BY Tim Londergan
If you’re struggling with customer renewals, you’re not alone. According to the Aberdeen Group, highly successful companies renew 56% of their agreements, while less successful companies renew 25% or fewer.
Contract expirations tend to sneak up on you. Granted, some contracts include a built-in renewal mechanism. Others require active negotiation to continue the relationship. Whatever your customer renewal platform entails, you can act now to secure the bond between you and your customers.
Practice Value-First Conversations
The Rain Group suggests renewal discussions begin by reframing the conversation around outcomes already delivered and those still ahead. This tactic discourages discount requests to focus more on progress made and solutions delivered. Other customer renewal tactics they recommend are:
- Create a “value highlight reel”. This is a showcase of concrete proof points such as revenue gains, cost savings or risk reduction. The highpoints position your company as an essential business partner operating with the customer’s best interests in mind.
- Engage with success stories. Using success stories that connect emotionally show how users’ jobs became easier, or executives met revenue goals using your product. Perhaps your customer gained a competitive edge or minimized risk.
- Set the stage for the next term. Preview “what’s next” by painting a clear picture of the next wave of results. It’s a great time to introduce new features, additional use cases, or broader product adoption.
The Rain Group says, “Renewal conversations are your chance to reinforce value, deepen relationships and align stakeholders for what comes next”.
Show Customer Impact Beyond Financial
Return on investment can take many shapes. Your product may provide operational efficiency, cost savings or risk mitigation. Key performance indicators (KPIs) may involve production gains, throughput or personal growth opportunities.
Customize a value message for each role
During the customer renewal cycle, quantifying these contributions can tie results directly back to your product while impacting various stakeholders. For instance:
- C‑suite executives want to see direct revenue impact or competitive advantages you bring to the table.
- Financial types need to evaluate your contribution as a cost-to-value or risk-reduction investment.
- End users, concerned with production, need to realize ease of use, see time saved, or workflow improvements.
- IT or security folks respect your product for its stability, compliance or ease of system integration.
Navigating multiple decision-makers through a complex contract evaluation can be tricky. Therefore, it’s important to tailor a value message for each role.
Train an internal champion
If you are fortunate enough to have an advocate for your product on the inside, make sure they are well-equipped. Set them up with slide decks, metrics, or competitive data so they can effortlessly convey your value message.
Customer Renewal is an Ongoing Process
Retention improves when sellers treat value communication as continuous, not as a last-minute scramble at contract end. What’s more, customers who enjoy working with you tend to return. The folks at Ironclad offer these renewal strategies for business growth.
Customer experience drives renewal
It should be obvious, but customer renewals are closely related to the overall customer experience. Beginning with your initial contact, and in negotiations you should assure clients that you are easy to work with. Electronic signatures and clickwrap agreements are conveniences afforded by modern contracts.
Use automated alerts
Calendars and spreadsheets are not reliable reminders of contract deadlines. Setting multiple alerts of 120, 90 or 60 days out is a good practice to encourage preparation. This gives you time to compose value conversations and strategize negotiations more thoughtfully.
Layer your contracts
Segmenting your pending contract renewals by industry, value or strategic importance is a wise move. This allows you to maintain concentration and focus your energy where it matters most.
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