Why you are still dealing with contracts

1 minute read

Fleet Management, IoT

 Matt has a problem. His GPS vendor won't get back to him, support tickets go unanswered, plus he needs new hardware track three more vehicles. Sales say they should ship in a few weeks. After putting up with this sort of abuse, Matt can't wait to find a better partner to help him deal with his fleet technology issues, but he is under a contract for another 18 months. If this scenario sounds familiar, you are not alone. 

In the year 2018 you can get television, cell phone service and even office space without a contract but for some reason, GPS telematics companies still require a 3-5 year contract for their services. And the story is the same everywhere, sign the contract and service goes to the wayside, what motivation do the sales and support staff at these companies have to deliver if they know you are locked in for years to come?

A lot of fleet managers we have spoken with tell us that this treatment is just something they have gotten used to, and their alternative as they see it is switching to another provider. And this, of course, means signing another contract and the chance they will get back into the same sort of treatment; there is some hope, however.

A newer concept used by software as a service (SaaS) companies adopts a trust-based relationship with their clients and allows businesses to control their technology, not the other way around. Using a pay-as-you-go monthly plan, the SaaS companies like Microsoft Office 365, Hubspot and Helpscout earn their service every month. If something changes and the client needs something different, they can quickly switch to different software that better suits their needs. Most SaaS companies also offer better pricing for clients who want to stick with them for at least a year and pay for the annual service upfront.

Wireless providers have taken this strategy to eliminate their contracts with consumer accounts, allowing hardware to be purchased upfront or financed over a term. This enables them to offer monthly service without the traditional two-year contract.

We adopted this model a few years ago for our solutions, and we don't plan on changing that anytime soon. Using the pay-as-you-go model allows us to build a stronger relationship with our clients and a higher subscriber retention rate.


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Tagged: Fleet Management, IoT

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