Refuel Renewals

We’ve known since the early 2000s that boosting customer retention by just five percent can increase profits by 25% to 95%. It costs much more to attract new customers than it does to retain current ones. SaaS Capital reports that company growth rates are positively and exponentially correlated to net recurring revenue (NRR).

I’m not telling you anything you don’t know when I say that renewals are critical. I’m also likely not telling you anything you don’t know when I say that a lot of companies still don’t give renewals the attention they need. So, what are we doing wrong?

This week I sat down with one of our subject matter experts, Senior Consultant for Customer Success Strategy Lindsay Euller. She currently serves as VP of Customer Success at Espresa and has 20-plus years of expertise under her belt leading go-to-market and customer-success teams. I began by asking what organizations get wrong when it comes to renewals.

START NOW (NO, REALLY, LIKE RIGHT NOW)

One common mistake Lindsay sees businesses make is not starting the renewal process early enough. When should you begin? “It always depends,” says Lindsay, “but a good rule of thumb is the six-month mark. That’s when the conversation should at least start.” She recommends doing a business review at this time to kick-start the conversation.

“Another important aspect is really creating a solid sequence of events,” Lindsay tells me. “I’m a big believer in sequence of events, because you need to basically tell them exactly what is going to happen and give them the opportunity to come back with why that might not work. We just assume so much during the renewal process.”

Lindsay stresses that getting on the same page as your customer isn’t just for renewals—it needs to happen from the get-go. “It’s that expectation-setting right out of the gate,” says Lindsay. “Which is, ‘this is how we’re going to work together. We’re going to do a business review at this interval.’ Start to establish your sequence of events early because renewal will be there before you know it. I think a lot of it is setting those expectations so your customers are going into it understanding and not being surprised and saying, ‘We don’t want to talk about this yet.’”

I asked Lindsay how CS teams can ensure these business reviews and renewal discussions go well. “It all comes back to establishing that joint success plan with the customer,” she says. “That way, you aren’t having to assume what success looks like for them by the time renewal comes. If you can say, ‘What are the three metrics that we care the most about this year?’ And then, in every conversation you have with a customer, that’s at the forefront. It’s going to make those business reviews and renewal conversations a lot easier. Nothing bad comes from creating a joint success plan, and lots of bad things come from not.”

TRAIN YOUR CS TEAM LIKE A SALES TEAM (BECAUSE THEY ARE)

Another mistake Lindsay has seen organizations make is not treating the renewal as a true sale. “I don’t think they always treat it like it’s a new deal,” she says. “Oftentimes renewals don’t have the same rigor. Typically, in the new-business arena, there are so many checks and balances and steps to follow.”

This can be difficult for CS teams when they haven’t had the same training the sales team has had. “Sales teams get trained on the right questions to ask,” Lindsay says. “Not all companies appreciate that the CS team needs these same skills. You still have to ask the questions about who the budget holders are, who signs the contract, whether procurement is involved, etc., because the person renewing the contract isn’t always the same person who bought it originally, and so they might not always know. It just comes down to having the same rigor attached to renewals as you do to initial sales.”

“There’s this assumption that, ‘They’re happy. They like us. We went through this process once before, so they probably already have it built into their budget, and the steps are probably really straightforward—they just have to sign a contract.’ It’s just a huge blind spot.”

“On top of that, people can be really kind to your face. You have to know how to ask the hard questions. They’re not always going to proactively offer that they’re not renewing. They know that the minute they tell a vendor they’re not going to renew, they’ll be faced with emails and meeting requests. And so, some customers, unless explicitly asked, are just going to wait.”

WE ALL NEED TOOLS

What else do CS teams need when it comes to renewals? The same thing sales teams need to be successful when it comes to new business—tools. “RevOps is key,” says Lindsay. “You know, in terms of ensuring that the tooling and the data are where they need to be for a smooth renewal. When that stuff isn’t maintained, or you don’t have the right resources in place, it really slows the business down.”

Beyond making sure your CRM is up-to-date and has the data the CS team needs, other tools that provide sentiment and health scores help provide insights as well. And many teams aren’t getting what they need. According to Totango’s 2022 Customer Success Industry & Salary Report, 34% of CS teams reported that a “lack of tools” was a challenge to their growth. What’s more, research from SuperOffice found that only seven percent of companies actively track their customer health score.

“Getting the sentiment scoring and health scores can be really helpful,” says Lindsay. “It’s not definitive in terms of telling you whether someone is going to renew, but there are signals and flags over time that you can start to identify.”

We all know how important customer retention is, but according to an Invesp survey, 44% of companies have a greater focus on acquisition, while only 18% favor retention. Hopefully, Lindsay’s insights will help renewals get more of the attention they deserve. Thank you, Lindsay!

Are you looking for training for your customer success team? Reach out to us at mastery@maestrogroup.co for more information.