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Is the iPhone losing its Backbone?

Forewarned is Forearmed, as they say.

What can we, as sales leaders, learn from iPhone's recent sales decline? 

Leading one of the world’s most successful sales companies has to be a tough job. After the passing of Steve Jobs, many investors expressed their concern about the future of Apple and its lack of succession plan. But frankly, looking at wider dynamics, you don't need to be a computer expert to figure out why sales are down.

Whilst new CEO Tim Cook was quick to attribute a downturn in sales to a decline in the Chinese economy, salespeople, investors and thought-leaders across the world have suggested that there are wider problems surrounding the brand, with many of them being common challenges that sales leaders face day in, day out.

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Firstly, let's remind ourselves of Apple's stratospheric successes.  

Previously led by the enigmatic Steve Jobs, Apple shot to fame through the creation of the iMac, iPod and iPhone. And, since the early 2000’s Apple has consistently been one of the most recognisable companies in the world. Renowned for sleek design and innovation, Apple's sheer desirability has enabled them to sell at a premium.

However over the past year something has changed.

 

Innovation

One of the biggest motivations for buying a new iPhone was upgrading. Ten years’ ago, upgrading meant huge improvements to the product, such as camera improvements, and fingerprint ID to name a few.

But, more recently, there are many consumers that no longer feel the need to upgrade every year. Why? Quite simply, because the changes have been minimal and largely irrelevant for too many of us.

In addition to losing their 'upgraders', Apple’s 'first timers' - those making their first smartphone purchase, are also dwindling. Nowadays, most people wanting a smartphone of some description have already purchased one, and with so much choice in the marketplace, users aren’t limited to Apple or Samsung products in the same way they used to be.

This should not have come as a shock to journalists and investors, and to many, it hasn’t. Tim Culpan - Bloomberg, wrote an incredibly prophetic article back in August, where he made it clear that a downturn in sales was fast approaching. And he wasn’t the only one.

A large number of salespeople and tech insiders have been suggesting this for several months.

 

Pricing

Apple's 2017 iPhone X was the first £899 iPhone to start this high-priced phone trend, and as a one-off device to celebrate the tenth anniversary of the iPhone's existence, this was fair enough - we all know ‘limited edition’ products command a premium. 

However, as Apple’s prices continued to rise, it began to isolate its loyal customer base. There is a limit to how much consumers will pay and it seems that Apple have discovered where that ceiling lies. Especially when products aren’t demonstrating the same levels of innovation.

It’s worth noting that the iPhone generates nearly two-thirds of Apple’s overall sales, so whilst other Apple products are still generating income, is it enough to support Apple on the whole?

 

So, what can we learn?

Firstly, knowing and understanding your customer in every sense, including their all important price sensitivities is key. Mistakes in managing their own cost base, and passing these premiums on, has also contributed to the steep drop in profits across Apple as a business.

 

So do you know your customers price threshold?

For salespeople, the qualification is often the most important aspect of the sales cycle. Really getting to grips with your client's needs and wants are fundamental to a successful process.

If you have to sell at a premium, then having the right justifications are a key part of your sales strategy. You need the innovations, the services, the marketing, and the calibre sales pitch to go with it.

 

Are you providing a true added value customer experience?

Apple are famously driven by customer experience. From their mould-breaking 'chapel of apple' stores, showcasing an exciting range of glorious products, (with which interaction is actively encouraged), to the  'genius' bar, and the 'techie cool' and insightful customer team, all these things have added to the customer experience. Phone their customer service line, and unlike the usual low bar we are used to these days, you will find it's answered swiftly by knowledgeable people who clearly have pride in what they do, and the business they work for.

So, take a leaf out of Apple's guide here. Leverage every opportunity you can to create differentiated and meaningful customer touch points. It will lock in your customers, and protect your price premiums.

 

Are you innovating and cross selling?

Apple’s genius has been its stream of profit-making innovative services.

From Apple Pay to Apple Music, to Apple TV, they are experts in building and monetising a wide service offering. In fact, according to a number of tech magazines, Apple is continuing to invest in these alternative streams with rumours rife that they’re investing heavily in a gaming service. These additional revenues help protect the business from downturns in sales in any one area - like the iPhone.

This merits of this kind of diversification strategy are applicable to so many businesses. To future proof your business, it's important you explore and leverage any additional revenue streams. Are there any other areas that you can monetise or upsell on?

 

So, where does this leave one of the worlds most successful companies? The first thing to bear in mind is that whilst Apple’s iPhone sales are declining, they remain an impressive $265.6 BN business, with an array of extraordinary assets under their belt.

 

To quote Jeff Kagen who, in a recent article for Computer World, shared his thoughts on the future of Apple. ‘Users will remain satisfied. The investor, however, may be a different story’.

 

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