Renewals are an important aspect of a salesperson’s business, but this focus can be neglected. Often, reps are focused on prospecting and gaining new business, leaving current clients on the back burner. Focusing on retaining clients may not be as exciting, but it’s necessary for revenue. “Existing customers should be treated with the same attention and dedication that you show to new prospects if you want to retain the maximum number of customers long-term,” writes Julie Thomas for LinkedIn’s Sales Blog.
But, how do you encourage renewals? Thomas has three suggestions:
- Provide a frictionless customer experience
- Identify why customers cancel
- Begin the renewal pursuit with the end in mind
Renewals = Revenue
Reps may not realize just how valuable renewals are. Thomas reports that, “increasing customer retention by 5% boosts profits by 25%-90%. Therefore, the time you spend improving your customer retention rate could be your most profitable activity.”
Provide a frictionless customer experience
One way to boost retention rate is to ensure that your current customers have a smooth road to renewal. Jumping through hoops, poor communication and a reactive approach do nothing to encourage customers to renew. Be prepared now for when the time comes for renewals. The more proactive you are now in making the process seamless, the easier it will be. This involves working on a consistent approach. “To make purchasing simple for your customers, embrace a buyer-first culture,” Thomas writes. “Provide a frictionless customer experience where the original salesperson (the ‘hunter’) and the renewal salesperson (the ‘farmer’) speak the same language and have the same approach.”
Identify why customers cancel
Thomas reports that the primary reason customers don’t renew is due to a perceived lack of value. As a seller, you need to examine the history of the contract in order to encourage renewals. Analyze if there are any potential reasons the customer may feel they didn’t get the value they expected; obviously, you must be proactive with this and do this work prior to a contract ending.
And keep in mind that a lot has changed recently. Considering 2020 alone, it’s important to requalify those customers. “The reasons your customers bought from you initially may not be the same reasons that they’re buying today,” Thomas explains. She suggests asking yourself specific questions during this requalification process, such as:
- Does your product or service meet an identified need in a unique or superior way?
- Does your product or solution still solve problems or address issues that are important to the client?
- Do you know how the prospect will measure value and the expected outcomes from the new contract?
- Have you identified the people involved in making the renewal decision?
- Do you have a mutual plan to realize the expected value and deliver the anticipated outcomes? (The renewal is a whole new sales cycle.)
Begin the renewal process
To read tips from Thomas on how to take the next steps, check out the rest of her article. Together, these three approaches can help you create a well-rounded plan to keep your renewal business strong.