How often do we pay for things we don’t need because we don’t think to question our long-standing outgoings?
Big companies, especially utilities, telecoms etc rely on consumer and business inertia to generate huge profits. What do I mean by that? Well, it’s simply the fact that for many people, once they have signed on the dotted line, it is easier to just keep making the monthly payments (especially if they are done via direct debit from their bank account) rather than go through the process of checking for better deals and switching to another service provider.
Even now, when there are numerous websites that will do all the comparisons for you and even handle the process of switching and managing the change to payment details, a lot of people will simply just not do it.
This is one reason why many companies are prepared to offer very generous terms to new customers to get them to sign up for contracts, as they know that customers will often keep on paying the same rate even though, over time, it has become a poor deal. The longer the initial term of the deal, the more likely that customers will stick and not switch
Every regular payment should be scrutinised in the same way that you would check your small change in the local shop.
I’ve just recently reviewed my domain name holdings and online hosting plan and saved my business a significant amount of money which previously trickled out almost unnoticed in a steady stream of outgoings spread over the year.
There are other ways that corporations boost their profits by capitalising on consumer inaction.
Did you know that gift certificates/cards/tokens purchased from popular outlets for friends and family can boost profits for retailers due to often hidden terms that see the gift cards expire after 12 months? This renders the money spent on them pure profit.
In 2006 it was estimated that the value of unredeemed gift cards was almost US$8 billion. Many people are unaware of this and savvy/unscrupulous (your choice) businesses take advantage of it. Some states in North America (e.g. California, Massachusetts, Ohio, Washington) have enacted laws to eliminate non-use fees or expirations.
Maybe there is an opportunity here to differentiate your business from theirs by advertising gift cards that don’t expire. I’m sure your accountant/CPA will brand that advice as reckless or irresponsible(!) but in practice it won’t make much difference to the percentage of your gift cards that are actually redeemed. If you are not currently offering any form of gift/delayed redemption card they can be very profitable in almost all sectors and you might like to give it some thought.