can increase a consumer’s intent to buy by about 25%. In some categories, like computers, that number peaks to more than 30%.
Is Your Company Ready to Drive 5G Adoption?
5G is a game-changing technology, but 5G adoption isn’t a slam dunk. It will happen gradually. And not all consumers will respond to upgrade opportunities in the same way. Raising awareness of 5G and its benefits is a good starting point. So is understanding what motivates consumers in different market segments and how to respond to their needs. Looking across the connected consumer landscape, mobile carriers, retailers and OEMs will need strong trade-in, upgrade, support and disposition programs to maximize 5G revenue and profits. Take a look at our recent eBook, The 5G Evolution: A Look at Connected Company Opportunities, for more insight.
If you have more questions about programs that can better prepare you for 5G adoption, talk to an Assurant mobile expert.