The COVID-19 pandemic may have radically altered the marketplace around us, but the fundamentals of customer renewal strategies remain the same. Customers have always based their renewal decisions on emotional connections, financial realities, and the amount of trust they have that a service can deliver sustained value.
During the current crisis, the importance of those elements of connection, finances, and trust has only increased. The biggest variable the current environment creates is a sense of helplessness—that the causes of churn are beyond the control of your customer or your business. That is not entirely true. With a strong customer relationship, you and your customers should be able to work together to plot a path to success during this time and beyond. That conversation involves the same renewal strategies you employed before the pandemic’s impact. You just have to adapt them to today’s sensitivities.
How to Encourage Renewals
Customer retention is the lifeblood of the SaaS and subscription industry. The digitization of business has empowered customers to seek flexible, personalized business solutions that spread the cost of overheads and capital over the life of an ongoing partnership. The SaaS model has created a balance in which the customer receives continued business value over time, while the enterprise gains a reliable, growing source of revenue.
That process must endure the current pandemic conditions if both parties are to continue to thrive. While there are obvious economic forces working that may alter the usual cash flow between B2B companies, the relationship will hold up if an exchange of value can be maintained.
For the SaaS enterprise, that means adapting traditional customer renewal best practices to suit the current conditions. The three strategies to focus on right now are:
- Demonstrate Value
- Start Thinking Renewal Early
- Make Renewals Frictionless
The last strategy on the list is of particular importance given the stresses of the current pandemic. At its heart, however, the renewal conversation is always a consideration of value, so that is where we start our discussion.
1. Demonstrate Value
Value only increases in importance during times of economic stress. History shows that products perceived as reliable and offering value for money consistently do well during financial downturns. Your relationship with your customers is the same. If you have a proven record of driving growth and delivering value through the achievement of business goals, it is far more likely that your customers will maintain at least the intention of consistent renewals.
If your customers are not seeing value right now, you may need to analyze their usage of your product and offer training specific to features that would benefit their business. Or, offer user group gatherings in which other product users can share the techniques that are working for them.
The biggest thing you can do right now is support your customer through this crisis and back onto the path toward growth once it passes. You could alter financial agreements to reflect the changing business environment, accelerate the introduction of new product features more suited to digital delivery, or allow limited-time access to current key features that can help them during this time.
2. Start Thinking Renewal Early
Renewal is not tied to an anniversary or date on a calendar. Customer renewal is a direct result of customer experience and an emotional response to every engagement that precedes the final decision. Customers may make their minds up about their future with your enterprise long before you ever ask them to sign on the dotted line.
That’s why the best customer renewal strategies begin on Day 1 of the customer experience. Every effort that is made to deliver value to your customer makes the process of renewal an extension of an ongoing relationship. Here are just a few ways you can start to take action:
- Recalibrate customer health scores
- Identify meaningful business risks or opportunities within the customer base
- Leverage automation to drive usage of digital services
- Execute at-risk renewal path a predetermined number of days prior to renewal
- Execute no-risk renewal path a predetermined number of days prior to renewal
- Provide more value to customers at the same price by enabling additional features, providing more licenses, offering training and professional services, or adding value in other ways.
This applies in the current climate as well. You have to understand the experience of each of your customers before you begin building a case for renewal. Tracking customer health, including customer success, makes it possible to determine if there needs to be a shift in a customer’s contract or product usage in order to make renewal more valuable. You may have to start providing an altered service, perhaps one that focuses on training rather than business goals or consolidation rather than growth, before your customer can find enough value to renew.
3. Make Renewals Frictionless
The renewal process should seem like part of an ongoing process rather than a sudden question. For high-value renewals, automation can enforce a renewal process by helping Customer Success team members build a renewal strategy, collect information such as product adoption, license utilization, support ticket status, and more, conduct an executive business review and get customer sentiment about renewal, and forecast the renewal based on customer sentiment. If customer sentiment is negative, automation can help team members construct a renewal recovery plan.
For low-value renewals, the process may be much simpler, but automation can still help. Automated renewal reminders can prompt team members to initiate the process at just the right time, so renewal does not feel rushed or drawn out. For low-tier, low-touch accounts, automation can lighten the workload of CSMs who might be managing as many as 1000 low-tier accounts.
In a time of economic uncertainty, this strategy of streamlining the process becomes even more important. No company needs more hassle right now. If you’ve been working closely with your customers, you should be able to personalize your messaging and make the renewal process simply the continuation of a tight working relationship.
Customer Renewal Strategies Rely on Flexible Software
The financial and market pressure brought about by the ongoing COVID-19 crisis will undoubtedly lead to changes in customer behavior. Customers that have steadily renewed for years may suddenly face conditions beyond their control that cause a shift in their thinking. This has the potential to impact your renewal rates unless you can keep pace with the changing conditions your customers face.
That’s why your Customer Success software should be flexible enough to accommodate the current conditions. You need access to up-to-date information on product usage, licensing, feature engagement, recent touchpoints, support tickets, and survey feedback in order to know how to serve your customers’ needs. Your software should provide a visual, cross-segment view into the health of every customer account so you can prioritize your engagements, capitalize on opportunities, and combat churn before it starts. CS software should also offer the ability to use automation to provide the right value at the right time.
The current pandemic may have introduced a new level of economic stress to the market, but the basics of customer renewal remain. Stay in touch using a comprehensive Customer Success platform, then deliver ongoing value that leads to mutual growth.
Totango’s customer success platform collects, organizes, and analyzes your customer information, and makes it easy to act on that data in a practical way that makes the most of your CS team’s time. To put it to use during these challenging conditions, get started for free with our COVID-19 Customer Engagement Toolkit.