Make contract renewal a sure thing

Make contract renewal a sure thing

Recognize this? Salesperson clinches the deal, customer moves over to the account manager, renewal sales rep schmoozes the customer to renew, maybe upgrade, their contract when the time comes. And so it goes on. But is that conveyor belt really the best way to nurture a customer experience that is going to see them come back year after year?

It’s time to realize we’re operating in a changing world and changing industries – what worked last year, last month, might not work any more.

Whether it's renewing a contract with a service provider or the lease on a commercial property, the time for contract renewal is ripe for dealing with customers’ issues head on. Make the renewal-of-contract discussion a valuable chance to sit down with your client to assess how your relationship is working and what you can do to better serve their needs.

In Customer Success and the Critical Path to SaaS Renewals, Jason Whitehead wisely pointed out “Initial purchase decisions are based on hope. Renewal decisions are based on experience.”[1]

And when you put that idea alongside RightNow’s 2011 Customer Experience Impact Report that found “89% of consumers began doing business with a competitor following a poor customer experience”[2] , you should really get to thinking about how you deal with your contract renewals.

When “companies are doing what they’re supposed to be doing — building, selling, and servicing a product that customers can’t live without,” says Jason Lemkin co-founder of EchoSign, “renewals should take care of themselves”

Quite simply, if customers love your product, and far more importantly, your customer service, they’re not going anywhere. But, if you’re not stepping up with customer service, be warned that “a customer is four times more likely to buy from a competitor if the problem is service related vs. price or product related” [3]

For your customers, it’s not all about money, it’s about being cared for. In fact, 74% of consumers have spent more due to good customer service.[4]

So how can you make contract renewal a sure thing?

First of all, you can’t assume that leaping in with a metaphorical bunch of roses at the eleventh hour is going to cut the mustard. This is about longevity. Know when each client’s contract is up for renewal and pre-empt it by a good month or so by remind them contract-renewal time is around the corner and offer a meeting to discuss the renewal. Then get started on your homework, which will put you at a 15% to 20% renewal advantage to those companies that just wing it.[5]

Assess your value in the market

Believing in your product is all well and good, but before you enter contract renewal negotiations, take some quality time to research your competitors. Are they undercutting or are they cutting corners?  What could your competitors offer your client that you hadn’t thought of? By better knowing your ever-changing market, you can better serve your client.

Know your data

Check your customer’s critical metrics – their login activity, adoption, usage data, scores from any customer-satisfaction surveys – to evaluate whether they are making the most of your product or service. The chances are, you know your product better than your client does, so they might not be getting the most out of it they could. And in the day-to-day running of a business it’s easy to not find the time to become an expert in whatever service, software or product you’re supplying.

Identify, also, any changes in circumstances that might affect contact renewals: is there a new executive? Any mergers or acquisitions you need to know about? What about changes in industry regulations? Knowing your stuff means you can be better prepared to share Nuggets of Value and guide your customer effectively. Think support not sales.

Look to the future

Now we know it’s not all about price – in fact, very little of it is, but if you’re on the top end of the scale, you should gently remind your client why they should continue to pay a premium. The world is moving at a crazy pace. Show you’re ahead of the game by giving your client a glimpse into what their future holds with you. Exploring their future benefits of their contract renewal should outweigh any focus on elements lost in the updated contract.

How are you finding contract renewals in this brave new world? Share your experiences below.

Sources

[1] http://labs.openviewpartners.com/customer-success-management-critical-path-saas-renewals/

[2] http://www.oracle.com/us/products/applications/cust-exp-impact-report-epss-1560493.pdf

[3] http://www.bain.com/publications/articles/turning-on-utility-customer-loyalty.aspx

[4] http://about.americanexpress.com/news/docs/2014x/2014-Global-Customer-Service-Barometer-US.pdf

[5] http://www.acquisitioninstitute.com/uploads/CONTRATNEGOTIATIONSLA.pdf

 

Last Updated: 23 March 2017

Back to top