Customer renewals—they’re the lifeblood of your business. And not just because of the often-cited statistic that acquiring a new customer can cost five times more than retaining an existing one (although that’s part of the equation).
You might be surprised to learn how much higher a success rate you have selling to an existing customer (upwards of 60%).
Or how marginally increasing customer retention rates by as little as 5% can increase business profits by more than 25%.
In an economically uncertain climate, focusing your sales attention on customer retention is your key to achieving strong results, quarter after quarter.
And in a B2B subscription economy, unsubscribing is only one click away.
In this guide to customer renewals, we’ll show you how to craft a streamlined renewal process and encourage cross-departmental collaboration between Sales and Success, with the ultimate goal of boosting your renewal rates.
So, let’s dive into the customer success renewal playbook.
Who owns customer renewals?
You’ve heard the saying “what gets measured gets managed.” But when it comes to customer renewals, who does the measuring? And who does the managing?
It’s a big topic of debate at B2B SaaS companies. Ultimately, each company has its own way of distributing responsibilities across its sales and customer success teams.
But both teams should be involved in the renewal process to encourage ownership and drive results.
That means creating alignment between both Sales and Success, since working in silos can only get you so far. Initiatives like collaborating to gather account intel or assigning revenue numbers to customer success can help draw the two departments closer together.
What role does Sales play in renewals?
Sales used to focus solely on customer acquisition, but things have changed with the rise of subscription-based SaaS and product-led growth.
Now, customer success, upselling, and cross-selling are ongoing activities throughout the customer lifecycle, which means Sales needs to be involved with customers before, during, and after a deal is closed.
Sometimes, customer account managers (AMs) will be the ones to own renewals. It’s part of their job to guide customers that are considering upgrading or expanding product usage. Of course, they don’t walk that road alone—that’s when the customer success team comes into play.
What role does Customer Success play in renewals?
Customer Success is in charge of encouraging usage, driving advocacy, and spearheading all non-commercial customer activities. But the team’s role doesn’t start and stop there.
In some companies, Sales’ role is limited to new customer acquisition, while customer success managers (CSMs) manage commercial activities for the existing customer base. Other companies choose to tag-team renewals. Yet there are still businesses where customer success is limited to non-commercial activities only.
While these are all functional options, it’s easiest to achieve alignment between sales and customer success when the two teams work closely together.
Generally speaking, the larger the initial sales investment in relationship-building and the longer the sales cycle, the less likely Sales will be to completely hand off the client to Success.
So while customer success will always be a crucial part of your client relationships, their role may change depending on the structure of your company and the nature of each deal.
The biggest takeaway here? Bridging the gap between sales and customer success is vital to a smooth renewal process.
Customer renewal rates & benchmarks
To ensure you’re making the biggest impact possible, you have to dig into the data. That means finding ways to accurately measure retention and its impact.
Here are a few metrics you can analyze to get a pulse on customer sentiment:
Customer renewal rate: This is the percentage of customers that decide to continue a relationship with your company. It’s calculated by dividing the number of customers who renew by the total number of customers eligible for renewal. It’s a good way to get an idea of customer satisfaction rates and growth prospects.
Customer churn rate: Churn rate (or attrition rate) is the measure of customers who decide to terminate their relationship with your business. You can calculate customer churn rate by subtracting the number of customers at the end of a period by the number at the beginning, then dividing by the number of users at the beginning. A high churn rate indicates an unhealthy business outlook.
- A meta-analysis from Cobloom in 2020 found that an ideal annual churn rate is around 5-7%.
- Recurly reports an average churn rate of 4.91% for B2B businesses and 4.69% in SaaS
Revenue churn rate: Revenue churn rate (or monthly recurring revenue (MRR) churn) is usually calculated on a monthly or periodic basis. Revenue churn rate is the percentage of income lost from customer non-renewals, downgrades, and cancellations.
Time to value (TTV): TTV is a metric used to measure the time from customer purchase to the moment the customer begins to derive value from your product. The sooner new customers begin to see value from your product, the better the outlook for upsell and renewal.
Customer lifetime value (CLTV):, CLTV is the amount you expect a customer to spend on your products and services throughout the course of your business relationship.
