Three Keys to Increasing Customer Renewals
Strategies for Customer Success Renewals
This happens to you more often than you’d like to admit. Your sales team lands a new customer with great potential. You work hard at the on-boarding process and hit all of the milestones. Roll-out is on schedule. Over the year(s) of their contract term, you resolve every issue quickly. Then 2 months before renewal, you get the call: the customer has decided not to renew.
This probably came as a surprise to you. You probably have a list of reasons these customers give for not renewing. Some of the items on that list are understandable, from product shortcomings to changes in the customer’s business (such as acquisition). Others you know are just excuses, such as pricing, or that one support issue that was only 90% resolved.
Now tell me, honestly: was there something you could have — or should have — known that could save this customer?
There are 3 things you should be examining closely every day to get a deeper understanding of — and a deeper relationship with — each and every customer:
1. Ask good questions
In an earlier post, I discussed the idea of measuring customer success from the customer’s point of view and choosing the right measurements. You have to help your customer use your product, but you also have to help your customer get the value they need from your product.
Your market is crowded. You are competing not only against companies that provide similar products, but with all the other investment priorities of your customer, and your customer is deciding whether whatever work you support is worth funding at all.
One of your first tasks when you assume responsibility for a customer is to understand how your customer will measure their success because of your product. If they are not clear, help them define that measure.
One company with which I’ve worked offers tools to bring social information into the selling process. If you ask generically how they make customers successful, they might say they increase revenue. Well, yes. But so many factors affect revenue and the effect of their product may be small compared with others, so it’s a meaningless measurement. They could also quote their marketing material and say they provide a deeper understanding of each prospect. Again, yes, but can you measure that? And is it a benefit or just a thing the product does?
While the product provides many benefits, one that is particularly interesting is it shortens the sales cycle (decreasing time to revenue). So they ask every new customer how long their average sales cycle is. Then they look at the users of their product and ask them 3 months, 6 months and 9 months later how long their sales cycle is. The length drops every time.
The customer is now convincing themselves that the product has significant benefit. And you know exactly how much and why they should renew (and how to sell the renewal).
Pick your measurements. Ask good questions. Make sure your customer realizes value. And they are less likely to leave.
2. Social engagement
I don’t think I need to convince you business is social. Your customers are in the social channels, discussing their business challenges and issues, as well as the products and services they like and don’t like.
The best case is when your customer loves your product so much that they recommend it to their friends and colleagues. You can see this from high NetPromoter scores or by looking at your brand advocates with services such as Zuberance.
The worst case is when they don’t talk about you at all. Remember the adage, “The opposite of love is not hate, it’s indifference.” If your customers are indifferent, they are not getting value from your product, and they are less likely to renew.
So, listen and engage. Follow your customers on whatever social networks on which they are active. Connect to their professional networks. See what they are up to. Talk with them. Focus on issues and items of interest to them.
LinkedIn offers advice to recruiters about retaining candidates. They suggest adding new employees to your network, then watching their new connections. If you see them connect to a bunch of people at your competitor all at once, there’s a pretty good chance they’re interviewing.
Do the same. If a new competitor comes up, and suddenly your customer connects to lots of their people, it might be time to strengthen your connection.
3. Look at the data
You have data. Lots of it. Don’t be afraid to use it. But don’t get caught up in the “big data” hype. Here’s how to make it useful:
You already track every single action your customer takes in your product. You know every interaction, and you probably know the results of those interactions. All of this may not be well organized, but a close approximation will work pretty well for this purpose. And your data analysts can help you make sense of it all.
The key to analyzing large amounts of data is asking the right questions. You should be asking one or both of these:
1. What specific actions predict either renewal or non-renewal?
2. What are the relevant (predictive) differences between customers who renew and customers who don’t?
If you know the answer to one of those questions (they are just two sides of the same coin), you will have a much better idea much earlier whether any given customer is on the path to renewal.
It’s important that you not only look at this data when it’s time to ask for the renewal. You must look every month (ideally) or periodically throughout the contract term. Don’t wait until they’re ready to say no to talk them into yes. Get them on the road to yes much earlier.
This can feel like a lot to do with each and every customer, and you might be thinking you can only do all of this with your largest customers.
I warn you: that is a mistake.
The biggest danger for non-renewal — and for large revenue losses — lies in the middle of your customer base, with those customers who matter, but still fall outside your high-attention area (e.g. your enterprise group).
There are lots of technologies available today that allow you to watch large data sets, interpret social streams and collect customer data. Even I, as an independent consultant with no staff at all, engage and monitor social streams for clients, prospects and new business opportunities. Is easier — and cheaper — than ever to scale these efforts.
1. Pick a question or two to ask your customers every month.
2. Choose a set of customers with whom to engage on social networks.
3. Ask your data analysts one of the two questions above.
Most importantly, start counting your surprise non-renewals and the number of customers at risk of non-renewal. And (this is how I deliver value to my clients) watch the numbers drop.
Tell us what you choose and how you do in the comments.
Need additional insights? Look to DNA-CX to help improve customer renewal.