AutoPoint Blog

Why Apple Isn’t Magic

Posted by Manuel Soto Friday, September 20, 2013

As I’m sure you’ve heard, Apple will start selling their new iPhones tomorrow. The buzz leading up to the announcement was typical with speculation running wild, leaked photos and chatter just about everywhere. After the announcement however, the buzz shifted away from excitement towards disappointment. People got so excited in the pre-announcement frenzy that they felt let down and many articles that followed criticized Apple for not being innovative enough and advised consumers to keep their iPhone 5. Even Wall Street reacted to this disappointment as it saw shares in Apple decrease by 5.4 percent after the announcement.

Yet, even though there exists a general consensus amongst technology sites that the iPhone 5S is not innovative enough to merit an upgrade, people still started lining up at the Apple Store in New York as early as 2 weeks ago; before the new phones were even announced. Consumers in Japan are in line despite a typhoon that caused flash flood and even evacuations in some areas.

Only the less expensive iPhone 5C has been available to pre-order yet it’s already seen over a million pre-orders in the US and they are expected to sell 5 to 6 million phones this weekend alone in comparison to 5 million iPhone 5s last year. With the iPhone 5C essentially being the iPhone 5 in a colorful, yet plastic, body and the iPhone 5S being widely criticized as not being a huge step forward, why are people still lining up waiting to buy the new phone?

In a word: loyalty. Apple has some of the most loyal users in the world. In fact, a study published by the Yankee Group based on a survey of 16,000 consumers states, “91 percent of iPhone owners intend to buy another iPhone.” While the Android platform may own half the smartphone market currently, (with Apple owning 30 percent) they even speculate that Apple will overtake Android by as early as 2015 in market share. Yankee Group VP Carl Howe shared his reasoning behind this:

“Think of the Apple and Android ecosystems as two buckets of water. New smartphone buyers — mostly upgrading feature phone owners — fall like rain into the two big buckets about equally, with a smaller number falling into Windows Phone and BlackBerry buckets. However, the Android bucket leaks badly, losing about one in five of all the owners put into it. The Apple bucket leaks only about 7 percent of its contents, so it retains more of the customers that fall into it. The Apple bucket will fill up faster and higher than the Android one, regardless of the fact that the Apple bucket may have had fewer owners in it to begin with.”

Android, through their open source platform and willingness to propagate amongst many phone manufacturers, increased their market share quickly with many options available aimed at all levels of consumers. Apple, on the other hand, took a decidedly different approach as they built their brand. To this day, they retain tight control over their phones, operating system, and content that can be added to and purchased for their devices.

Regardless of whether you are an Android or an Apple fan, the point is that no matter where your dealership stands in current market share, the key to overtaking your competition, regardless of the size of any lead they may have, is building customer loyalty. Apple has worked long and hard to accomplish this and it is paying off now more than ever. Most companies would kill for loyalty from 9 out of 10 customers. However, it’s not magic. Any business can increase customer loyalty and retention through listening and providing an exceptional customer experience…exactly as Apple has perfected.


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