What's on my mind as we settle into Q1? Renewals.
Renewals, especially when it comes to the “as a service" business model.
After all, we’re living in a subscription-based world. A friend of mine just had a baby, and she gets her baby food via subscription. That’s how I get my multi-vitamins. We even have an associate who’s wild about a sock subscription service!
In fact, yesterday I was on the phone with a friend, Maggie, who’s the CSO of a SaaS firm in Seattle — and she said, “Julie, I’m worried about our renewal rate."
I thought, Great — here’s something I can help with. After all, when I started in sales at Gartner, my first role was in renewal sales — or what you’d call a customer success manager today.
We started chatting about what that role’s responsibilities look like at her company. I asked what their buyer onboarding was like, how frequently they spoke with customers, and when they typically began the renewal process.
Maggie said that onboarding happened on a credit system. Each account came with one hour of onboarding and customers had the opportunity to purchase more credits to bring teammates up to speed.
Yikes, I thought. But I get it — it’s easy to see this as a simple tactic for increasing incremental revenue. The reality plays out differently. If you have customers who aren’t able to effectively leverage every part of your solution, the odds of them realizing the expected value of that solution fall dramatically.
Then we moved on to how frequently their customer success managers engaged with customers. Turns out, not that much. They typically check in once per quarter and only schedule an in-depth review if the customer fills out a satisfaction survey with particularly low scores.
I was happy to hear that there was some survey/response mechanism in place, but disappointed because the check-ins didn’t seem designed to preempt those poor survey responses and the resulting conversations.
Every interaction is an opportunity to listen. Every interaction is an opportunity to learn. Plus, it’s an opportunity to forge stronger connections — and connecting at a human level in the digital age through digital means is not only required, it’s absolutely crucial.
Finally, we got into the renewal process and Maggie said that they typically begin about a month out. Now that’s not too bad, but if there is a problem, that customer success manager has their work cut out for them.
I see this all the time. The number one mistake that someone in this role makes is that they trust in the fallacy that just because a customer is actively using the solution, value is being realized.
The key is to begin with the end in mind. Renewals start with an effective customer onboarding process and must ensure that the customer realizes the expected value of the solution.
Maybe the tools they bought aren’t the best fit, or their needs have changed. Maybe everything went as promised. Well, guess what?
Now you’ll need to identify other problems that your solution can solve. Just as you gave them a reason to change in the beginning, renewals are all about giving them a reason to stay — which is why it’s critical to use the same sales methodology when approaching customers for renewals that was used for the initial sale — and to do so with identical rigor.
What happened with Maggie’s firm? Suffice it to say we had a long conversation — but I know she’ll take my advice to heart, implement the changes we spoke about, and see those renewal rates rise.
If you want to dive deeper into customer experience and renewal sales, check out:
Until next time, happy selling,