Customer health index (CHI): CHI paints an overall picture of a customer’s health. What status does the customer hold with your company? What KPIs are being measured and how close are you to meeting them? The higher the customer health score, the more likely you have a healthy customer relationship—which will in turn lead to more renewals and upsell opportunities.
All of these are possible ways of measuring retention. It's up to your team to decide which metrics you’ll use to determine the effectiveness of your renewal strategy.
The four-step customer renewal process
Renewal time shouldn’t be crunch time. The renewal process is a marathon, not a sprint. Focusing on ongoing best practices can help you capitalize on business prospects when renewal is up.
Here are a few tips to keep in mind as you look at your renewal process:
1. Onboarding: Where it all begins
Customer onboarding is the most critical moment in the renewal process. Every touchpoint customers have with your product should surpass their expectations, starting from day one.
“When I led marketing at Lattice, a smooth customer onboarding process was the number one factor in whether a client would renew or not,” said Alex Kracov, CEO at Dock.
That includes designing a smooth onboarding experience, complete with:
- A smooth Sales-to-Success handoff
- Onboarding email sequences
- Kickoff meetings and training sessions
- Implementation plans
- Slide decks and tutorials for internal product training
Dock can help you do this in style with customer onboarding workspaces.
2. Adoption: Get them up to speed
The more value you can deliver to customers, the more revenue they’ll ultimately drive for your business. As they begin implementing your product, make sure they’re recognizing your value at every turn. Highlight time to value and other metrics that show they’re on a path to success.
Throughout the process, consider the questions:
- How can you reduce TTV for customers?
- Are you delivering the value they want and expect?
You then might decide to drive adoption by hosting training sessions, creating interactive tutorials, or making support super accessible. Taking a look at new customer usage data can also give you an indication of areas that need improvement.
Improving at this stage might also require taking a step back and refining your onboarding process, which is the basis of product adoption.
3. Nurture: Care for your customers
The worst thing that could happen come renewal time is for a customer to realize they’ve been left out in the cold since onboarding.
From quarterly business reviews (QBRs) to multiple sales touchpoints, it’s important to have an overview of every client relationship.
4. Renewal: Showtime is here
After you’ve been through onboarding, initial adoption, and nurturing, your product and customer service should already speak for themselves. If you’ve proven your ability to deliver value to customers in line with their strategic goals, most of the work is done.
All that’s left to do is to directly ask about renewal and be open to addressing any doubts the customer may have. Be prepared to pitch any upcoming product innovations or updates that could be game-changers for the customer.
Customer renewal best practices
Renewal is no walk in the park. Because it’s such a lengthy process that traverses the entire client lifecycle, there are certain questions and challenges you’ll come up against.
In this section, we’ve laid out a few renewal best practices that you can adopt as part of your renewal process.
1. Champion for renewal from the start
From day one, your customer success team should have renewal top of mind. From closing the deal to onboarding to delivering on promised value, every touchpoint with the client matters.
Starting from onboarding, your goal should be to minimize time to value.
The sooner your client sees return on their investment, the more likely they are to view your product favorably. They won’t have to worry about justifying spend to others in the company, since your solution has already proven its value.
2. Identify at-risk customers
Do you know which of your customers are happy and which aren’t? That’s an important step in minimizing churn. Knowing who’s at risk and who isn’t should be a part of your renewal strategy.
Driving up retention rates starts with identifying risk factors, which may include:
- A decrease in usage of your solution
- Delayed or missed milestones in the adoption process
- The inability of your solution to deliver on value
- A high number of support tickets
- A change in key stakeholders
- Low net promoter score (NPS)
Of course, these are just a few of the factors at play. And merely identifying these factors isn’t enough.
Having a system in place to monitor these indicators and taking action is key to assessing which customers are at risk.
3. Identify champions and silent detractors
Inevitably, some of your customer stakeholders will be fans of your solution, while others might not be the keenest—whether that’s due to competition, budget, or other factors out of your control.
Luckily, it should be obvious for your team to identify which of your contacts are your buyer champions—the most responsive and enthusiastic users of your product. Likewise, your contacts that show hesitation, ask pointed questions, or constantly identify the 'why not's are probably detractors.
But there’s also a third group: the silent detractors, who appear content on the outside but secretly harbor discontent. To identify the silent detractors, you can take periodic “temperature checks” with your contacts to assess their likelihood of championing for renewal.
