SAM BRUCE
GM of Retail
One New Zealand
Every major smartphone launch triggers the same ritual. We compare cameras, battery life and processors. We debate whether this year’s upgrade is worth it. Then we get to the question that matters for most people: how much is it going to cost?
With premium smartphones now regularly costing well over $1,500, it’s a fair question. But I’d argue we’re increasingly answering it the wrong way.
The retail price tells you what a phone costs. It doesn’t necessarily tell you what upgrading to it will cost you. The number on the price tag isn’t necessarily the number that matters. The more useful question is: what will this phone actually cost me? It’s a simple calculation:
Retail price – trade-in value – accumulated customer value + any cost of financing.
Put all of that together and you get what I’d call your effective upgrade cost. That’s the number I think consumers should increasingly be comparing.
For years, telcos largely worked as a transactional relationship. Customers pay their monthly bill and their provider supplies connectivity. When it’s time for a new phone, the process effectively begins again. We all know that time has gone.
If someone has been paying their mobile bill, has multiple connections with the same provider, uses their phone overseas and eventually trades in an old device, why shouldn’t that relationship contribute towards the cost of their next phone?
That’s the thinking at One NZ behind Phone Dollars. Phone Dollars can be earned over time and the result is that when the next generation of smartphones arrives, customers aren’t starting their buying decision from zero. They already have value to spend.
It’s one example of a broader change I think needs to happen across our industry: shifting the conversation from simply asking “What do I get this month?” to also asking “What is being a customer worth to me over time?”
There’s a broader challenge here for our industry. Telcos have traditionally competed heavily on plan inclusions, monthly pricing and network performance. Those things will continue to matter. But customers should also expect more value from the relationship itself.
A premium smartphone is a significant purchase. Helping customers reduce the real cost of owning one shouldn’t depend solely on a short-lived launch promotion. So next time a new smartphone catches your eye, don’t start with the sticker price. Start by working out what you already have. You might find your next phone is closer than you think.
