OPTing In – The OnProcess Technology Blog

Summary:

• Complex devices such as “smart phones” and digital Pay TV services have steeper learning curves, leading to user frustration and higher-than-expected return rates.
• Costs of handling these returns, as well as training users, are high and getting higher.
• Opportunity costs of these returns are high as well, as anticipated revenues plummet and unanticipated costs escalate.
• Proactive customer outreach and training can mitigate these costs and keep per-customer revenue levels higher.

As our consumer technologies become more complex, the opportunity for wireless carriers, device manufacturers and Cable/Pay TV operators to realize higher per-subscriber revenues increases substantially. Data plans, bundled voice and data, digital programming and on-demand pay-per-view can enhance your customer’s experience while driving higher usage and, therefore, cash flows.

A casual sampling of our markets revealed that Sales of these newer devices have increased between 15 – 30% in ‘08 versus the previous year.

The downside of this digital revenue bonanza, however, has begun to emerge. The promise of an enhanced user experience has been shattered by the reality customers are finding: steep user learning curves, overly complex menus, unknown feature sets and unrealized benefits of increased capabilities.

As a result, users are returning complex “smart phones”, downgrading digital TV converters and, in so doing, often expressing their frustration by changing carriers and providers.

Ironically, the more that these more expensive devices are adopted overall, the greater the exposure to companies in the areas of Capital Expenditure, Replacement Stock Management, and Lifetime Value per Subscriber.  Have a look at this graph:

Smart Devices expose companies to ever-increasing return costs

In this example, we assume a typical wireless device, with an internal cost of about 1/3 that of a “smart” device, and a return rate of roughly half that of ”smart” devices.  With an ever- increasing proportion of “Smart” devices as a percentage of total adoptions, the expense of returns of these devices increases substantially over time. Chances are, you have under-predicted the level of returns you are experiencing.

This makes the need for a comprehensive approach to both Asset Retrieval and Customer Experience Management so critical.

If your Reverse Logistics and returns programs aren’t completely buckled down and optimized, the hit on your Capital Expenditures will be much greater, due to the increased cost of the more complex units. In addition, if the Customer Experience is not proactively managed during this critical time of frustration and dissatisfaction, you can easily lose a customer instead of satisfying them.

Moreover,  by proactively educating new customers and upgraders to a few key features and procedures on their new equipment, you can stem the flow of returns and realize those increased revenues you previously forecasted!

–sk