Contract and product renewals are the perfect time to look holistically at the economics of your commercial relationships and take steps to improve them. Some B2B companies have no choice but to settle for a “status quo” renewal instead of having the foresight and an actionable playbook for taking advantage of all available uplift opportunities.
Too often, sales teams simply don’t have visibility into all the right contract information to make appropriate decisions at renewal time, which means money gets left on the table. Even companies with dedicated renewal teams constantly struggle to understand what’s been sold, the current pricing, unfavorable terms, existing entitlements, even the renewal date itself.
Establishing a best practice approach to contract renewals may seem herculean, but it doesn’t have to be. However, there are specific steps you must enable in order to empower your renewals team to rise above the status quo.
Set Your Course for Renewal Effectiveness
We have determined 6 critical steps required for you to maximize the strategic value of each renewal. In short, those steps are:
DETERMINING WHEN CONTRACTS ARE RENEWING
Do you have an accurate understanding of upcoming renewals and off-contract revenue? It should be based on the calculated product and contract renewal dates, auto-renew status and notification period. You can’t set proactive alerts if you don’t know the renewal dates.
PRIORITIZING WHICH RENEWALS TO WORK ON
Do you have a singular view of upcoming renewals prioritized as high, medium and low based on revenue size, retention risk and upside opportunity? You’ll also need to know if you have the ability to improve economic position by negotiating out unfavorable terms, such as termination for convenience.
COLLECTING AN INVENTORY OF A CUSTOMER’S RENEWALS
How well do you know each customer account? Are you able to review a summary of what the customer currently owns, whether the customer is meeting their minimum revenue commitments, how price increases have been applied, and if the customer has any non-standard service level terms?
ADDING NEW REVENUE
Visibility into promising white space is extremely challenging for many B2B leaders. You need the ability to map the customer’s current contracted product footprint, which products need to be migrated to newer strategic products, and where there are opportunities to sell them complementary products.
RENEGOTIATING A BETTER ECONOMIC POSITION
Comparing the customer’s negotiated Ts & Cs and pricing to similar customers and standards is vital. Best-in-class teams have access to a playbook of opportunities to improve renewal effectiveness by lengthening contract terms, shortening payment terms, improving discounts, eliminating unfavorable terms, or moving the customer.
PREPARING FOR A RENEWAL EVENT
When it comes to renewal negotiations, you can’t understate the need for preparedness. Does your team have a renewal management plan at their fingertips that includes all renewing products, pricing, and discounts, as well as the original MSA, order form, and any amendments?
