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October 24, 2012

Trade-In Programs: The Facts You Need to Know

By Jamie Epstein, TMCnet Web Editor

Are you sitting with your smartphone in hand as you read this, wishing you could be using the newest, just-released version that comes complete with all the bells and whistles including a faster processor, better memory and an HD camera? Well, your wish is their command—buyback programs that is -- or companies whose goal is it do drive customer satisfaction by replacing outdated gadgets with brand new ones.

Headquartered in the great state of Texas and founded back in 2006, CExchange began powering trade-in retail operations in 2007 and now covers 26 different product categories which includes pretty much anything you think of in terms of consumer electronics that are either handheld or easily shipped.

 I recently had the chance to speak with Bob Kilinski, chief marketing officer for CExchange, in regards to some scams eager, gadget loving consumers can sometimes fall for when faced with “upgrade fever.”

Kilinski said, “We started something a little over a year ago that I think differentiated us right away from competitors especially in the online space. We realized that for consumers sitting at home trying to do a product evaluation that are anticipating getting a specific value on a device, it is fairly difficult because all of the trade in companies want to have customers define exactly what version of the product they are looking to send in to pay them the exact right price. But, consumers tend to think the quality of their device is higher than it is which in turn was causing a lot of consumer dissatisfaction. So, we switched our entire model to a two condition pricing system in which the product is either working or not working, giving fair working values which ultimately lead to extremely high customer satisfaction scores.”

Getting the best and newest gadget these days is almost like getting that next fix for a drug addict. Kilinksi equated this growing trend to that of a status symbol. With so much hype around a new product launch with the buzz first originating in the technology company, it continues to catch on like wildfire until a majority of the public truly believes they need this offering to survive.

Image via Shutterstock

Yet sometimes this pandemonium can lead to consumers being taken advantage of via bait and switch pricing, extended trade guarantees, and online vs. in-store programs.

  • Bait and Switch Pricing

“A lot of programs out there make the consumer essentially become a technician as they outline multiple conditions with 15 or 20 different criteria that an individual must choose from. Then if the consumer selects what they believe is right for their product and subsequently sends the device in, I would say based on those scales these companies have to have higher than 50 percent dissatisfaction rates because there is no way consumers can be right about all the options they throw at them,” he added.

While they think they are going to get $300 for their old device, they now are surprised to receive a notification they will only be receiving $150. “In some cases, a customer will get a new offer for $150 but if they don’t take it they can opt to get the product back, while in other scenarios they get overly excited, don’t read the fine print and get a new offer for $150. If they don’t accept it, too bad because the company stated within its terms and conditions that it doesn’t send the product back. Consumers need to be aware of what they are doing, signing up for and what’s really going to happen to them in these situations.”

  • Extended Trade Guarantees

When a new product launches, a lot of companies will guarantee the price until a certain date, yet consumers are probably not going to get what you originally thought and have now wasted two to three weeks of time, which means  the value of their product has now dropped significantly. While locking in a price is great if you are getting a high price, it isn’t so fabulous if you then select to sell it elsewhere as you will likely lose 30 percent of the value. “It is a double whammy,” Kilinski commented, “when you lock in a supposed price from the date of an announcement. It sounds great on paper, but are you really going to get what you think?”

  • ·         Online vs. In-Store Programs

While typically you won’t get paid as much as an actual retail store as you would if you traded in your gadget via a website, what you will receive is instant gratification. You make a trade, receive a gift card and then buy what you want but the price is typically lower because these retailers need to take into account that the sales associate won’t always know that there is something wrong inside of a product. These stores have to factor something in to protect themselves. However with an online program, no one is willing to give you the money with a product sight unseen. Instead, they first have to get it to see its current condition.

When looking towards the future in regards to these types of exchange programs, consumers will begin to expect it and they will become highly competitive.

Kilinksi concluded, “People will want to know they are getting the best value and this will become one of their selection criteria that determine where they buy from.”

Edited by Rich Steeves
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