Is it time to let go of auto-renewing telematics contracts?

Sean Maher, head of sales at Quartix

Auto-renewals are a contentious topic in the vehicle tracking industry.

With everyone feeling the financial pinch from the current global economy, it’s become even more important for customers to have the power to decide exactly when and how their money is spent.

I've got a lot of experience of seeing customers caught out by auto-renewal contracts, and the things that stands out to me the most are that customers are always surprised by it, and how rare it is that they even know it’s in place when they sign the original contract.

In most situations, when the company is coming to the end of a contract, they're keen to move to a new supplier.

They spend a lot of time and effort on researching the market and going through a supplier selection process.

They think they're going to make a move but then, suddenly, they've got another six months to go on their contract because it's automatically renewed.

So, their options are pay a lump sum to exit the contract early or put up with a substandard product or service level for a considerably longer time.

We've had this happen very recently with a customer that's just signed with us, where they were caught on this, and they’d been with that supplier for over 12 years.

They've said, categorically, they'll never work with that company again, because it's left a bitter taste in the mouth after what was a relatively good relationship.

And I see no possible advantage to auto-renewals.

Should we expect customers to be happy about staying on their current contract for another year or more at the same price as when they bought that product three years ago?

Without a doubt, the circumstances, if not the price itself, will have changed since then.

If a customer auto-renews, they’re not getting any benefits from those changes. There is no advantage for the customer. 

Most of the terms and conditions of a vehicle tracking contract will say you have to give notice at six months, so to avoid getting caught out, my advice is this. If you sign, let’s say, a three-year contract, mark the day, two and a half years into the contract — so six months out from the end — on your calendar, so you don’t miss it or you don’t service notice too soon.

Check the clauses in your contract, too, because they are they are well hidden inside the T's and C's.

I see auto-renewal more as a kind of trap to hold on to a customer for another six months or a year or even more.

But if you're treating your customers well, you don’t need auto-renewals to keep them.