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February 19, 2016

Smartphone Prices & Satisfaction On the Rise Simultaneously

Customers these days are highly price-sensitive about just about anything. It's part of the reason online shopping has done as well as it has, offering up what people want for less money. With this in mind, new J.D. Power studies have found an unexpected set of circumstances working together: prices on smartphones are going up, but satisfaction with the purchase is also going up.

The J.D. Power 2016 U.S. Wireless Purchase Experience Full-Service Performance Study, backed up by the J.D. Wireless Purchase Experience Non-Contract Performance Study, examined the market and found that both satisfaction and prices are on the rise. Customers are getting less access to incentive deals and subsidies, and that's increasing average costs. These are up $31 over last year alone, part of an ongoing plan to move away from subsidies and toward equipment installment plans (EIPs) that charge the full price for the device up front, over a specific lease period, and then let the customer permanently own the device afterward.

Along with these price increases, though, has come much higher customer satisfaction. Virtually every sales channel saw rises in customer satisfaction, just from the last installment of the study. Cost of service satisfaction is up 16 points, phone sales representative satisfaction is up 15 points, and in-store sales reps are up 12 points. One of the biggest boosts in satisfaction, according to J.D. Power's senior director and technology, media and telecom practice leader Kirk Parsons, has come from boosts to data plans, allowing users better access to the devices that they're paying more to own and use. That's providing a greater perception of value.

Even for non-contract customers, satisfaction is on the rise. Overall satisfaction is not only up six points over the last installment, but it's also at the highest level since 2009. Interestingly, it takes less time to be a non-contract customer; average time spent for a full-service customer is about 48 minutes, though that's down from the last installment of the study.

In the end, as the Barenaked Ladies song briefly insisted, it's all about value. Paying more for a phone, particularly in shaky economic conditions, may seem out of line. When customers believe that the value is there, paying extra makes sense. Improvements  in the plans is certainly helping that value perception out, and driving greater satisfaction than ever, for now. It will be interesting to see if these numbers can hold, or if greater plan coverage and more data isn't enough to fuel satisfaction with phone purchases over the long-term. The changes in customer perception are comparatively recent, coming mainly over the last year, but will these hold as customers begin to expect expanded data as just table stakes?

For right now, a better value is improving customer satisfaction, and driving interest from a variety of sectors. It may not be able to hold out for long, but it might give the market a new lease on life in the short term. 

Edited by Maurice Nagle

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