Vodafone Spain launched a new smartphone program that enables subscribers to acquire handsets with interest-free payments over 24 months and comes with 10 GB of data during the first year of ownership. The program, called Lo Tenemos (“we have it”), also offers phones with no minimum contract period, a five-day repair service, insurance and a trade-in offer worth up to €450.00 off the price of a new model.
The company currently sells the Huawei P20 and Xiaomi Mi MIX 2 without tying the client to a contract period and plans to offer other smartphones in this way. With the repair service, Vodafone expects to return around 60 percent of phones within 48 hours and offers a loan unit as a replacement during that time.
It is almost always in a mobile operator’s interest to get full-featured smartphones into the hands of as many customers as possible. The more of their subscriber that have these devices, the more data gets consumed, and the more revenue the operator earns. The model of installment-plan payment for devices, with zero down and no long-term commitment to a particular plan, is calculated to appeal to budget-minded customers (as well as to customers in general) and therefore makes sense in terms of increasing the volume of data-enabled devices connected to an operator’s network. These arrangements are prevalent in the U.S. market, and Vodafone’s adoption of it in Spain may signal a trend toward the approach in Europe.
Spreading the payment for the device over 24 months keeps the monthly payments low, and de-linking this arrangement from any 24-month subscription plan obligation will satisfy the preference of many of today’s users for maximum flexibility and freedom, while still keeping the users within Vodafone’s ecosystem.
Furthermore, the free-data offer should be very effective in encouraging participants in the device offering to use those devices to or near their maximum capacity and thus help to form usage patterns that will remunerate the operator in the long run. We should note that 10 GB per year is quite generous in terms of monthly data allotment and should more than suffice for a great number of users.
The repair and trade-up provisions of the program are also quite attractive in terms of increasing customer satisfaction and loyalty. The latter in particular speaks to the operator’s desire to retain customers as smart-device users and to upsell them over time. It is more affordable for the operator to offer budget smartphones by Huawei, but it might be a good idea to extend the program in the future to higher-end devices from major Western brands.