Executive Briefings

Managing a Successful Trade-in Program for High-Tech

Consumers often balk at the prospect of trading in old versions of equipment, while vendors do their best to encourage the move. Steve Brown, global product lifecycle manager with Hewlett-Packard Co., offers tips on how to manage trade-programs for old and out-of-warranty products.

Out-of-warranty products present a special challenge to tech companies that are offering an upgrade path to their customers. Customers must weigh the benefits of repairing or replacing a device. In the event, the original vendor might find itself competing with the open market for that customer's continued business.

"If we offer a trade-in program, they pay a little extra and get a top-line product, they tend to respond actively in a positive way," says Brown. "We figured that out. It was one of the drivers that caused us to begin offering trade-in programs. We were losing our customers in the open market by offering just repair."

The decision on how long to support a product in the marketplace depends on whether it was made for the consumer, commercial or enterprise sectors. The period might be just one to two years for the consumer, stretching to 12 years for enterprise customers. "As lifecycles compress," says Brown, "feature sets expand. We get a shorter period of time for consumer products, and strangely, a longer time for enterprise."

It's up to the manufacturer to make the case for an upgrade, using a "faster, better, cheaper" argument. Customers are further swayed by the offer of longer warranties for the new equipment.

Nevertheless, there remains a contingent of users that insist on sticking with older models, despite the fact that it becomes increasingly difficult for those individuals to download new apps. "All of us are pressuring the consumer where we'd like him to go," says Brown.

The other side of the coin, of course, is the challenge involved in managing reverse logistics when customers opt for upgrades. Brown says HP mostly hires third parties around the country to handle that flow. Recycling becomes an important element in the returns process as well, as high-tech manufacturers strive to meet the requirements of rules such as Europe's Restriction of Hazardous Substances (RoHS) regime. Very little of a high-tech product ends up in landfills today, Brown says.

To view the video in its entirety, click here

Out-of-warranty products present a special challenge to tech companies that are offering an upgrade path to their customers. Customers must weigh the benefits of repairing or replacing a device. In the event, the original vendor might find itself competing with the open market for that customer's continued business.

"If we offer a trade-in program, they pay a little extra and get a top-line product, they tend to respond actively in a positive way," says Brown. "We figured that out. It was one of the drivers that caused us to begin offering trade-in programs. We were losing our customers in the open market by offering just repair."

The decision on how long to support a product in the marketplace depends on whether it was made for the consumer, commercial or enterprise sectors. The period might be just one to two years for the consumer, stretching to 12 years for enterprise customers. "As lifecycles compress," says Brown, "feature sets expand. We get a shorter period of time for consumer products, and strangely, a longer time for enterprise."

It's up to the manufacturer to make the case for an upgrade, using a "faster, better, cheaper" argument. Customers are further swayed by the offer of longer warranties for the new equipment.

Nevertheless, there remains a contingent of users that insist on sticking with older models, despite the fact that it becomes increasingly difficult for those individuals to download new apps. "All of us are pressuring the consumer where we'd like him to go," says Brown.

The other side of the coin, of course, is the challenge involved in managing reverse logistics when customers opt for upgrades. Brown says HP mostly hires third parties around the country to handle that flow. Recycling becomes an important element in the returns process as well, as high-tech manufacturers strive to meet the requirements of rules such as Europe's Restriction of Hazardous Substances (RoHS) regime. Very little of a high-tech product ends up in landfills today, Brown says.

To view the video in its entirety, click here