SEVEN BEST PRACTICES FOR SELLING RENEWALS
Selling renewals uses different skills and practices than new product/service sales. To be successful, you’ll need to think a little differently. The following renewal sales best practices are based on our experience managing renewals sales for all types of companies, and applied across industries and company sizes.
1. Start from expiration when building out your contact strategy
Timing is critical. Why? After you’ve passed the optimal time for your first contact, renewal rates drop with each passing week. The closer you get to the expiration date, the more vulnerable you are to competition. And once a contract is 30 days past expiration, renewal rates typically drop by 50%.
In general, your first renewal contact with the customer should be at least 90-120 days before the contract or subscription expires. This gives you enough time for quote revisions, missed calls, vacation schedules, etc. Set a specific timeline with milestones and track performance against it on a daily basis.
2. Segment your customer base
Segment your customer base in the way that makes the most sense for your business – by product, geography, contract size, or some combination of these factors. Segmenting customers gives you better visibility into your true renewal opportunity, and a way to strategise and prioritise your efforts. Better yet, with customer segmentation you can deploy the next best practice: customised sales plays.
3. Run tailored sales plays
Personalisation is the new big thing in sales and marketing, and that’s because because it works. Once you’ve segmented your renewal customers, customise your sales plays for each segment. This way, you can give customers the personalised attention that they expect from you.
4. Make friends with a numbers cruncher
Step away from the phone for a moment and find someone working with a spreadsheet or analysing your financial and customer data. This person might be your new best friend – because no matter how good you are with people, renewal success requires having the right data.
Data about what’s working: You’ll want data about the average renewal rates for different segments, reasons for cancellation, and timing of renewals to tailor your efforts.
Data to prove your effectiveness: You’ll need accurate data to demonstrate whether your efforts are moving the needle on renewals and having a revenue impact on your business. Show management how you’ll improve the business, and you’ll get more support.
5. Listen to your customers
Don’t just sell the renewal – use the event to really talk to your customers.
- Is a customer having a problem? Build equity in the customer relationship by helping them fix it.
- Is a competitor moving in? You’ll need the right ammunition to retain the customer.
- Have you lost the customer? Update your forecast and find out the reason for the churn. It’s always better to know ahead of time than to be caught by surprise.
6. Look for the cross-sell and up-sell opportunities
If you’re talking with the customer and building equity in the relationship, then you can look for meaningful ways to cross-sell or up-sell. Offer the customer a new module or a higher service level if it would meet their needs. If you’ve earned their trust and understand their needs, your chances of success are pretty high.
7. Document the end of the renewal cycle
Before you chock up the result and move on, make sure you document what happened in the renewal cycle.
If you’ve lost the customer, document the reason for customer churn – this is critical insight to give to marketing and account teams.
If the customer has renewed, document the customer disposition and pass anyopen issues to the right members of the account team. Then you’ll have a head start when the customer comes up for renewal again.
For more strategies for successful renewals, download the eBook “Recurring Revenue: Five Secrets to Fly High and Fuel Growth.”