Spotlight on measuring holistic smartphone performance (SKU/brand) with 7 key measures

One question I’ve often been asked is – “How to holistically measure smartphone performance (SKU/brand) and where does the shipments metric fit in?”

Measuring smartphone performance (SKU/brand)

There are many metrics by which a smartphone performance (SKU/brand) can be measured; the most common of them being the unit shipments

Quick note: Different entities (carriers, OEMs, retailers, etc.) and teams within (procurement, marketing, pricing, channel ops, etc.) the smartphone’s value chain would have different goals and as such will adopt variations of device performance metrics that best suit their needs

The post takes a generalized view on key smartphone metrics (beyond shipments) that help in constructing one such holistic performance picture (device standpoint)

Smartphone performance measure #1 – Shipments: The first step!

Shipments metric is typically the first and most common metric that comes to mind when comparing, ranking or evaluating smartphone performance – either particular SKU or the brand itself

Generally speaking, this metric represents the number of finished smartphones that have been shipped out… but…

…as with any one-dimensional metric, shipments too requires at least one other correlating measure to provide meaningful context to any smartphone performance and comparisons

Furthermore, shipments makes up the first stage in a smartphone’s lifecycle (particularly for flagship & iconic models) where it would be equally important to augment key post-shipment measures if the device’s holistic performance is being sought

Hence shipments metric by itself is just the first step in determining the holistic smartphone performance

Post-shipment smartphone performance measures

Exploring questions at key post-shipment stages of a smartphone’s lifecycle…

…that correlate to various smartphone performance measures under 3 key categories –

• True Device Sales (Volume)
• Device Lifetime Revenue (Revenue)
• Device Engagement & Loyalty (User)

Performance Category #1 – True device sales

Where shipments doesn’t necessarily translate into (1:1) ‘sales’, the following metrics could help derive the true device sales measure

Smartphone performance measure #2 – Channel point of sale (POS) sell through

Sell through metric typically represents the volume of smartphone devices that have actually been sold through to the end-user via various channel (i.e. POS)

The sell through metric paints a clearer sales picture (vs. shipments alone) and also provides a view into channel inventory performance (read: shipped BUT unsold devices)

Smartphone performance measure #3 – End user activation

This metric paints an even more accurate picture of true sales, derived typically from the first time the smartphone would have been activated by the end-user

The user activation measure could also be helpful in measuring the true sales performance in scenarios (or markets) where the smartphone may have ‘passed through’ multiple POS sell-through layers (e.g. bulk purchases, individual retailer / re-seller, etc.)

At this point; if deemed significant enough, device returns / recall volumes may also be factored in evaluating the actual sales performance

Performance Category #2 – Device lifetime revenue

Revenue metrics when augmented with Volume metrics provide the 2nd dimension of a smartphone’s holistic performance

Smartphone performance measure #4 – Net device margin

This metric could help evaluate Device Margin = Device Selling Price + OEM ancillary revenue – Costs 

Device Selling Price: The selling price per device to the OEM (may also be substituted with ASP – Avg. Selling Price)

OEM Ancillary Revenue: Applicable to OEMs who also offer branded ancillary products & services (think: branded accessories, content, etc.) AND if the smartphone has directly contributed towards revenue from the same 

Device Costs: Per device-associated costs (e.g. subsidies, logistics, acquisition, marketing, commissions, etc.)

Smartphone performance measure #5 – Ancillary & attachment revenue

Some smartphones have a unique potential to generate higher ancillary & attachment revenues than some other models (think: SKU specific higher tariff plans, accessories, App spend, insurance add-ons, etc.)

Including potential ancillary & attachment revenue could further help measure the holistic smartphone revenue potential; particularly for its value chain partners (retailers, wireless telecom carriers, et al.)

Smartphone performance measure #6 – ‘2nd life’ revenue potential

Some smartphones (particularly flagship & iconic models) preserve their value well beyond their ‘primary life’… 

…and as such are re-purposed by Carriers & Retailers to generate extended revenue from this 2nd Life (think: refurbished, certified preowned Post/Prepaid, etc.)

This measure when integrated with associated net margins, price erosion & related CLV metrics could help provide a smartphone’s lifetime revenue potential (read: DLR – Device Lifetime Revenue)

Category #3 – Device engagement & loyalty

Smartphone performance measure #7 – User satisfaction & loyalty

This metric(s) represents the user satisfaction & loyalty with their smartphone and could be a result of the various device / OEM attributes (e.g. UX, UI, pricing, OS features, updates, etc.)

This measure could also be correlated to device experience, engagement &/or abandonment measures and forms one of the base inputs into predictive modeling of repeat & ancillary purchases

This measure could be derived from a combination of device usage analytics including Apps, content, social media listening / analytics, post-activation surveys, promoter / detractor scores measure, et al.

Device engagement & satisfaction metrics also provide a valuable indication (read: potential driver) of future sales & revenue (x-sells, up-sells, BBTIU, etc.)

Holistic smartphone performance

Together, the aforementioned metrics (or combination thereof) provide a more holistic view of smartphone performance as opposed to just shipments alone

These measures may also be weighted according to their importance / requirements to the various value chain entities, teams, local market conditions & statistical model being sought

Furthermore; using a holistic performance approach also overcomes the one-dimensional shortcoming of using shipments alone and enables a more leveled comparison between smartphones (SKUs & OEMs), irrespective of their focus on volume or margin

So… 

So to answer the question – how to measure holistic smartphone performance?
From its holistic performance indicator (including measurable & subjective metrics) over its lifecycle… well beyond the initial shipments metric

As with any statistics / research it is equally important to take into account the accuracy & confidence levels of each of the metrics’ underlying data sources as well (OEM reporting, component supply chain, retailer POS systems, App installs, surveys, et al.), assumptions and models

Similar concept could also be applied to wide range of devices within the IoT categories that rely on ongoing service revenues & user engagement in addition to initial hardware sales

Stay tuned!