MOBILE AND PROTECTION INDUSTRY

The Accident and Emergency service of the connected world

By Kevin Gillan, Managing Director for Europe, SquareTrade

Ownership of tablets and smartphones has exploded in the last five years. Already industry analysts are putting bets on the year in which some markets will reach saturation.

Compare this with the timeframe in which television became central to most of our lives – several decades – and we find that there is no comparison.

Tablets and smartphones have become runaway successes that enable us to run away, untethered, from our desks and our homes.

Take a trip on any train or pause for a moment on any sidewalk and you will recognise that slightly stooped posture of someone consulting their hand-held oracles, like 20th century versions of monks on their way to prayer.

On most train carriages that I have shared in recent years, the majority of my fellow travellers have been staring intently at the soft glow of their devices rather than the papers and magazines that they would have been looking at five or 10 years ago.

Both devices have consequentially become essential to consumer and business users. In a very real sense they are the Swiss Army knives of the 21st century, multi-functional devices that are a fixture in the briefcases, handbags and pockets of consumers around the world.

With miniaturisation and Moore’s Law, of course, comes fragility. For instance, in the UK alone, damage to iPhones and Android phones has cost smartphone owners more than £1.2 billion since 2007.

A recent SquareTrade study showed that smartphone owners were nearly 10 times more likely to suffer from accidental damage than loss or theft. We treat these essential, fragile devices as our third hand – and indeed they play that role – with the bruises and scars to prove it.

Several factors have combined to put these devices into the hands, clumsy or otherwise, of a multitude of users.

In addition to connecting us to everyone we hold dear as well as our jobs, companies like Apple, Google and Amazon (which recently launched Fire, its long-rumoured smartphone) have created vast credit-card enabled ecosystems with devices that enable consumers to transact. These devices include tablets and phones. The devices are essential to commerce.

Mobile operators have subsidised the cost of ownership through contract-based tariffs. According to the Pew Research Center, 83 per cent of 18-29 year olds in the US own smartphones.

Forty-nine per cent of workers in the US earning $30,000 or less now own a smartphone. What’s more, production methods have improved – and cost of production has fallen, enabling an enormous demographic to become wired for mobility.

Social networks – Facebook, Twitter, Instagram, Pinterest and others – are enticing a new generation of digital consumers to appreciate the value of ‘now’.

With our lives increasingly nomadic (have you noticed the recent uplift in ‘out of office’ alerts?), a smart mobile device is essential to our lives. They are supercharged remote controls. We can do whatever we want, wherever we want.

Cloud-based data (look at the way that Microsoft is reengineering its business) requires us all to have a portal to our data wherever we are.

‘Windows on every desktop’ used to be Microsoft’s mantra. Surely now it is ‘Windows on every street corner’.

Combine these factors and you have a highly compelling user case. A recent piece of research in the UK found that the average UK citizen has used six separate digital channels in the last six months. Most of these channels are used on the move.

Remove the device and we are like ships without anchor. These devices and what they enable really matter.

Drop or damage your device and you are immediately off grid. The pressure begins to mount.

Consumers recognise that unlike most modern gadgets, our phones and tablets not only connect us to our mail and our banking, but hold our treasured repositories of photos, music, videos, contacts, our social lives and so much more. Offering customers cover for a smartphone is a form of virtual life insurance.

Delivering on the promise of cover – in that moment when consumers need us the most – that is where most warranty companies fall down. In fact, most consumers put on their battle gear before making a call to their insurance company. We don’t believe it needs to be this way and that when a consumer calls in that moment of crisis, they should expect great service and a new phone within 24 hours.

A damaged device is a headache – but for people without cover, it’s an irresolvable short-term financial burden. Without mobile carrier subsidies, the cost of a replacement device is usually more than £400.

It’s for all of these reasons that SquareTrade and other providers are finding an enormous global addressable market for the peace of mind that cover for their device provides.

Retailers, especially in consumer technology, are by necessity focused on managing stock, marketing and promotion to contend with ever-shortening product lifecycles.

Handling after-sales support is increasingly complex and costly, and in the case of device protection, has eroded the brand in the past: poor customer support, endless fine print and loopholes have cast a shadow on the retailer that sold the consumer the warranty.

Partnering with protection plan providers, retailers have not only seen attach rates increase but have also created a positive customer experience that connects customers months and even years later in a positive way with the retailer that sold them the protection plan.

It is a reputational reality that the days of customers tolerating poor customer service – and long delays in getting the service they paid for – are long gone. The age of instantaneous communication has created the age of instantaneous expectation.

Until recently, smartphones were largely status symbols in these markets because they lacked the network infrastructure necessary to take full advantage of their functions. These hurdles are gradually lifting and penetration is increasing.

It is difficult to recall the world before mobile devices were an everyday necessity. The expensive, heavy brick phones of the late eighties are now small precision instruments, packing firepower that exceeds anything that was dreamt of then.

It makes perfect sense that a device that fulfils so many functions can go wrong in an equally elaborate list of ways. What does go wrong? Our own data shows that accidental damage comes in all sorts of expected and unexpected ways.

Accidental drops, pet damage, breakages by kids at school, phones dropped in the bathroom, sat on – the list is endless.

Device manufacturers are doing a great deal to make their products robust and durable, but the sheer volume of use makes it inevitable that at some points in our working lives or during leisure activities our devices will come a cropper.

Delivery of timely replacements is what’s needed – and what the time-poor consumer, desperate to resume his or her connection, needs. Dealing with a provider with the real-time knowhow, built on fast-track analysis of global fault reports, offers reassurance to the consumer as well as relative affordability thanks to economies of scale.

It’s not just consumers’ mobile devices that services like SquareTrade replace, it’s their peace of mind, and at times, their sanity. Pew Research carried out another poll at the beginning of the year examining the technologies that we simply couldn’t bear to be parted with. Top of the list was the internet, which 46 per cent said it would be hard or impossible to give up. Second on the list was the mobile phone, of which 44 per cent said the same.

Here’s the thing. Mobile devices and internet usage are rapidly becoming one and the same. They represent our communities, they keep us organised, informed, motivated, and calm, in touch and connected. Robbed of that connection, as I said earlier, we find ourselves at sea.

That’s where businesses like SquareTrade help. In a sense we are the Accident and Emergency service of the connected world. We all have stake in staying connected. Our task as a global protection provider is to reconnect our customers at a rate that exceeds their expectations.

Kevin Gillan is managing director for Europe at SquareTrade, an protection plan provider for consumer electronics and appliances headquartered in London and San Francisco.