In my opinion, one of the most abusive techniques employed by companies is the “give me your credit card” and by the way; “you are signing up for automatic renewals”. The most obvious reason companies do this is because the sales cycle is the most expensive component of the company’s revenue stream. Eliminating sales efforts reduces customer retention costs.
Not only does this practice eliminate the costs associated with getting customer to renew plans for another period of time but it also eliminates the need to keep customers happy. AT&T, DirecTV and XM Radio are notorious for this constantly, always offering significant discounts only to lock you into never-ending automatic renewals with ever increasing fees.
As busy consumers we don’t have the time to keep up with these scams and when we look for less-expensive and better service alternatives we are rudely reminded that we were automatically renewed for another period of time which will now cost us to get out of.
In the case of XM Radio, not only are you facing ever increasing fees and automatic renewals but you are also faced with the unpleasant fact that they are the only satellite radio provider, so if you want satellite radio in your vehicle you have to deal with them. But, if you play it right, not only do you get the satellite radio but you also get to get significant discounts.
Here is how I did it. I accepted the fact that they are the only provider for my vehicle and that as scummy and unethical it is for them to auto renew contracts I still have to deal with them. But I don’t have to play by their rules.
First and this is important, do not provide a credit card or pay from your checking account. As soon as you do that, you become a hostage to their scam and you lose all leverage over their outrages fees.
When I first acquired the service they were desperate to pad their subscriber base by adding a new account to satisfy Wall Street’s penchant for increasing sales figures each quarter. As a new customer you have leverage to negotiate a substantial discount so go for it. Their business model doesn’t care about the first year of service because they are looking to lock you into auto renewal purgatory.
As soon as you negotiate your best deal do not pay by credit card or with your checking account. If you do you lose any leverage when it comes to the renewal. You must remember that you must be prepared to pre-pay at least a year of service for this to work. I also recommend you only lock yourself into one year to give you flexibility in the future.
Once the deal is negotiated ask them for an invoice and tell them you will mail in a check. They will ham and haw but don’t fall for it, remember you hold all of the cards at this point because they need to report subscriber increases each quarter in order to keep investors happy.
When you get the bill in the mail, get yourself a money order and mail it in as payment.
When it comes time to renew, you will get a bill from them asking you pay an outrageous fee for your renewal. Do not pay it. Rather wait about a month after your account has expired for the notice that your service is about to get cut off. Now you have leverage.
The other side of the equation is that just as they have to report new subscribers they also have to report subscriber losses. Investors don’t like that. So, although the letters are threatening you with ongoing fees, because of their auto renewals and yes you are responsible for them because they hold your social security number hostage, keep in mind that you are only responsible for the one or two months of extended service you are using while you negotiate a better deal.
But you also have leverage. Innocently call them at the number they conveniently provide you in the notices and tell them you are calling to cancel. They will immediately call in the “client retention” specialist, or whatever they call them at the time. Again, tell them you are calling to cancel. Now you hold the cards.
The specialist will offer you a “special” that just got announced today, or some similar scam because they “value” their customers. Before getting bogged down in details; tell them politely that you will not provide a credit card or allow them to process a check via the telephone and if they want to keep you as a customer they need to invoice you and you will mail in the payment.
Oh sure they will tell you how convenient to pay by phone is and they will remind you that you are agreeing to auto renewals but don’t worry about that because the auto renewal language is only there to allow them to auto charge your credit card or your checking account.
After you have negotiated the best possible deal, wait for the invoice and again mail in a money order.
In my case, my first year of service was about $140 and this year it is only $108, plus I got two additional months for free while we went through their attempt to auto-renew and my contacting them to cancel cycle. They had originally attempted to bill me over $200 but because they couldn’t automatically debit one of my accounts they had to negotiate with me which got me the best possible deal, which is what capitalism, is all about.