The dust is settling over Battery Gate. I’ve heard many woes and seen people in disbelief. Is this really happening? Is a mobile phone the only product affected? Social media exploded with conspiracy theories and various law firms have started class actions. What can we learn from Battery Gate?
Sales and After-Sales
A relationship between Supplier and Customer starts with an initial sale. With array of tools Suppliers bid for repeat purchases:
- Dazzle them: Brand/ customer loyalty
- Force them: Technology/ customer lock-in
- Convince them: Maintenance & Value-added Services
- Help them: Operate & Ease-of-use Services
In the case of the phone we can see multiple types of product related repeat purchases:
|New phone||$999.00||In x years|
|Extended warranty||$199.00||Point of sale|
|Battery replacement||$79.00||Approx. after 2 years|
In this example the supplier drives its revenue figures through product sales and has little incentive to lengthen the life cycle of the product. After-sales revenues even jeopardize future product sales.
Many OEM’s/ Manufacturers will find themselves in exactly the same position: after-sales revenues are a welcome addition to sales revenues as long as they don’t compete.
Doing the right thing
So, what is “doing the right thing”? In case of Battery Gate consumers got the impression that the supplier was purposefully reducing the product life cycle, thus forcing earlier product repurchases. We’ll probably never know all supplier considerations in their course of action, we do know Battery Gate back fired … to a certain degree. Analysts predict that the supplier may see “mild headwinds” (see inset).
When considering “doing the right thing” from the customers perspective, the concept of Total Cost of Ownership (TCO) could come into play: the optimum of both the initial/ capital sale and the operational expenditures throughout the life cycle.
Does this mean we would rather buy a phone with a longer life span and user replaceable parts? I guess here we must make the distinction between “needing” and product and “wanting” a product. If you want the new functions and features you’ll probably forgive the supplier. Your repeat purchase will be the next product. If you need the product to generate output and outcome for your organization, you’ll drive your supplier, or third-party maintainer, to deliver after-sales services.
Would a Battery Gate in your industry impact your NPS and revenue stream? Would the headwinds be negligent, mild or violent? I believe being honest and transparent is your route to loyalty and repeat revenue.