Investment in renewals has a big return. Implement a solution lifecycle approach to improve renewal rates, reduce churn and drive predictable recurring revenues.
It’s a common SaaS story. Partners invest significantly in acquiring new customers, but once the licences are sold, attention wanes and customer renewals are taken for granted. Few apply analytics to understand how to improve renewal rates and upsell. Renewals rates suffer and recurring revenues fall. But, by investing in data and analytics, customer success and renewal management, you can lift renewal rates, increase recurring revenues and dramatically improve profitability.
Happy customers mean increased renewals
In a nutshell, a renewal rate measures the proportion of customers who renew their subscriptions at the end of each subscription period. A high renewal rate is a strong indicator of value – it means you are more likely to maintain customer loyalty and generate long-term revenue.
Having a good handle on your renewal rate is crucial for every partner selling software and SaaS today. Tracking how renewals are changing over time makes it easy to spot trends and potential growth pitfalls early – a stable or increasing renewal rate means happy customers and smooth sailing, while a decreasing renewal rate could be a sign of rough seas ahead.
Here’s three reasons why monitoring your renewals rates is so important.
- Determine the health of your business
Maintaining a high renewal rate is a strong indicator of a healthy and profitable SaaS business. Keeping a close eye on your renewal rate over time makes it easier to spot any unexpected changes, giving you an early indication of problems in other areas of the business.
- Retain more customers
Your renewal rate is the best indicator of overall customer satisfaction. Measuring how many customers want to continue doing business with you naturally filters out fluctuations due to customers changing their needs, product mix or contract length. Tracking customer satisfaction or health lets you reach out to customers with a higher risk of churn, giving you a better chance of saving those accounts and keeping your renewal rate high.
- Accurately predict revenue
Measuring your revenue renewal rate can help you forecast future revenue. More accurate revenue projections mean more accurate sales and marketing budgets and less wasted spend. Renewals can represent up to half your revenue and as much as 80% of profits.
Best practices to avoid pitfalls and increase retention
During the renewal stage, a customer success strategy revolves around strengthening a customer relationship to the point that they decide to re-purchase the solution for another subscription term. The biggest pitfall standing in the way of success is if the customer doesn’t see enough value or tangible ROI for your solution.
So, what best practices can you follow to ensure customers see the value and renew?
- Focus on customer success
Spending time and energy improving the success of your customers is one of the best investments you can make. Customer success elevates every part of your offering, helping to reduce churn, improve renewals and increase expansion revenue. Constantly engage and communicate with customers throughout the entire journey, from onboarding onwards, to ensure every user is seeing value and achieving their personal goals within the solution. The success of a renewal strategy hinges on overcoming this roadblock and driving positive business outcomes and impacts throughout the customer journey.
- Understand your customers
Getting to know your customers is key to retaining them. Really get to know them – not just vague personas but a detailed understanding of their needs, their value drivers and their desired business outcomes. This will build trust and extend your customer relationships. Once you know what your customers actually need from a solution, you’ll be able to match the solution to provide maximum value and match their specific needs. All of which makes your customers’ lives easy – and the decision to renew even easier.
- Implement a lifecycle approach
Solution lifecycle management makes renewals simple. Our dedicated, multilingual renewals teams, together with our data, analytics and PartnerView platform, ensures you have complete visibility of all upcoming renewals and plenty of notice to ensure you can renew your customers on time. Proactively managing your renewals increases renewal rates and we make sure you never miss another renewal with our complete datasets.
Don’t wait until it’s too late to increase your renewals
Minimising churn and getting more customers to renew needs to be an automated, efficient and ongoing process – one that begins as soon as a customer signs up for a solution. Renewals shouldn’t be an action you start to think about when a customer’s contract is nearly up. By implementing a solution lifecycle management approach in your business, and leveraging the proactive insights and automation from Westcon-Comstor, you can track renewals opportunities right from the start and close any gaps in your process.
To find out more about how solution lifecycle management can maximise renewals opportunities in your install base, get your copy of our latest eBook.
This blog is part or our series of solution lifecycle management articles. Below are the other articles in the series.