How To: Take Control of a Telecom Renewal

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Your telecom renewal is coming up and you’d like to be prepared for it.  I’m going to guide you through the process, so you’re confident with your new agreement.

This particular post is written for the company who has had a positive experience, or at least relatively positive experience with their existing carrier and you aren’t itching to switch providers. You still want to make sure you are being a good steward of your company’s resources and getting the right products and services for your end users.

Coming out of contract? Do you need to do anything about it?

If your company has internet, phone services, or WAN services from a telecom company there is a good chance that someone signed a contract to establish those services.  Coming up for renewal means that you are reaching the end of that term length for which those services were signed.  Signing a renewal contract means that you are going to sign an agreement committing to more time with that carrier with a new set of terms outlined.

If you take no action, you will still continue receiving services. At that point either your contract would auto-renew or you go onto a month to month term. 

So technically, no you don’t have to do anything, although it is usually in your best interest to take some type of action.

Avoiding Auto Renewals

Auto-renewals are not ideal. You almost always want to avoid being Auto-Renewed. An Auto renewal clause would be stated in your original contract. Being auto renewed means you miss your chance to get a better deal and ultimately miss out on getting more value for your company’s telecom infrastructure.

If you plan on renewing a contract, taking action ahead of the term end date would avoid the auto-renewal kicking in.

If you do not plan on renewing, find or request your original contract.  There is likely verbiage in there that will explain how to avoid the auto-renewal.  It is typically a matter of writing an email or calling the support line and requesting that your account does not auto-renew.  Make sure you have a confirmation in writing from the carrier stating that your services will not auto-renew.

Getting the Best Bang for Your Buck

Two phrases that I commonly hear from my customers are:

  • “We want the lowest price possible.”
  • “We need the best / fastest service”

I’ve always interpreted this to mean, “We’re looking to obtain the highest possible value from these services.”

Ultimately your objective with the renewal process is to make sure that your company has the right set of services at the right price point. Having the right telecom agreement in place can be a competitive advantage, but is not likely going to be the reason your company’s business model takes off.  However, having the wrong telecom agreement in place can prove to be a real headwind. 

What Documents to Have When Beginning the Telecom Renewal Process

  • Previously signed agreement(s).
  • A few recent invoices.

3 Variables to Consider

In a telecom contract, there are three main items you’ll be concerned with at renewal, term length, prices and services.  Certainly there are other components which make up an agreement, but the point here is to focus on the main components. 

#1 Term Length

The default term length I see most customers take at renewal is whatever they signed for when the last contract was signed. Example: If they signed a 3 year term initially, companies often request another 3 year term.  Nothing says you need to do this.  It’s possible to sign a 3 year term and then renew for a 1 year term.

  • It’s different for every carrier and their pricing, but generally speaking you can expect that the longer the term you commit to, the lower the rate that you will get.
  • Getting a lower rate and signing a longer term, doesn’t necessarily mean that you will spend less money.  Remember technology services become less expensive over time.  By signing a 3 year term you are locking in a price point for 3 years, when the market rate of that service will be lower in the future.
  • I like the 2 year term length.  It will be slightly more expensive than the 3 year and ensures your prices will never be too far out of whack with market rates. It also limits your ETF liability by 33%. 

#2 Price

There are a range of different prices paid, by different companies, from the exact same carrier, for the exact same service.  Your objective should be to be on the low side of that range in what you pay for the service.

Companies That Overpay For Services

Generally speaking when I see an instance where companies are paying more than their peers for a similar services it’s because of two reasons.

  1. They signed up for that service a long time ago.
  2. They’ve done nothing since then.

 As years went by the account moved out of contract, nothing was done and the compounding effect of yearly rate increases start to work against the company.  Fixing this is generally as simple as calling the carrier and getting a new agreement in place.

Companies That Are Getting A Good Deal

Companies paying lowest for services do the following:

  1. Stay on top of contract end dates.
  2. Shop around at each renewal and make sure they are getting fair market rates.
  3. Ask for discounts.

