In a bid to retain customers, Samsung Electronics is giving larger financial incentives to people who choose to exchange the ill-fated Galaxy Note 7 for another smartphone from the company, rather than seek a refund. In the U.S., the company is giving customers a $25 bill credit through carriers and retailers to customers who return a Note 7 for a refund or for any other branded smartphone. But if they choose to exchange the Note 7 for any Samsung smartphone, they will get a whopping $100 bill credit from select retailers and carriers. The company did not immediately provide further details on the program.
The company had earlier announced a $25 incentive for customers exchanging their Note 7 for another Samsung product. On Thursday, the U.S. Consumer Product Safety Commission announced an expansion of its Sept. 15 recall of Note 7 phones that it had put in place with Samsung after it found that the lithium-ion batteries in the devices can overheat and catch fire.
Under that program, Samsung was to ship replacement phones or provide refunds for around 1 million phones sold before Sept. 15. The replacement phones that Samsung shipped did not fare better, and the second recall announced by CPSC now includes 1.9 million phones, of which 900,000 are apparently the replacement phones. CPSC said the hazard in all the phones was the possible risk of the batteries overheating and catching fire.
In an analyst report soon after the guidance cut, Macquarie Research wrote that Samsung has been “resilient” in the mobile phone market, and weathered many crises, including the “flop” of the Omnia smartphone running the Microsoft mobile operating system and patent litigation from Apple. Macquarie warned that some potential Note 7 buyers, who it estimates could have accounted for sales of 14 million phones, may now move to Apple’s iPhone or phones from other vendors, which seems to explain the largesse Samsung is bestowing on Note 7 users who stay with the company’s smartphones.
The analyst firm warned that it is critical for Samsung to repair its brand equity with its forthcoming Galaxy S8. “Once it figures out what went wrong with the Note 7, its new Galaxy S8, a more important flagship model than the Note series, can help repair the tarnished brand and recover sales/profit margin,” the analyst firm added.