For anybody unfamiliar with incentivised cellular phone offers the term automatic cash-back may seem a little peculiar or confusing. I mean, why would a cellphone company give automatic cashback, and what is meant by automatic?

First off it is necessary to realize that if you take out a cellular telephone contract, it is not with a single company, you are effectively dealing with two (except if you go direct to the network operator). Usually you will purchase your mobile from a shop, either on the high street or on the web. Then you will be obliged to pay a monthlly bill to the mobile network. The relationship between the store and the network provider is solely commision based. That means that the network provider pays sales commission to the retailer.

The store cannot  change the monthly cost billed by the network, this is fixed. To help sell more contracts the store will typically spend some of the commission on incentivised deals. In the late 1990′s it was enough for them to merely give away a free mobile phone. This after all was a time when cellphones were really expensive and were often seen as a status symbol of sorts.

These days though, things work differently. Cellular Phones are more common and are much cheaper, so, stores increasingly have to ply their customers with increasingly tempting incentives, for example free laptops or even free televisions.

Notwithstanding some customers are not interested in free gifts, they want the cheapest cellular telephone offer possible, and this is where automatic cash-back comes in. As the store cannot cut the monthly cost of a cellular telephone rental, they instead offer to give back some money to the consumer on the spot. So, for instance, if the customer tries to obtain a Twenty Percent reduction in line rental, the cellular phone store will simply calculate the value of thatdiscount and refund the cash imediately.

Automatic cashback deals are not to be confused with free line rental or cashback by redemption deals, in which consumers have to claim cash back later on in the contract. Due to dubious terms and conditions attached to these claims for cash-back many consumers did not received their refund, and lost faith in the cashback by redemption offers.

So, the automatic cashback promotion came into play. These offers promised more modest savings than the cash-back by redemption deals, but, the payment was guaranteed. It was automatic, paid to the customer as soon as the deal was completed, and thus, the term automatic cash-back was coined for this kind of mobile contract.

For consumers looking for an automatic cash back phone deal, without question, the best place to get one is online. Whilst it may be possible to find one of these offers on the high street it is unlikely. For a start, the high street mobile retailers do not generally offer such good deals or incentives purely because their running costs are a lot more than those of their online competition (though their customer service is normally better). Besides, it is challenging for shops to make money with these deals. The margins associated with automatic cashback deals are so tight that they require constant monitoring, taking into account changes to the levels of commission paid and the cost of the phones themselves. This means the shelf life of a given deal is quite short, once that ends you (as a consumer) have to wait for the next automatic cashback deal to come along.

For this reason mobile phone comparison sites are usually the best way to find an automatic cashback promotion, as they will show all offers by all online shops on one page. These offers are obscure, representing a tiny amount of the total number of deals on offer, and, you will have to accept an older less well featured handset in order to obtain one. But for the thrifty, automatic cash-back deals are by far the cheapest way to run a cellular telephone.

Tagged with: • • •

Filed under: Mobile Cell Phones

Like this post? Subscribe to my RSS feed and get loads more!