We conducted a channel check in the US (August 4 – 13, 2014), to get a precise idea of the state of mobile phone retail shortly after the LG G3 launch. Our main observations are as follows.
Leasing a success story
Phone leasing programs have been in place for almost a year. They’re showing good traction. According AT&T sales associates surveyed "Next" is the most popular option among consumers. In addition to paying for a phone of choice on a monthly basis, consumers receive network service discounts as part of the easy payment plan. This adds an additional purchase and loyalty driver. Depending on the device selected, AT&T shows a grid of monthly payments vs. a two-year contract to highlight the financial benefits. AT&T announced 50% of new smartphone sales in Q2 were “Next” sales.
Verizon is also finding success with its "Edge" program. According to our survey among a small cross section of Verizon sales associates – the consensus was that around 65% of customers stick with a regular two-year contract while around 35% have moved to the "Edge" program.
The leasing programs are designed for consumers who are eager to adopt the latest technologies. When asked about traditional two-year contracts, store associates suggested that almost half of the customer base they interacted with were satisfied with a traditional two-year contract…