Category Archives: Renewals

Want Renewals? Step 4 – The Close

Yes! You Need to Close.

You’ve done all you can to provide the best possible customer experience.  You have a terrific customer success team and you regularly communicate with all of your customers to offer help and suggestions – without being too sales or spammy.

Throughout the year, you’ve kept your customer success and your renewal sales team talking and working together so you know who is really using all the features, who might be needing something with a bit more horsepower (or less) and you’ve shared stories with your customers about others  who’ve had success using different features or solving different problems.

At least 120 days out from your annual deadline, your renewal sales team has executed a contact plan that has intelligently added voicemail messages to your email reminders because this is no time to risk emails being ignored. A goodly portion of your renewing customers have let you know that “Yes” they plan to renew.

So don’t screw it all up now by just sending out the bills and crossing your fingers that the money will come rolling in. Some will, but not enough.  This is the time for your sales team to directly engage with your renewing customers and close the deal!  Better yet, wherever there is an opportunity, this is when your sales team truly pays for themselves by up selling and cross selling your renewing customers.

I worked with a company once who made the mistake of backing off the customers as soon as they agreed to renew.  The reps never really closed the sales and even worse, since each sales group handled a distinct product, intra departmental conflicts precluded any attempt to up sell or cross sell and each sales team jealously guarded their client rosters.  If you don’t believe I don’t blame you, because this is crazy talk.  But it’s true never-the-less.

Book appointments. Your customers deserve that much respect for their time from you. Take the opportunity for your sales team to deliberately review their business needs. Look at changes that have happened in the last year. Look at new opportunities on the horizon.  Somewhere along the line, you probably told your clients about how you didn’t just want to take their money, you wanted to be their partners.  Make good on your promise to add some value.

Even the best-managed companies are going to lose some customers every year and the bigger you grow, the harder it is to replace the customers who churn out. So, employ every possible defensive strategy and the rock solid close, the up sell and the cross sell are among the best defenses.  It only takes a small increase to make a big difference.

Yes. If you’re thinking that you can’t possibly do this for business that renews every month, you’re right.  For larger sales or multiuser licenses, think about how often you can sensibly re-engage and create the “new close” opportunity

 

 

Want Renewals? Step 3- The Decision: Ask Early and Often

Is putting added emphasis on pushing customers early and often for a decision to renew is worth the effort? According to a 2011 report from Morgan Stanley, on average, for the technology sector, 30-40% of the revenue and about 50% of the profits are driven by recurring revenue. For those exclusively focused on web-based software or services, the numbers are obviously going to be higher.

There are a few other factors to consider, the specifics of which will vary by industry:

  • Many companies that depend on recurring revenue models do so knowing that it takes roughly the first year of revenue to pay back the acquisition cost. Renewals are the only road they have to profitability.
  • Confirming the renewals is actually a two step sales process; getting the decision and then confirming the close.
  • Over 45% of customers who did not renew their contracts, claim they were not contacted to ask for the renewal*
  • By one month, the renewal rate for contracts that have expired will be about half of what it could have been if followed up earlier.

So, is a concerted effort to get a yes/no renewal decision from your customers worth the effort? Yes. Clearly it is.

Use a multi channel approach to gain the decision. Realistically, almost everyone will use email as their first line of contact. It’s fast, easy, cheap and should do a decent job to gain the easiest decisions. Everyone already knows that much, but that 45% number, who claim they were never contacted flies in the face of emails adequacy as a sole source of contact. It’s much too easy to ignore and this decision is too important to the financial future of the vendor to be ignored.

The second line of contact is to call. This is the quickest, surest way to cut through the clutter of the email environment and guarantee that your customers know you are looking for a renewal decision. Start your calling 120 days ahead of the renewal date.

In the early stages, if you haven’t used the phone already to support your customer service outreach or customer nurturing programs you’ll probably find that the contacts you thought you were communicating with aren’t there anymore. So you’ll need to find the new influencers. You are going to hit voicemail, so plan a series of intelligent and compelling messages and use them along with your continuing emails to get a yes/no decision. If you’ve put a good sales process in place, those specific responses will prep your sales team for their closing calls.

