We speak to Chris Sparshott to get his advice on the renewal process.
The renewal process is one of the most important parts of keeping clients and retaining Monthly Recurring Revenue. We speak with Chris Sparshott who spent over 3 years as a Chanel Sales Manager at IBM and was responsible for the renewal process. We get some excellent advice.
Irrespective of renewal value or if it is contracted or not the number one thing you shouldn’t do is assume the renewal will transact and the client will pay.
Always ask for confirmation.
It depends on the client, the value of the renewal and the personality of the buyer. In general terms, the larger dollar value and complexity of the renewal the earlier you should engage with the client; 6-9 months before the due date is not uncommon. The renewal process fits hand in glove with customer success so if we are ensuring the client is gaining value from their purchase then the risk of churn is reduced. Have a clear process which matches the CSM and AM engagement for the renewal. i.e. ensuring adoption, usage, number of support calls etc are communicated on a regular basis to the client. In general terms looking at a renewal 3-4 months out is fairly typical with high performing teams.
Renewals overlaps with all these roles which is the challenge. The question worth asking is who is tasked with giving the client the invoice and ensuring it is paid. In my mind this task should be with a renewal rep or an Account manager if the company does not have the size to employee a renewal rep. I would also make sure this person is not the CSM. The CSM needs to be a half step removed from the “money” at all times. The reason for this is when money is being discussed with a client the conversation is different from a “partnering” and “helping to succeed” CSM conversation. There can be emotion when money is discussed that could damage the CSM’s relationships and future effectiveness in driving consumption.
1. Have a consistent process that all parts of the organisation are aware of and get really good at driving that process in conjunction with the CSM and Account Mgmt teams.
2. Add value. At every touch point between your company and the client always add some value. Map out the value points that are communicated to the client at each touch point within the renewal process. i.e. have a Sales – On-boarding – Adoption – Consumption process.
3. Have a retrospective attitude. If things are not working then investigate and shift, we can always improve and we don’t always get it right.
Having said all that, if you have really limited resources and time and renewals is not a big part of your focus then just do one thing. Pick up the phone and ask the client to pay for the renewal 2 weeks before the due date.
Be open with the client and listen to the issues that led to the late renewal. Most software organisations will be ok if the client has a good reason and they are a few days late. Business is about being reasonable and it goes both ways so there is always some flexibility. If we find ourselves with a client that has high usage of your product, the renewal is late and the client has not provided a clear commitment to renew then developing a “late renewal” process is the best way forward. As a representative of the vendor I would go into a late renewal conversation knowing what my options are . You may start to switch off features after the renewal is one week late and by four weeks you may move the system into read only mode. In a massively competitive environment where switching providers is easy I may just use discounting and offer a better price if the client closes in the next day or two. Often strong arming the client to pay will just make the client move to the competition and a 5-10% drop in ACV may drive a better LCV. Either way, having a process for “late renewals” in place that fits with your industry and competitive environment will help with the churn rate. When the late renewal situation arises the entire team reads from the same script so the client is not confused about the vendors position, the impact to the client and the steps needed to resolve.
Simon has over 10 years helping clients achieve their goals through the use of software. Having previously lead Customer Success teams in London, Europe and New York City, Simon now owns Kupr Consulting working with B2B SaaS companies to improve their Customer Success teams and processes.
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