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10/14/14

Contract balks: Why annual contracts easily kills consumer interest

Less than a decade ago, most products and services came with one glaring loophole.
You had to sign up and commit to some sort of agreement beyond just a handshake. In fact, everything from cell phones to cable and everything in between carried with it a stubborn, cumbersome and unwanted contractually agreement.
If you wanted a cell phone, you had to sign up for two years. Cable typically carried some sort of annual contract as well. Even the idea of exercising and getting healthy came with a long term deal involved. Most gyms and health clubs not only sported high prices for walking on a treadmills or lifting weights but also asked you to sign up for one year at a time.
Fast forward to present day, and the idea of a contract hardly carries the kind of weight it once did not that long ago. Cell phone companies still deal in contracts, but that hardly is the first offer they put on the table. The heavy hitters like AT&T and Verizon offer plans that include a monthly fee for phones but minus the long term contract.
Cable is in the same boat as Comcast and Verizon ditched the contracts in favor of month to month plans that still include fairly decent pricing and incentives to join their team versus the competition. Even your neighborhood health club and litany of franchises such as Planet Fitness and L.A. Fitness have cut their prices in half and allow you to stop whenever you'd like, whether you've been on that elliptical for 45 minutes or decide to stay at the gym for years.

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So why the change of heart over time?
Most of it has to do with competition, mainly. As more players enter the field, the general idea is to stay ahead of the curve and be as fairly pleasing to customers as possible, while still making money and turning a profit in the process.
The dollar doesn't go nearly as far as it once did, so fighting for the consumers money has allowed the general public to win big when it comes to not only what you're paying but allowing you to call the shots and set the terms of most agreements.
That being said, some companies still haven't gotten the memo, namely the likes of Direct TV. This satellite provider still wants you to sign on for two years, even though competitors aren't asking for that kind of longer relationship. Direct TV stands by its business model and points to its low cost pricing as reason to justify the contract.
But that type of thinking isn't the kind of universally appealing mentality that customers flock to these days. They want to know that if they lose their job tomorrow that they won't be saddled with NFL Direct Ticket or a subsequent package they can't afford.
Competition in particular genres aside, the customer doesn't necessarily want to always be right but they'd like the peace of mind that they can start cutting expenses when they need to without being told they have to finish the remainder of a contract that they're ultimately regretting.
Thankfully, most contracts have been replaced by forward thinking and a better tailored plan to draw customers and put them at ease in the process.

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