*ServiceSource Recurring Revenue Index by Wavelength Analytics, July 2013

Want Renewals? Step 2- Customer Nurturing – Think Negative Churn

It would be nice to believe that your customers are loyal; that their relationship with you is valued, and they will give you a chance to respond to any claims or promises made by your competitors. Yes, it would be nice to believe that but not too bright.  Even though you can assume that a certain percentage of your customers will renew their agreements with you, on a case by case basis, it risks the health of your business to look at any one account and assume their continued business.

Until that renewal agreement is closed and the next period is paid, your customers are really not much more than warm leads. Until it’s time to close that next payment, you might want to think about the advantages of keeping those leads warmed up with a customer nurturing program.

“But wait!” you say.  You have an account management and/or customer service/satisfaction team assigned to existing accounts and this is part of that job.  You’re totally correct, your account management/ customer satisfaction team has that objective firmly on their plate. But, this type of customer nurturing is NOT based on building satisfaction for the current state of affairs. This customer nurturing program is truly a sales initiative with three distinct goals.

  • Reinforce your competitive preference
  • Introduce and build interest in cross sell possibilities
  • Introduce and build interest in upsell possibilities.

In terms of a communications plan, what does this look like?

Look at a quarterly message that’s distinct from your newsletter or other easily ignored (sorry, but its true) email communications.  Woo them, just like you did before they became your customers, with invitations to events, demonstrations and webinars.  Feed them a generous diet of market and issue oriented content that’s genuinely useful to them.  Don’t bombard them with your specifically self-serving propaganda. Believe me, that gets boring very quickly and will damage your share of ear. Instead, stay within your market niche and offer content on issues, trends & problems relevant to their business.  That kind of information gets read…. and remembered…. and valued.

Naturally, you’ll want that content to also illuminate the opportunities and dazzling benefits presented by your cross and upsell products and services. Afterall, this is a business you’re running, not a library. When it comes time for your renewal sales team to close the business, set them up with a reasonable chance to actually grow your YOY revenue. Without upsells and cross sells, your business has nowhere to go but down. Think negative churn.

Want Renewals? Step 1- Reach Out from Customer Service

Everybody knows that the squeaky wheel gets the grease, and your customer service or account management staff are brutally well aware of that simple axiom.  They deal with squeaky wheels every day, slathering on the grease until problems are solved, questions are answered, information is provided and clients are purring with satisfaction.

Once the intensity of the on boarding process is a distant memory, its easy to assume that a quiet client is a happy client. Sadly that is not always the case. A quiet client could also be apathetic, profoundly disappointed, lending their ear to your competition or simply taking your service for granted. All of these options are possible. None of them are good.  And every one of them is made worse by your own ignorance of the situation.

Unless you have a lot of account management/customer service talent to spare, it’s not likely that you can guarantee that your quiet clients are hearing from them directly and regularly.  But that’s what you need to do.

One way to solve this problem is to put into a play a quarterly communications outreach on behalf of your customer satisfaction team. What can you accomplish with this program? A couple of things actually and every one of them is important to smooth your upcoming renewal period.

First off, you simply need to stay top of mind, reminding your customers of the benefits they are (or should be) gaining from your service. You can’t have them forgetting about you, and in doing so allowing (where applicable) your adoption and usage levels to drop.  Would you be rushing to renew a service you’re not using?  Not likely.

Secondly, you need to look for problems. Seriously. As much as pushing problems under the rug can make for short-term comfort, unaddressed issues will come back to bite you when it’s time to renew.  Worst of all, it’s almost impossible to project with any accuracy what you’re renewal rate will be unless you know how your company stacks up on the key performance indicators.  Do you know what they are for your service?

Once again it comes down to using communications to measure and manage the metrics that will affect your renewals.  If your silent majority of customers isn’t making it easy for you to keep that communications door open so you can evaluate how your performance stacks up, its in your own best interests to proactively push your foot in the door and open it up.

Do it regularly and do it quarterly.  Less frequent communications will make your efforts entirely too forgettable.  More frequent communications will probably cost too much in time, effort and cash to maintain.

