Do You Know This Secret to Winning Renewals?
Are you having trouble closing renewal deals? If so, Tim Riesterer has some great advice for protecting current relationships and driving repeat business. In an article for Sales & Marketing Management, Riesterer reports on a recent study his company (Corporate Visions) conducted in which they compared various messaging approaches to renewal conversations. The study found that salespeople should alter their pitches when asking for renewals.
“It may sound obvious, but in this era of challenging and provoking customers, this research shows that using that same aggressive approach in a renewal selling scenario will backfire, decreasing their loyalty and increasing their willingness to shop around and possibly switch to an alternative,” he writes.
Study participants, imagining they were employers hoping to boost employees’ 401(k) participation, had to choose whether to renew and stay with their current provider. Before deciding, they heard three different pitches from their “provider:”
- The status quo reinforcement message emphasized how well the current plan was working and retention rates; improvement over time. The pitch emphasized how much effort went into selecting the current provider in the first place. It also highlighted the risks and costs associated with changing providers.
- The provocative pitch also noted the progress of participation rates but it differed by bringing up a new idea: It suggested a complete alteration of how the participants enrolled in the program and included statistics to back up the proposal.
- The provocative pitch with upsell had the same message as the provocative pitch. But, it also included the option to add additional services to boost probability of participation (and this option cost extra).
Can you guess which pitch was successful? Riesterer reports that participants who heard the provocative pitches were 10% more likely to switch providers or shop around than those who heard the pitch that documented success and reinforced status quo biases. As Riesterer writes, “the status quo reinforcement message created statistically significant boosts in credibility, intentions to renew, and positive attitudes.” Keep this in mind when creating your next renewal pitch, and you may find that retaining customers is easier than ever!