What does renewal management mean?
Renewal management is the business process that keeps track of customers who renew their accounts and contracts. Renewal management oversees customer orders, payments, trial periods, discounts, and other connected things.
“Renewal management” can be used in any business, but it’s most common in software-as-a-service (SaaS) companies that get most of their money from membership fees.
Usually, sellers will send renewal notices to customers before their contract ends. This gives them time to plan and decide whether to keep their subscription running. They often offer deals or discounts to get people to update their contracts as soon as possible.
A business may send an account manager or a member of its customer success team to start a renewal talk in person.
Similar Terms:
subscription renewal management (SaaS renewal management)
Why it’s essential to renew
Renewal management is essential for software companies because keeping customers is essential for their finances and long-term growth.
How to Keep Customers
This is especially true for SaaS companies: getting new customers costs four to five times as much as keeping old ones.
Companies with good renewal management policies and procedures are usually able to keep more of their customers, which makes those customers happier and more loyal.
Better cash flow
Companies that keep track of customer renewals can better predict how much money they will have in the future. This helps them budget for upcoming costs and plans for growth or new investments.
Predicting revenue also lets investors know that the business is growing in a sustainable way and that it can more regularly pay its bills.
Value of a customer over time
Customer lifetime value, or CLV, is an essential metric for SaaS companies because it shows how much money a customer will bring in throughout their career.
Businesses can raise CLV by keeping customers longer and selling more goods and services to them by upselling or cross-selling. This helps the company make more money.
How the Customer Feels
According to the McKinsey study, personalization is essential to the B2B customer experience. Most B2B buyers (71%) expect companies to provide highly personalized interactions, and about the same number (76%) get angry when companies don’t.
One of the best ways to customize the customer experience is to start the renewal process with current contracts. Here are some reasons why:
It shows that the seller values their current customers and usually includes some deals to get them to renew.
There is a better chance that the customer already knows how to use the product since they have spent time getting acquainted with it.
Costs of Getting New Customers
No matter your business, the average cost to get a new SaaS user (CAC) is several thousand dollars.
When businesses keep customers through the customer renewal process, they lower this cost by a significant amount. They can get new customers through word of mouth, leads, and other cheap methods.
Renewal management problems that subscription-based businesses face
Online shopping makes it easy for B2B software companies to connect with their customers, but it also brings new problems for companies that run on subscriptions.
As a subscription-based business, you may face the following problems:
- There are a variety of payment options. Giving customers more ways to pay, like monthly and yearly payments, can help you get more customers. However, keeping track of all these different billing cycles and subscription levels is challenging and needs a sound payment system to prevent mistakes.
- They are not choosing to churn. Customers lose access to a service without meaning to because their credit cards expired or their payment failed. This is called “involuntary churn.” Subscription-based businesses need systems that quickly let customers know when there might be a problem with their payments and make it easy for them to fix the problem so they don’t lose the customer.
- They are taking into account people who change their subscription plans. Customers can change their payment plans or move their subscriptions up or down. Businesses must ensure that these users have a smooth transfer and that billing is changed to reflect this without affecting the user experience.
- I am trying to get extensions at the right time. A vital part of any renewal plan is ensuring proper communication with customers about renewals. Too much communication can annoy users, and too little communication can mean missed chances to repeat or low customer response.
- It makes the user’s experience smooth. A smooth renewal process is essential for keeping customers happy. This means making a payment system that is simple to use, a user interface that is easy to understand, and transparent prices and terms.
- Taking care of sales and deals. Individually managing dynamic deals is hard because businesses must keep track of who is eligible for each one and how long it lasts while making money.
Best Practices for Renewal Management That Focus on the Customer
Make sure you put the customer first.
You should always put the customer first when renewing a customer’s account. Businesses should talk to their subscribers by sending them material and deals made explicitly for them.
Setting up an automated system to notify you of upcoming renewals is one example of a customer-centered renewal management strategy.
Giving discounts and other incentives to customers who renew early Sending personalized emails or messages that address the customer by name Giving customers customized renewal offers that are based on what they want
You are creating reward or loyalty programs to thank customers who stay with you. Start a unique referral program for your present subscribers.
During the contract term, software vendors can also focus on their subscribers through content marketing, email campaigns, and events like webinars and “how-to” sessions hosted by the business.
Milestones for Clear Communication
For each refresh, it’s best to set clear communication goals so nothing is left in the air. It’s easier to keep track of renewals now that this information is in the company’s CRM system, customer platforms, and marketing automation software.
When the customer starts using your product or service, this is the best time to tell them what to expect and give them a sense of what their trip will be like.
Ensuring they know how to get the most out of their contract is also essential. This can be done by giving them FAQs, walkthrough videos, and written guides.
Software companies that offer complicated products and services for setting up and connecting systems.
After six months
After six months, it’s time to start checking to see how happy customers are and getting user feedback.
The best way to find out how they’re using your product, what they need, and how you can improve it is to send them an easy survey.
If, on the other hand, users aren’t happy or if usage has dropped a lot since they started using the service, a member of the customer success team can reach out to set up a call to talk about possible solutions.
90 Days Before Paying Again
Business owners should already have a relationship with their customers 90 days before the renewal.
Now is the best time to offer customers renewal deals, discounts, and other promotions.
It’s also important to be clear when terms and prices change and let customers know how their service might look different after it’s renewed.
Adding More Tracks
Businesses should watch for growth chances to increase CLV once they already have a customer and the renewal date is approaching.
This could mean giving customers new goods or services they might be interested in or adding extra features to their subscriptions.
Take care of escalations.
Managing disagreements and escalations are unpleasant tasks that everyone in business must do, but they must be done.
A customer may become angry enough to take the problem to a higher level for several reasons, but the most common is that the customer service person doesn’t know or understand how the process works.
Customer support portals or clear and to-the-point documentation are essential. This way, customers can quickly find answers to their questions or be paired up with someone on the service team who can answer them.
Write down the process of renewing.
The renewal process should be written down and tracked, just like any other contact with a customer.
Businesses should keep track of the whole process, from signing up new customers to deleting old ones. They should also write down customer comments, interactions, and any changes made because of those comments.
Keeping notes on all interactions in CRM helps businesses make more accurate predictions about future demand and customer retention. It also helps them reach out to customers at the right time and give them more personalized services in the future.
Automating Software for Contract Management and Renewal
Renewals are made more accessible and faster with tools for managing contracts. The negotiation process goes faster because documents are made, contract changes are made automatically, and signatures are given.
It also helps businesses keep track of their subscribers, see how well refills are working, and ensure they follow the rules.
Systems for managing customer relationships (CRM)
CRM software combines customer data from different sources to make a complete record of all your customers and when they are due to renew their contracts.
The system can automatically send texts to customers before their renewal dates and let sales reps know when a customer is about to renew so they can reach out and start the renewal process.
It also gives companies a complete picture of their customers, which lets them use that information to make more targeted marketing efforts and more personalized interactions with those customers.
Software for managing subscriptions
Tools for managing subscriptions help companies keep track of and handle their subscribers, from signing up for the first time to renewing their memberships.
They manage payment plans, simplify adding new customers, and gather subscription information. They can also be used to set up recurring payment plans that will be billed automatically, ensuring that customers never miss a payment.
Software for billing
Billing software automates billing for subscriptions, speeds up payment processes, collects payments from customers, and helps businesses keep track of their cash flow.
Billing software is often part of subscription control software but can also be bought separately.