 

 

 

Renewal Revenue Goals Need a Communications Plan

As more companies take advantage of new online business opportunities and models, the importance of a segmented communications program to support contract renewals is more critical than ever.  With some companies, maintenance agreement and support contract renewals are almost treated as an afterthought, but that is changing. There is simply too much money at stake.

What makes a good communications plan even more important is that in the face of increasing competition and a relentless decline in customer loyalty, doing a great job of providing the service for which you were contracted is simply not enough to retain the business.

To make the most of your renewal revenue opportunities, here are four distinct tasks that a good communications plan will address:

  1. Search out hidden problems with the silent majority of customers.
  2. Nurture your current customers like they’re leads for the next sale.
  3. Communicate to promote a decision to renew well ahead of the renewal date.
  4. Create a sales plan that creates appointments to close, cross sell and up sell.

Regardless of whether your contracts renew annually or monthly, proactive communications will pre-empt your competitors, improve your ability to measure your key performance indicators and reduce the number and value of churning customers and contracts.

Renewal Revenue 4 Ways to Fail

According to Morgan Stanley, 30-40% of the revenue and over 50% of technology company profits come from recurring revenue- and that number is even higher for SaaS/XaaS organizations. From 2012-2014 “cloud billing” will grow by about 35%

Given it’s importance, one would expect that companies depending on recurring revenue would have that re-sell process firmly in hand. But if, like this writer, you have recently fielded a call from a supplier’s customer service or even billing department, awkwardly attempting to secure your contract renewal, its pretty obvious that this process is often very poorly managed.

There are so many ways to make a mess of this sales opportunity it was hard to pick my top four, but here they are:

4 Ways to Absolutely Suck at Making More Money on Renewals

1- Leave it in the hands of customer service, accounting or email campaigns.  We want renewal revenue to be as simple as just paying another bill- and so we get lazy. But making the most of your recurring revenue opportunities is a sales job.  Your salse reps know that not getting  a “NO” is not the same as getting to “YES”. You need to close those renewals.  And even more important?  You need to upsell, cross sell and prospect those customers for new opportunities and referrals.

And don’t think that the 27 emails you sent with the billing reminders are doing you all that much good.  Sorry to mention it but most of the emails you send to your customers will go unread. How else can you possibly explain that the number one reason cited by non-renewing customers is that “no one contacted me” which is absolute idiocy.

2- Use the wrong measurements to evaluate your performance.  There are distinct stages in the process that give you recurring revenue and you will never be able to manage or grow this foot-in-the-door income opportunity until you can measure the the performance of your organization and your sales effort against some meaningful benchmarks.  A simple year over year number might be good to look at but it’s doing absolutely nothing diagnostically to help.

You need your decision rate, which will tell you how many and what percentage of your customers acknowledged your efforts to renew their agreement and gave you any answer.  You need to know your churn stats and how your  sales team is performing relative to:

  • actually closing the people who didn’t say “get lost”
  • upselling and cross selling  (what and to which types of product/service)
  • uncovering new opportunities and referrals

And you need to see your overall performance vs YAG

3-Wait too long to get the show on the road

The decision as to whether or not to renew your offering will depend on a lot of things, the most important of which being- “Did the customer perceive that they experienced the benefit they bought you for?”  This is not only affected by the realities of adoption rates and usage, but also by not letting those new benefits and advantages slip out of mind and out of sight.  Ignoring these factors all year long and only establishing contact 60 or even 30 days out from the renewal, perhaps even then with nothing more than an annual bill, will send your revenue performance on a steep, downhill slide.

4- Use your sales team the wrong way.  They’re called your sales team, not your “calling to touch base and made sure you saw our invoice” team.  Nor are they your “calling to make sure you saw our latest webinar about the new release features”  or even your “calling to wish you Happy Birthday” team.  (although these calls are not a bad idea when you decide that you want the relationship to be owned by sales.  They are your SALES team.

