We work hard to get our customers. And once we have them, we want to keep them! We win and lose renewals in three places:
Innovation: Our ability to infuse products with innovative ideas that make our customers’ lives better. This could be by saving them time, helping them get to market with their own products faster, improving their quality of life, streamlining a process, increasing collaboration, etc.
Product Quality: The quality of our product. Put simply, keep the bugs to a minimum. Less features of higher quality will always trump code that shouldn’t have gone out the door. Here, rather than offer tons of buttons with complex logic, we can laser focus on just what customers need, build in testing and automation to get products to market, and if possible take a zero bug policy approach.
Great Support: The quality of our support (and services if those are provided) is critical. Empathetic support buys us time when there are quality issues. Educating support empowers our customers to grow (and often reduces the support tickets opened). We must
The fourth place that could be mentioned there is price. But for the most part, if we’re out innovating our market with a quality product, and support that makes our customers feel like we care about them, price is rarely too much of a consideration.
The amount of work we need to do to win a renewal should be less than the amount of work put into winning the customer. Small customers might renew monthly, large customers might renew annually or on 3-year terms. The larger the contract amount, the more time we likely need to spend discussing the renewal opportunity with the customer. Let’s start with organizationally, where renewals live.
The Organizational Chart
As with many aspects of running a startup in the beginning renewals likely live wherever they can. If we have a product that’s tapping the credit card of a customer once a month for $5 then it’s likely the renewal lives in the web interface. Maybe we begin by shipping a product that requires manual cancellation in Stripe and then as doing so becomes labor intensive we move to create a button to cancel service.
Larger, more expensive products will require more thought. For those, renewals (as with sales) often begin with the founders. As we grow, they often remain with sales in the early days - especially when sales teams are small.
According to how a company perceives renewals on the balance sheet, and how good a track record we have with renewals, leaders on a team will either run to or away from being in charge of renewals. The two places renewals typically fall are under sales or support. Let’s look at each.
Sales. Sellers who receive commissions after the first term of a contract (e.g. for renewals) often want to be involved in the renewal process. This helps them stay connected to the success of customers and to protect their own livelihood. Over time, many will realize that it can be awkward when the seller calls once a year to ask for money and forgot about customers in the meantime. This is because they’re often hunting for new customers. Therefore, many organizations evolve to having support teams handle renewals.
Support. Support teams often end up with renewals as sales organizations scale. One reason for this is that sales teams start growing faster than support teams and when a business leader looks at the balance sheet it’s easier to justify hiring more sellers. The sellers should still receive alerts as to the activity on customers (at a minimum with renewals but often with closed ticket statistics as well) but won’t seem inauthentic when calling to pretend they care and ask for money once a year. Support teams, especially when a dedicated representative works a given account, end up talking to customers throughout the year, and so seem less awkward when renewals come around.
Dedicated renewal teams. As sales and support grow, renewing accounts can become a tedious task - and one with a specialized skillset very different than the specialized skillset required to provide quality support for products. Therefore, larger enterprise customers often end up working with dedicated renewal teams - once we reach that level, those likely report into the sales organization again as they become responsible for the revenue line of the balance sheet.
As we mentioned, smaller and more transactional renewals are often handled within our products. This might simply be using a payment processor like Stripe to process a transaction until a customer cancels the service. This is obviously the method with the least amount of friction, but also with the least amount of touch. In these cases, just make sure to provide great support and continue innovating the product so we don’t see a mass exodus when something better comes along.
Staying Relevant
No matter which method we choose, keep in mind that in order to remain relevant and competitive we need to out-innovate and provide great support for customers. Let’s look at some ways to make sure we’re doing that:
Tirelessly attacking quality. Nothing loses a customer faster than losing their data. Customers will become more frustrated if they click buttons that don’t work or not want to pay for a service that is unavailable.
Close those tickets. Before we can close tickets, we need a ticketing system. This is the center of the support universe and comes free (or at a nominal increase in cost) with many a customer relationship management (CRM) suite. Track the time it takes to close those tickets and automatically escalate tickets that are open too long up the leadership ladder. Early-stage companies this often means that service interruptions go straight to a founder and in later stages we end up classifying tickets and assigning those escalations per classification of the ticket type (and sometimes differently for named or enterprise accounts).
Feature requests. If we ask our customers the right questions we never need to have another innovative idea again. Feature requests (and sometimes the ability to vote those up) are a great way to uncover what customers need to get more value from our products. Providing value often means we don’t have to compromise on price and makes renewals easier. The ability to vote feature requests up or down then gives us a natural quantifiable metric for the features customers might find most valuable.
Surveys. Features aren’t the only aspect of a software business. Another aspect is just he experience around working with the company. Surveys that cover how the sales and renewal processes were, in addition to thoughts on the product are a great way to uncover how we can better serve our customers. One type of survey question is simply whether a customer would recommend our product, the heart of what we call a Net Promoter Score, or NPS. This can be put on a dashboard for everyone in the company to see how we’re doing when it comes to brand loyalty and is a great early warning sign that there will be renewal challenges when it dips low.
Know the competition. Innovation is often an evolution. Small features that enhance workflows are great to bolt onto products, leveraging insights a competitor has come across, but in ways that match our own ethos. We shouldn’t actively use the products of our competitors but we should keep an eye on images of products posted to websites from influencers and how people talk about products. We also shouldn’t over-index on what our competitors are doing; but we should stay aware of what they are up to.
Talk to every customer that leaves. Every time a customer leaves we fill a pit in our stomach. It can hurt to lose customers, especially if we put a lot of effort into getting them in the first place, or if their name provides some cache. But whenever possible we should talk to them and understand where they went and why.
Be attentive, but clear. We want to be attentive to the needs of our customers. This starts with feature requests and surveys but might include phone conversations and even in-person discussions. But we don’t want to leave customers expecting something we never plan to build. Hearing them and making them feel heard is important but we should be clear about where their needs fit into our roadmap so we don’t leave them waiting.
Pick up the phone (just not at renewal time). Many customers don’t have time to chat with us. They have day jobs and we are here to make them more successful at their job. If they don’t have time to talk with us, they don’t have to answer - but at least when we call they know we care. And if they happen to answer, it’s great to touch base and hear honest opinions of how we’re doing.
Each lead is hard found. Each sale can take months (if not longer) to close. The revenue derived from customers is the life-blood of any company. We should all understand how we want renewals to occur, what happens when customers upgrade, how we measure satisfaction, and what success looks like.