I finally made a phone call that has been on my to do list for the past month. It’s been on the back of my mind for a while because I didn’t want to miss it and get a heart attack after seeing a high-balance statement. Have you ever faced a shockingly high bill after forgetting that a special promotion rate expired? Forgot to call your service provider?
I’m sure many of you have and it’s not cool at all. You know you should have researched alternatives before the expiration date, but sometimes we’re just not that diligent. Life gets in the way. We keep being busy and have little time to pay attention to how we can save by looking for better offers.
Also, some people don’t like to bother with the nuisance of contacting a service provider, so they continue to pay a regular rate on their service. But I know you think differently and that’s why you’re reading this. There’s an opportunity cost here. You’re not just missing out on the monthly savings that you could accrue by getting a discount.
About two years ago, we struck a deal with Verizon. We ordered Fios for $29 for high-speed internet for two years! That cut our internet cost by almost a third! We never had such a great internet deal, let alone for two years.
$29 for high-speed internet is a super sweet deal! The regular price for this service is $74.
The offer was due to expire last month. Best case scenario – we would get the promo rate extended, otherwise, we’d settle for some discount off the regular price. Paying $74 is too much for us. We can afford it, but we have better plans for our money.
So, I called the customer service line and told them that we have set up internet with a competitor and would like to cancel the service by the end of the month.
The rep didn’t ask me why I was canceling, but instead said that our promotion was going to be renewed for another year.
Here’s how the rest of the conversation went:
Rep: “Sir, did you know that we are extending your promotion for another year without a contract?”
Me: “No, I wasn’t aware of that.”
Rep: “If this your first time calling?”
Rep: “If you stay with us, we’d renew it and you can keep it on a month to month basis. And you can cancel it at anytime.”
Me: “That’s great! I just called your competitor today, so I’ll go ahead and cancel that new service. Thank you!”
Notice that I didn’t even ask for a discount. I gave her the impression I was out the door with a great offer from a competitor and that put me in a position of strength.
Now, you might be thinking: “Ok, Mr. Enchumbao, so you’re saving $45 a month, which is $540 a year. It’s nice, but what’s the big deal? It’s not $4,111 like you indicated in the post title.”
Not so fast, folks. I’ll get to that big number in a minute.
Show me the money!
Albert Einstein once said: “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
If you understand how compound interest works, then you probably have a good sense of how those $540 can turn into thousands of dollars over time. Let’s illustrate how that would work in the following scenario.
Since we’re able to save $540 in expenses over the next year, we can invest it into our retirement accounts.
So, let’s say we go ahead and invest the $540 from our salaries into the 401(k)s as pre-tax money. At a 25% tax bracket rate, this money turns into $720 pre-tax! Let’s say that money stays invested in our 401(k)s for thirty years yielding a 7% return. For thirty years we don’t have to move a finger to make this money grow. It would grow on its own to $4,111, before taxes and inflation!
All it took was five minutes of my time to make that phone call and realize some serious savings.
How I calculated the annual return on the $720 savings.
Now, mind you, we’ve been taking advantage of this deal for two years already. So, imagine the previous savings!
Go to the beach, relax, enjoy life – your money is still growing
Whenever you can realize some savings on your dollar bills, think about compound interest. Once you invest that money, you won’t need to work for it again, and can move on to enjoy life, while that money works for you! A dollar is not just a dollar. Think in terms of what your money could be worth in the future and you’ll unleash the beast inside of you that will, ultimately, make you rich.
You’re worth to a company a lot more than you think
Sometimes we’re afraid to ask for discounts. We might think that a company won’t give us nice deals because they won’t profit if they hit their bottom line. But the truth is that corporations make money from you in different ways and not just by the direct service that they provide. Think stocks.
Having a certain number of subscribers allows a company to win over a competitor. The value of a business is also dependent on the number of subscribers. Let’s say that Verizon has 10 million subscribers and Comcast has 3 million. Which one do you think is more appealing to investors?
Think of Netflix as an example. The company added 5.2 million subscribers during the second quarter of this year and the stock soared by more than 10%.
It’s in your service providers’ best interest to continue adding subscribers.
Also, if you cancel your service, it can cost your service provider five times more to get a new customer than retaining a current one. You’re worth a lot more than you think to a company, so use this knowledge to your advantage when you make that call!
My technique before calling a service provider
Before I pick up the phone, I check what competitors are offering. Besides helping to show that I’m not bluffing, this gives me a ceiling of how much I’ll be willing to pay for the service. Even though I’m looking to keep the same price level (floor) or less (Why not? Let’s head to the basement!), I’ll be willing to keep the service if they’re willing to match at least what a competitor is offering. However I don’t mention how much I’d save with the competitor right away and hope that we don’t have to go there.
After all, I’m here to “cancel the service”, not renegotiate. You’ve got to show them that you’re already out the door.
Tip: If there’s no competition in the area, tell them that you found other means and don’t need the service. Go as far as saying that you’ll be using your phone as your primary means for the internet. I’ve heard of people using their mobile phones as primary means of internet, so you won’t sound like a liar. You can also say you’ll take advantage of free internet at work or at the library.
If nothing works, end the call, and call back at another time. Next time, you’ll most likely have better luck with another rep. If nothing else works with the new rep, then ask to speak to a manager.
In other instances where you have an issue that needs resolution. It might even be worth elevating it to the next level of management until it’s resolved to your satisfaction.
My wife once went as far as sending a letter to a CEO of a company because they wouldn’t refund her money due to some confusing rules about airline credit usage. The CEO’s dedicated client team responded and the credit was provided. 🙂
I’m a firm believer that you only need to make the money once and then let it work for you. All those moves to lower our bills is what allows us to save aggressively and prepare for early retirement. Wouldn’t you want to save more as well by calling your service providers to lower your bills?