Their job is to take the companies who are interested in renewing their agreements with you and close them down.  They are supposed to cross sell associated services or products that are a good fit for their needs.  They are supposed to make this year’s sales bigger and better than last year, which means go for the upsell.

Companies love recurring because its so profitable. Maybe the problem is that it’s a little too profitable because we just aren’t working either hard or smart enough to really take advantage of one of the few growing business opportunities.

 

 

 

 

Case Study – Solving a Small Account Renewal Challenge


Background

A North American security software developer, selling to business organizations of all sizes, was concerned about the low rate of maintenance agreement renewals from its base of smaller customers (under 50 seats).  Because they already knew that a call from the sales reps at 90, 60 and if necessary 30 days, was the major contributor to the better renewal rate among larger accounts, the sales force was mandated to begin calling on the smaller customers as well in exchange for a commission on the sale which had not been paid in the past.

Challenge– It proved to be a bad plan for a number of reasons.

  • Unlike the large accounts, records for the smaller customers were inconsistent and required a combination of different contact methods to reach them.
  • The sales team was not large enough to make all the necessary calls with voicemail and email follow ups to the full base of smaller accounts and so began to cherry pick the easier call backs to gain extra commissions.
  • While renewals increased, the smaller invoices offered a poor ROI relative to the cost of sale.
  • The time consuming calls generated short term renewal sales, but at the expense of more difficult new account development. Additionally, the calling for larger account renewals was becoming inconsistent.

Alternatives  – Considered and rejected

  • High end outsourced telemarketers could manage the different types of contact needed but were more expensive than the in-house resources. Low end outsourced service providers were affordable, but lacked the management support to deal with the many different messaging alternatives needed to reach the accounts with any significant penetration.
  • Email only reminders provided some lift and a positive ROI, but used alone the overall impact was insignificant.
  • Increasing the telesales/telemarketing group was not cost effective.
  • Status quo was not acceptable, given the potential revenue.

The Solution

A fluid combination of services from Boxpilot was used to reach this market and renew the agreements.  Three unique voicemail messages were pre-recorded by the actual sales rep for the account and delivered at 90, 60 and if necessary 30 days prior to the renewal date.  The first message was delivered using the guided voicemail service.  For some companies, after the contact and direct dial information was verified on the first call, the 60 and 30 day messages were delivered using Boxpilot’s auto-guided service as a cost savings measure.

Each delivered message was followed up with a synchronized email – again from the individual sales rep. The emails offered additional information and an easy method to respond directly to their sales rep representative.  Boxpilot’s Live Message service was used for the segment of the list without fully developed voicemail systems and in cases where the desired contact actually answered the phone.

Results

Using the combination of four delivery methods and campaign management services from Boxpilot – Guided Voicemail, Synchronized email, Auto-Guided Voicemail and Live Message – the renewal rates of the test group were 18% higher than the control and the cost-per-sale was well within acceptable limits.

More Renewals and Better Forecasts with Guided Voicemail

Background:

A large non-software client needed to improve their renewal rates and the accuracy of revenue projections.  In a weak market the contract renewal rate had been declining and even with over 61 dedicated phone reps, over 40% of renewal sales lapsed without any sales follow up.

Challenge:

Because the previous sales management had supported aggressive, high pressure selling tactics, the new sales team was subjected to many negative customer encounters when making renewal calls.   As a result call volumes were well below objectives.

Alternatives:

  • Email was considered and rejected as it created very low response rates. It also failed as a means to rebuild a personal and positive relationship with some irate customers.
  • Replacing reps who did not meet calling quotas was rejected since the problem extended to over 80% of the sales team.

Solution:

The Company selected Boxpilot to execute an intensive calling campaign with voicemail plus synchronized email left 60, 45 and 30 days prior to renewals.  The messages were recorded by the sales reps and provided information about renewals with a concerted effort to communicate the emphasis on better customer service and a positive tonality.
Results:

Within 120 days the percentage of resolved renewals increased from 56 to 75% and the positive response for renewals increased from 25 – 33%.  While the positive responses were lower than desired, they were significantly better than before and the company management was able to create benchmarks of anticipated renewals to create new incentives for both the customers and the sales team.