#3 Services

Contract end dates are a natural time to evaluate the services from your provider and make sure they still fit your needs for now and the foreseeable future.  

The most common change of service that happens alongside a contract renewal are bandwidth upgrades. Even if your number of users remains the same, everyday applications and websites are designed with a tendency to consume more bandwidth.  Don’t keep the same bandwidth for the same price.  You should be thinking about one of these value adding options:

  1. Keep the same bandwidth for a lower cost.
  2. Upgrade bandwidth for the same price.
  3. Get a lot more bandwidth for more money with a better value to you.

What Does the Future Hold?

When you are signing a contract, you’re not signing it just for today, you’ll need to put some thought into future plans. I find it helpful to think about the need for future telecom services with three categories in mind:

  1. Buildings: Is your company planning to be in the building for at least the amount of time that you are reviewing the agreement for?
  2. People: Does the company plan to have more people, less people or relatively the same amount of people going forward?
  3. Company Initiatives and Tech Projects: Are there any tech projects or company initiatives that will impact your telecom requirements?

Shopping Around

If you have been generally happy with your existing carrier and plan to stay with them it still makes sense to check with the other carriers in the area.  While it might not make sense to switch carriers to save a few dollars, you want to make sure you’re not grossly overpaying for the service.  Check with the other carriers to find out if you are paying considerably more for comparable services. If so, you should ask your existing carrier why their prices are much higher than the other carriers. They might provide an answer that convincingly highlights ways that their services are really worth more. They could also consider a lower price point if the services really are comparable.

If they are unable to prove their value or improve their offer, you could end up switching carriers after all.

Ask for a Deeper Discount and Promotions

If you don’t ask for discounts or promotions, you might not be offered any.

For improving your chances of obtaining one:

  1. Ask.
  2. Have a reason for asking.  Even if it’s not that good.

Example ask: “We’ve checked with the other carrier in the building and for their comparable service, their prices are 17% lower.  We value our partnership and we’d prefer to continue doing business with you. Is it possible to get a deeper discount on this service?”

Promotions you can ask for:

  • You can ask for credits. Ex: 1 or 2 Free Months.
  • The same price points with a shorter term length. Ex: Is it possible to get these same prices on a 2 year term instead of a 3 year term?
  • Ask generally what promotions are going on for customers like you.

Early Renewals

Telecom companies sometimes will allow you to renew your agreement before the term end date actually arrives. If it works for your business, it could be a good option for you.

Some carriers let you renew the contract:

  • 6 -12 months before it expires.
  • Halfway thru your contract.

Upgrading - Coterminous

Signing a telecom contract doesn’t mean you are stuck with those set of services for the entire contract term.  Telecom companies will allow you to upgrade services and typically without pushing back the contract end date. Downgrading services can be more difficult.

Other Things to Check While You're Renewing

Renewal time is good reminder to check on a few things.  

Authorized Users – Who is authorized to access your account?  Are those the right people? Does anyone need to be added or removed?

PIN Number / Security code– This is a code commonly used as a security question.  Make sure you and your authorized users know the PIN #.

Multiple Locations – Depending on the number of sites in your organization, it could be a good time to try and sync up contract end dates across multiple sites.  It’s common to sign contracts as you need them over time, this creates a situation where you have many different contract end dates.  See if you can condense those down into fewer contract end dates.

Order of Operations: Renewing a Telecom Contract

  1. Identify the rep you’ll be working with.
  2. Have an account review with a renewal conversation.
  3. Shop around and process your information.  
  4. 2nd call with telecom rep :
    • Tell them what you want.
    • Get pricing
    • Ask for discounts and promotions.
  5. Request and review agreement.
  6. Sign and return.
  7. Invoice review – In the weeks and months to follow, check invoices to make sure the appropriate changes have taken place.
  8. Track your next contract end date – Add calendar reminders for when you need to start thinking about this again.

You Got This

Getting a great deal on your telecom services doesn’t require being a slick negotiator. It requires being prepared, understanding the process, knowing what you want and asking for it.

If you have any questions along the way or would like a second set of eyes to look things over, schedule a free consultation and I will happily take a look.