Cracking the Code

CCS Insight Survey Identifies Changes in Mobile-Buying Behaviour

CCS Insight’s inaugural survey into how people buy mobile phones and subscriptions revealed fascinating insights.

Here we briefly reflect on three major findings from the research. If you’d like to receive a free digital report exploring some of the themes in more detail, simply fill in the form below.

In July and August 2018, we surveyed more than 2,000 people in the UK and France. Samples were nationally representative of age and gender. Our research focussed on several areas including the second-hand phone market, device leasing, refurbished phones, the growing relevance of the online channel, brand loyalty, SIM-only and mobile switching.

The lead finding was an acceleration in the separation of mobile phone and subscription purchases, which is being driven in part by an increasingly knowledgeable and savvy set of consumers. This concept, which we refer to as “cracking the code”, reveals a greater understanding of the true value of the different parts of a mobile service. We believe that in the past customers have significantly underestimated the real worth of a smartphone, which was traditionally heavily subsidized and bundled into operators’ service plans.

More People Are Trading In Devices

One respondent in every five in France and the UK told us that they had traded in a used mobile phone in the past with an official retailer. This reflects the growing availability of part-exchange options from operators and third-party providers.

A similar proportion of people had traded in their device for cash or a reduction on their bill as those who did so in part-payment for another mobile phone. Significantly, about one in four respondents told us that while they’ve never traded in a used mobile phone with an official retailer, they would consider doing so with their current device.

Our survey also revealed some willingness among customers to lease mobile phones rather than own them outright. This was highest in the UK, even though only 1 percent do so at present. The finding should encourage Carphone Warehouse, which is pushing into the area.

The main reason given for not leasing is a preference to own new products, a perhaps unsurprising mind-set that may take some time for the industry to overcome. Other reasons include unattractive pricing, a lack of knowledge and uncertainty about how to go about it.

Online Stores Are Overtaking Bricks and Mortar

In the UK, nearly half (47 percent) of respondents bought their primary mobile phone online: 42 percent had the device delivered to a home or work address and 5 percent collected from a store. This suggests that online sales of phones — rather than the installed base — is currently above 50 percent. In France, the proportion of people who bought their primary phone online was slightly lower.

The move to online activities poses a threat to mobile operators as lower footfall reduces the opportunity for them to engage with customers and upsell services. However, it also offers long-term potential to save costs as part of their wider transformation strategies.

The web also plays an important role in research. In the two markets surveyed, more people researched their phone online than visited a store in person. This suggests that customers aren’t seeing the benefits of discovering new phones “in the flesh” and that retailers could do more to entice people through their doors.

About one respondent in every four in France and the UK told us they didn’t engage in any research for their mobile phone as they “already knew” the device they wanted.

Amazon’s Growing Role

The emergence of Amazon as an important destination in customer journeys to buy a mobile phone was a stark finding. In the UK, a surprisingly high proportion of respondents said they bought their primary mobile phone from the online giant. This points to a clear shift in buying habits away from the traditional mobile operator channel. Indeed, there’s also consumer appetite to buy from other retailers that do not have a strong pedigree in mobile services, like Argos and eBay.

Amazon also plays an important role among customers who ultimately buy their phone elsewhere. In the UK, Amazon was as popular a choice for people researching their device online as the websites of phone-makers such as Apple and Samsung and specialist retailers like Carphone Warehouse.