Samsung is expanding its recall program and making it more lucrative for current Galaxy Note 7 owners to stick with the company.
Samsung (SSNLF) on Thursday said that any customer who exchanges his or her first-run or replacement Galaxy Note 7 and buys another Samsung smartphone will get a $100 bill credit. Those who buy a smartphone from another company or simply want a refund will get a $25 bill credit. Samsung previously offered $25 to all customers who asked for a refund or replacement for their Galaxy Note 7 handsets.
The credits are similar to those Samsung is offering in its home country of South Korea, where customers will get a coupon worth 30,000 won ($26.91) when they get a refund. Those who opt for another Samsung smartphone will get a total of 100,000 won with their exchange. Samsung said in a statement the compensation was for consumers’ “big inconvenience.”
The move comes as Samsung finds itself in the unenviable position of trying to rebuild its brand in the wake of exploding Galaxy Note 7s. The smartphone, which launched in August, was quickly found to have a manufacturing defect that caused its battery to overheat, the smartphone to smoke, and in some cases, burn up and explode. Soon after, Samsung issued a recall and offered a $25 credit to any device owners. In addition, Samsung said that its replacement handsets would be safe and customers shouldn’t fear for their safety in the new Galaxy Note 7 devices.
However, in the last week, several reports surfaced from owners who said that their replacement Galaxy Note 7 units were overheating and smoking. After conducting an investigation into the latest claims, Samsung discontinued the Galaxy Note 7 this week and urged the millions of owners who bought one of the devices to bring it back for a refund.
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The risks are high for Samsung now. The company is watching shareholders lose trust in its ability to rebound, and according to recent data from research firm Branding Brand, 40% of existing Samsung customers aren’t planning to buy another smartphone from the company. Nearly a third of Samsung converts will buy an iPhone.
The decision to offer a larger credit on another Samsung purchase might be an attempt by the company to hedge against customer losses. Samsung is ostensibly hoping that by offering customers four times what they would get by buying an iPhone in place of the Galaxy Note 7, they’ll stick with Samsung’s devices.
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Although the credits seem to suggest that’s the case, Samsung hasn’t confirmed that the $100 rebate is designed to keep customers put. Instead, Samsung Electronics America president and COO Tim Baxter said Samsung is trying to do what’s right for its customers.
“We appreciate the patience of our consumers, carrier and retail partners for carrying the burden during these challenging times,” Baxter said in a statement. “We are committed to doing everything we can to make this right.”
