Apple, Samsung Nearly Equal in Smartphone Customer Retention

Just like in the animal kingdom, this is all about dominance. And the implications affect propagation of the species.

Apple and Samsung were both able to keep large numbers of their respective smartphone customers. But to to the extent there was switching, many more Samsung customers switched to Apple than vice versa. The numbers suggest that Apple is still the more highly regarded brand, at least from the standpoint of prestige. Its customers are wealthier, better educated and younger. Apple benefits from being the aspirational purchase.

But Samsung has the demographic advantage. There are many more people with limited budgets than there are those for whom price is not a consideration. And this is borne out in the data about those switching from older feature phones: they tend to go to Samsung first.

Apple has resisted introducing a lower priced version of its iPhone series because it is not yet ready to cannibalize its own higher end sales and because it fears adulterating the brand, thereby threatening its status and margins further into the future. The company has never feared cannibalization in the past - tablets, anyone? - but its fears about the price of losing iconic brand status are legitimate. Once diluted, such perceptions are very difficult to re-strengthen. However, this data suggests that the market may be there for Apple's taking once it is ready to adopt that strategy. And the statistics imply that once a customer chooses Apple, he or she will upgrade to another Apple product - and stay for life. JL

Greg Keizer reports in Computerworld:

But Apple did a better job of stealing Samsung's customers than vice versa

Apple and Samsung were almost equally able to keep customers in their respective smartphone folds over the last 12 months, an analyst said Monday.

"Apple has built one of the world's most successful brands, and it's well known for the loyalty of its customers," said Michael Levin, co-founder of Chicago-based Consumer Intelligence Research Partners (CIRP). But Samsung's not that much different.
"You can hate each other as much as you want, but you're the same," said Levin of the two groups.
According to CIRP, 42% of iPhone buyers over the last year had upgraded from an older iPhone, a sign of customer loyalty.
But Samsung's ties were nearly as strong: 38% of Samsung smartphone buyers had come from an older Samsung smartphone.
The nearly identical statistics for Apple and Samsung were unexpected. "It really surprised us, that Samsung's brand loyalty was nearly equal Apple's," Levin said.
For those figures and others Levin cited, CIRP had tallied four quarterly surveys conducted between July 2012 and June 2013; each survey polled 500 Americans who had bought a smartphone in the preceding 90 days.
Levin attributed Samsung customer loyalty to its aggressive brand marketing, including in-store placements and a strong string of television ads. "Samsung threw a lot of money at [brand awareness] and to a large extent they succeeded," he said.
There were differences between the two companies' ability to woo each other's customers, however. Among people who switched brands, Apple was able to pilfer three times as many Samsung customers (33%) as Samsung was able to steal from Apple (11%), Levin said.
Meanwhile, Samsung had the advantage over Apple in drawing customers from so-called "feature" phones, the basic models whose sales were eclipsed by smartphones for the first time in the quarter that ended June 30. CIRP's data said that 37% of Samsung smartphone owners had upgraded from a feature phone, while only 26% of Apple customers had dumped a basic model for an iPhone.
Levin credited Samsung's broader smartphone portfolio -- it has many more models than does Apple, with a wider range of prices -- for the company's ability to attract feature phone owners.
Other data collected by CIRP included PC and Mac ownership -- as expected, iPhone owners were more likely to own an Apple Mac, while Samsung customers were more likely to own a Windows PC -- age, income and education.
Generally speaking, Apple smartphone owners were slightly younger than Samsung's customers, and more likely to have an annual income over $75,000 and a college or advanced degree.

Apple and Samsung are nearly neck-and-neck in their ability to hang onto customers. (Image: Consumer Intelligence Research Partners.)