4. Reduce customer friction
Whether we’re checking out at the grocery store or buying a car, smooth purchasing processes make us happy. It’s no different when it comes to buying your product.
Make it simple to buy from you by enabling your buyers, and the results will follow.
How can you make things easier for your customers? Use these client management tips to make sure you:
- Communicate clearly and thoroughly from the start
- Are proactive about asking for feedback (using initiatives like a monthly NPS survey, social media polls, or an annual customer satisfaction survey)
- Document conversations in one place using a Dock workspace
- Keep sales and customer success teams aligned on strategy
- Focus on meeting the customer’s needs
- Track client engagement with your product and client workspace
- Adjust contracts and prices with agility
- Leverage sales, onboarding, and reporting templates
5. Scale your renewal process with templates
Of course, starting each renewal campaign from scratch is a huge drain on company resources. Because each customer renewal follows similar guidelines, it makes sense to follow a streamlined, repeatable process.
By creating a client management or client portal template in Dock, you can standardize your customer success process from onboarding through to renewal.
With Dock, you can build one standardized template per major client segment, and then simply copy that pre-made template for each new client before personalizing the workspace with the client’s contact details, project plan, and more.
For example, you can include a checklist with all the steps needed for a successful partnership.
You can even sync sections across client workspaces so you can push newly published content to all your clients at once. For example, you can have a synced section with your latest case studies.
By standardizing this process with a template, you will not only achieve more consistency across your customer success team, but you’ll also make life easier for your client.
The auto-renewal vs. conversation renewal question
There’s another way to ensure high retention rates as well: building auto-renew stipulations into your contracts.
This is where behavioral psychology enters the scene. The fact is that choosing auto-renewal over conversation renewal can make a big difference in your renewal rates.
That’s because of the opt-in vs. opt-out phenomenon. Many studies have been conducted to demonstrate the value of opt-out, or presumed consent, policies.
Take organ donation, for instance. Historically, countries with opt-out policies see donation rates of around 90%, while opt-in countries only see rates of around 15%. This suggests that by and large, people stick to the default option, even when alternatives are available. We see the same pattern with magazine or gym subscriptions.
This same concept can be applied to customer renewals. You’ll see many more renewals when the default option is automatic renewal.
Choosing auto-renewal doesn’t mean you’re tricking your customers, either. Let them know the terms when they sign the initial contract. Then, as renewal approaches, send them a few reminders informing them of the upcoming renewal and explaining how they can opt out if they wish. They’re still in control of the renewal, but you’ll have to do much less groundwork to secure customer renewals.
It’s a win-win, as long as you’re making customer-centric decisions while navigating auto-renewal communications.
Customer renewal tools & software
While renewal software isn’t a thing (yet!), there are plenty of customer success platforms that have the ultimate goal of contract renewal in mind.
Internal-facing renewal tools
These tools enable companies to increase net revenue retention (NRR) by listening to customers in a data-driven, scalable way. Many also feature an automated renewal system to drive renewals with little effort on your part.
If you’re struggling to conduct temperature checks on your customers, consider exploring one of these options to help you get a pulse on customer health:
Customer-facing renewal software
The problem with most renewal tools is that they’re not built for customer-facing interactions. They help your internal team, but not your customers.
In a high-touch customer success scenario, it’s helpful to provide your buyer with a workspace to manage the renewal process (starting from onboarding).
By hosting all your customer enablement materials—like onboarding guides, help center documentation, and action item lists—in one place, you make life easier for your customer, making the decision to renew even easier.
- Create customer onboarding plans
- Make content easier to find and share content with customers
- Make it easier for your customers to find your customer enablement content
- Measure how often and when customers are accessing your workspace
- Summarize quarterly business reviews
- Guide renewal conversations
Use Dock to win renewals from day one
When approaching the customer renewal process, the entire customer experience is important—from the initial sale to onboarding, to ongoing client management, to quarterly business reviews, to even the renewal discussion.
But a reliance on manual renewal processes is a recipe for inefficiency. Having a tool by your side throughout the entire customer lifecycle can make your job that much easier.
Dock makes it simple to pave a path to purchase, effortless for cross-departmental teams to collaborate, and a breeze to drive customer renewals and revenue at scale.
Throughout the entire customer journey, Dock is there for you. Want to set up your own Dock space? Sign up now to create 5 workspaces for free.