First of all it is important to understand that when you take out a mobile phone contract, it is not with one company, you are effectively dealing with two (unless you go direct to the network provider). Typically you will buy your mobile phone from a retailer, either on the high street or online. You will then have to pay a monthly line rental fee to your network provider. The relationship between the retailer and the network provider is commission based. That is to say that the network provider pays commission to the retailer.
The retailer on the other hand has absolutely no influence over the prices charged by the network provider, they are fixed. In order to sell contracts the retailer will typically spend some of their commission on incentives for the customer. Once upon a time it was sufficient for them to simply give away a free handset. This was at a time when mobile phones were very expensive and were seen as a status symbol.
Today however, things are different. Mobile phones are a far more common and much cheaper commodity, so, retailers have to grease the palms of their customers with more enticing incentives, such as free laptops or even free televisions.
However, some customers do not want additional free gifts, they want the cheapest mobile phone deal possible, and this is where automatic cashback comes into play. As the retailer cannot reduce the monthly cost of a mobile phone rental, they offer to give some money back to the customer up front. So, for instance, if the customer tries to negotiate a 20% reduction in line rental, the mobile phone retailer will simply calculate the value of that discount and give them their money there and then.
The reason these deals are described as automatic cash back is that the earlier versions of these deals used a process of cash back by redemption, whereby customers had to claim money back at the end of the contract. Due to dubious terms and conditions attached to these claims for cashback many customers failed to receive their money, and lost faith in the cashback by redemption deals.
So, the automatic cashback deal came into play. These deals offered more realistic savings than the cashback by redemption deals, but, the payment was guaranteed. It was automatic, paid to the customer as soon as the contract was signed, and thus, the term automatic cashback was coined for this kind of mobile deal.
For customers wanting an automatic cashback mobile phone deal, without doubt, the best place to find one is online. Whilst it may be possible to find one of these deals on the high street it is far less likely. For a start, the high street mobile phone retailers do not generally offer such good deals or incentives purely because their overheads are higher than their online counterparts (though their customer service is usually better). Also, it is difficult for retailers to make money with these deals. The margins with automatic cashback deals are so tight that they require constant monitoring, taking into account commissions paid and the cost of handsets. This means the life of a particular deal is quite short, once that ends you (as a customer) 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 deal, as they will show all offers by all online retailers on one page. These deals 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 cashback deals are by far the cheapest way to run a mobile phone.
Patricia Montana is a mobile phone vendor specialising in mobile phone deals with automatic cashback. For more information on these and other forms of incentivised mobile phone deal please visit http://www.fabfonedeals.co.uk/
Tags: cell phones, technology, mobile phone, mobile phone automatic cashback, automatic cashback