How to guarantee a renewal
Real money in software is based on the Lifetime Value of the client not the first year’s subscription fee. Great customer experience and happy customers are the most important factor of repeat business, but how do you guarantee a renewal and ensure Customer Success that extends that customer lifetime value?
Waiting till renewal date is too late!
Reality for many SaaS / information service providers is that after the installation the next time the customer hears from the sales consultant is circa 60 before renewal.
The process itself instantly creates two psychological challenges for the sales agent to overcome:
- The customer knows why you are calling and triggers a defensive mindset
- The customer is less willing to have exploratory conversation on up sell and wants to get to negotiation
The typical sales agent will start with questions exploring how well the software has worked for them this year. The customer knows why they are asking these questions and are very unlikely to share how amazing and value adding the product is nor listing all the benefits that they are having. Human nature is stopping them to do so, as the internal unconscious safety system is concerned that “we are being stitched on the price”.
Equally at the same unconscious level, there is knowing that if I have just told you how much I love this product, it is very hard for me to negotiate on price.
In the second instance, the customer is going to ask about price when they hear “You’re currently paying x and in the coming year you will be paying y”. This sets a price condition in the customers mind and they will undoubtedly want to drive this down (again human nature). The problem with the price conditioning is that the customer will be unwilling to pay for additional extras and add-ons.
Customer Success starts at Installation
The truth is that the renewal process starts immediately from the installation. Getting the right start for the customer, making the installation and kick off a big deal and showing them how much you love them is key to a successful start.
Make sure you brief the training / installation team on the features and benefits that the customer bought the solutions for and ensure they know the ROI’s that you have promised.
Diarise the Review Meeting
Booking the review meeting for circa 3 months into the term shows the customers you are confident in the solutions and it will also will deliver great tangible results.
Touching base with the customer 3 months after the sign up, from behavioural and psychological stand point will provide a positive statements from the customer. They know you are asking for their benefit (not the renewal) and are more likely to give you good feedback. After all the customer does not want to admit to a bad buying decision and will be happy to tell everyone what a great decision they made.
Equally if problems or challenges are identified, you still have 9 months to resolve them. Failing to uncover these until 60 days out at the renewal stage will often lead to a cancellation.
These conversations are critical in deepening the relationship and provides a great opportunity for the customer success agent to solve any issues, add value and turn the customer into a advocate.
Best time to Up Sell and Cross Sell
Having established the ROI’s and metrics in the first 12 - 18 weeks, nearing the 6 month mark the customer will be mentally willing to explore further opportunities, again long before the renewal conversations take place.
The beauty of having the conversations here, especially if your sales cycle time is 8-12 weeks, that the customer will be primed and ready to buy when the renewal conversations will begin. There is little time pressure in the customer, or the sellers, and everyone can be working towards the shared goal.
Renewal conversation at month 9
Having established the ROI’s from the solution early into the programme, these can be brought back out at this stage. They are the customers words, not the sellers, and therefore negotiation will be minimised.
Secondly, having established the up/cross sell/ add-ons over the past few weeks, this can all be rolled into the new contract keeping it simple for the customer.
This will minimise surprises, maximise renewals and also help increase the contract value.
How to guarantee a renewal - Customer Success:
- Renewal begins with a good installation
- Month 3 - Diarise the review meeting
- Month 6 - Build new opportunities
- Month 9 - Start the renewal conversations
- Your demonstration of care and interest in their success deepens your relationship and you will get to be their ‘trusted advisor’ ie. first point of call
- Each of your discussion is an opportunity to prime the customer for successful renewal and up/cross sell.