Upgrades & Renewals Processes are Changing
The reality is for any business to succeed they need to both add, and retain customers. The adding bit tends to get a lot of attention. The retaining part…not so much.
Recently, we sat down with 10 customer success leaders to understand what priorities they were focusing on for the coming year. A common theme throughout our conversations was the changes coming to renewal and upgrades processes. If you want to find out what they had to say on the topic, download our free eBook The State of Customer Success 2022 right here.
Why customer renewals need to be a top priority
If you’ve worked in customer success for any amount of time, chances are you’ve heard the stat about it costing five times more to attract a new customer than to retain a current one. It’s a powerful stat, but really just the tip of the iceberg.
Long term customers are also much more open to trying new products and services, when compared to new customers. They also spend more on average per year than newer customers. In fact, a 5% increase in customer retention can lead to a 25-95% increase in profit, according to Bain & Company.
By focusing on renewals you not only save yourself money, you also actively contribute to your bottom line. Knowing why customer renewals are important is a good first step, but in order to really see results, you may have to update your approach.
Tactics to upgrade your renewal process
Improving your renewal process is easier said than done. It takes time, effort, and commitment. Though there are some methods that may work better for some than others, or areas of their current process that need more attention, the three tactics below should be useful for most teams.
In the past three years or so you may have noticed that almost anywhere you shop online now wants you to save credit card details, billing, and shipping information. The pitch on the retailer’s end is that it saves you time, which is true. It also makes buying easier, which in-turn may make someone more likely to buy in the first-place.
For example, research found that as much as 24% of abandoned shopping carts are due to a website requiring someone to make an account prior to purchasing. Though a renewal is a different process than an initial purchase, it stands to reason that the same logic applies.
To make things easier for existing customers you could try a few things:
Add an auto renew option
Offer discounts for early renewal
Give a renewal grace period
You should also be sure to review the renewal flow at least once a year. Just because something worked at one point, doesn’t mean it will in perpetuity.
Consult, don’t convince
At some point we’ve all probably come in contact with a pushy salesperson. Their tenacity generally isn’t the issue, it’s that their main focus seems to be on how they can have the best personal outcome. However, that type of approach is quickly becoming a relic of the past.
These days many sales teams take a consultation approach to selling. Instead of simply trying to push a product or service on a customer, they take time to understand their needs then make specific recommendations based on what they find.
By personalizing solutions to their specific needs you increase the likelihood that they’ll be receptive to your pitch. Showing genuine interest in their business can also help foster feelings of trust from your clients.
Some steps you can take to move toward a consultative approach are:
Setting up quarterly client interviews
Review account activity to see what features are most used
Pay attention to others in a client’s industry to see how they’re using your products and services
As long as your client’s success is first and foremost in your efforts, you’ll be on the right path. When you invest in their success, you invest in your own, too.
Reorient toward the positive
If you asked most customer success teams what their main objective is 90% would probably say “reduce churn.” Reducing customer churn and improving retention are the same thing. Some may say it’s simply semantics, but according to the Sapir-Whorf hypothesis, the words we choose to describe something can actually have an impact on how we experience them.
By always talking about churn you may be inadvertently orienting staff toward the negative view. This may seem like small potatoes to some, but it turns out to be quite the opposite. A 2018 study found that negativity can actually decrease work performance by as much as 30%. It can also lead to more absenteeism and higher turnover.
However, people who are more positive tend to be more productive, engaged, and less likely to leave a position. By switching your metrics to talk about retention and expansion, instead of churn, you could actually be priming your staff to have a more positive view.
Some things to try are:
Focus metrics around retention instead of churn
Highlight successes like biggest account expansion each month
Ask your team to write down a “win” each week
It’s not to say you have to sugarcoat everything, but the more able you are to focus on the positive, the better.
A new look
Long term customers are the lifeblood of successful businesses. Without them you’ll be like Sysiphus, forever rolling a boulder up to the top of a mountain only to have it roll back over you right as you reach the top.
Creating a rock solid retention plan involves lots of moving parts, one of which is your renewal process. By updating your renewal process you can help improve your retention efforts and set yourself up for future success.
Pay attention to your customers, make decisions with them in mind, and orient your team toward the positive and you’ll be well on your way.
If you want to learn more about how to update your renewals and upgrades processes, download your copy of our free eBook, The State of Customer Success 2022. Filled with insight and advice from some of the top customer success leaders out there, you don’t want to strategize on customer success without it.