[Exclusive] Stop Subscription Cancellations... LG Electronics Analyzes Customers' Credit Ratings

Training 3,300 Professional Care Masters
This Year's Goal: Expanding Subscription Business, Emphasizing "Care"
Subscription Sales Quadrupled Last Year
In-depth Demand Analysis Based on 16 Years of Rental Know-how

LG Electronics has started applying consumer credit analysis to aggressively expand its home appliance subscription business model.

According to the electronics industry on the 22nd, LG Electronics has set a policy to analyze customers' credit ratings using credit evaluation company information such as NICE Credit Information Service to minimize subscription cancellation rates.

The home appliance subscription service is considered a core business area for LG Electronics. Last year, subscription business sales grew by more than 75% compared to the previous year, approaching 2 trillion KRW. This year, the company is also aiming to expand its home appliance subscription business model as its top priority. To achieve this goal, LG Electronics is actively utilizing consumer credit information to reduce the biggest risk in the subscription market, which is the cancellation rate. While it has been known that home appliance companies conduct extensive analyses on customers' gender, age, appliance usage volume, usage period, number of devices used, and appliance consumption preferences, the fact that detailed analysis of customers' credit information is also being conducted has not drawn much attention.

This approach borrows the subscription operation know-how accumulated through the 'water purifier rental service' that has been ongoing for 16 years since 2009. An LG Electronics official said, "Through the long-standing water purifier rental business, we have conducted sufficient demand surveys on which potential customers should be targeted for subscriptions," adding, "We are using external companies such as NICE Credit Information Service to analyze customer credit." He added, "This is to prevent the risk of cancellations."

LG Electronics' home appliance subscription business is rapidly growing by meeting the diversifying needs of customers. LG Electronics has set a goal to triple subscription business sales compared to last year by 2030 and to nurture it beyond a unicorn business with trillion-KRW scale sales into a star business.

To this end, LG Electronics is further accelerating the sophistication of its subscription service by increasing the number of professional 'Care Masters,' who manage subscription services, from 1,800 to 3,300 as of January.

The Care Master qualification system, introduced in 2022, is a certification granted by the Human Resources Development Service of Korea to enhance the expertise of 'Care Managers' who visit homes to provide care. Currently, LG Electronics has about 4,000 Care Managers under its care-specialized subsidiary, Hi-Care Solution, and 8 out of 10 of these managers have been certified as Care Masters. This meets the goal set last year to cultivate 80% Care Masters.

An LG Electronics official explained, "This is to standardize the quality of service, which can vary depending on the manager, and to provide customers with consistently excellent service."

The home appliance subscription business model is a field that LG Electronics President Jo Joo-wan has recently been emphasizing the most. At the world’s largest IT and home appliance exhibition 'CES 2025' held in Las Vegas, USA, earlier this month, he introduced, "LG Electronics has the advantage of having 4,000 to 5,000 Care Managers, and the core of the subscription business is that these managers visit homes to provide care."

The reason LG Electronics is focusing on expanding its subscription business is that the subscription market has been activated after the COVID-19 pandemic, and the pace of technological change has accelerated. Additionally, in an economic downturn, it is advantageous to increase regular contact points with customers rather than just selling products one-time.

Competitor Samsung Electronics also entered the home appliance subscription business at the end of last year and has begun actively targeting the subscription market. Samsung Electronics operates the 'AI Subscription Club,' selling major home appliances such as refrigerators, washing machines, air conditioners, and TVs in subscription form. They are seeking differentiation by combining free repair services and care services through an all-in-one pricing plan.