Save Big by Actively Managing your Vendor Contract Renewals

Remember when you signed up for that new, personal cell phone or a T1 data circuit for your business? There was probably a really good promotion that created compelling value to select that service. Fast-forward 24 months and, chances are, there could be an even better value awaiting you at renewal—but will you know?

Knowing when each contract expires and scheduling the renewal evaluation with ample time before your contract expires is the key to saving big. I’ve heard horror stories of missing opportunities to save thousands of dollars per month, only because cancellation was not provided, in writing, 60 days in advance of the contract’s expiration. In industries such as telecommunications, this language is common and the contracts are iron-clad.

For example, I started the renewal process of my cellular contract three months in advance of the 24-month term. My provider told me I was eligible for an early upgrade by 60 days because of my valued business. I was able to trade in my old phone, get a new, $499-valued smartphone for free, and save a few dollars monthly on my contract. It was the same situation with my TiVo service: I was able to eliminate paying for service on one device and reduce the contract by $27 a month. In all, I am getting way better service for a significant savings.

Below are three things you must know for the opportunity to save big on all of your contracts:

  • Who is responsible for the contract?
  • Where does the contract live?
  • What is the process for evaluating and renewing the contract?

Assign a responsible party. If this is at home, make sure you discuss who is responsible for what contracts. If no one owns the process, then by default the vendor does, which puts you at great disadvantage.

Create a one-page system for the renewal. It should include the contract description, expiration, accountable party and key dates. At work, you can assign contract renewals to staff capable of managing the process. Be sure to assign and review the business process they create for each renewal and include this in the position description.

Document the qualities that you like about your service or plan so they are not lost in transition. Identify areas you may want to see improvement such as speed, functionality or price.

When renewing, be careful not to sign up for terms greater than 24 months. Any upfront savings you would receive from a longer contract term are likely dwarfed by the savings of a contract renewal at the 24-month mark.

It is not the job of your phone, cable or Internet provider to review your options. The onus is upon you or your company to do so. When your contract is up for renewal, there is probably another good value to be had by upgrading, switching plans or negotiating a lower price in exchange for another 12-month commitment.

My next column will share how MySherpa uses single-page systems to guide employees on how to perform their Sherpa roles.

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