For telecom companies, mastering the renewal motion is a not-so-hidden source advantage in a highly competitive industry. Customer acquisition costs are high, switching costs are low, and slowing the decline of legacy revenue streams while driving strategic product growth is priority #1. Renewals represent a fantastic opportunity to re-engage a customer, lock-in revenue and find uplift.
In my last post, I discussed the challenges in determining what customers and products are up for renewal each year and making sales teams aware. Assuming you crack that challenge, it creates a new problem – how do I work all of these newly discovered opportunities without growing my team significantly?
The short answer is, you don’t. Leading organizations define a set of clear objectives for the renewal motion, assess all of their renewal events for how well they fit those objectives, and surface the highest priority opportunities for sales teams to work on.
Turn a reactive process into a proactive strategy
In working with telecom leaders, we’ve solidified three effective ways to establish a best practice when it comes to renewal prioritization. An effort that can feel insurmountable for your team today can become achievable when you start with these three important considerations.
#1 Churn Risk
The top priority is keeping the revenue you already have, and a number of factors can serve as red flags that a customer could be at risk of dropping a product or leaving you altogether.
For example, if revenue is off-contract and based on month-to-month renewals, it’s perpetually at risk. A better option may be to bundle month-to-month products and offer a steeper discount in exchange for a multiyear term. You may also want to look at how their current spend now compares to their agreed to minimums? If their current consumption is measurably different than the initial deal terms, your team can take active steps to reconcile issues sooner not later.
Finally, it’s important to look at the specific products that are up for renewal and see how the active pricing compares to the current market rate. If its significantly higher, it may be a good time to engage and either offer a discount or propose a strategic product alternative.
#2 Upside Opportunities
Renewals aren’t just about avoiding risk, they are a great time to find opportunity. Look for customers that are way over their revenue commitment. Or maybe there are customers that are way over their bandwidth limits every month. By finding customers who are overperforming, you can explore raising the minimum and offering a discount to lock them in for a longer term. Or perhaps lock in a higher revenue floor at a lower rate.
Examine the relationship for products they have under contract, compare them to current channel marketing campaigns, and see what the customer has deployed at their sites. You can surface prime expansion opportunities by finding customers that have strategic products they have yet to purchase, have products deployed that are complementary to campaigns, or have whitespace at the site that is renewing. These strategic renewal actions go a long way toward maximizing customer lifetime value (LTV.)
#3 Commercial Relationship Clean Up
Spring (or fall) cleaning is always a good idea. If you have a business-wide initiative to tighten up your commercial relationships, renewals are a prime time to weed out the outdated and unprofitable terms.
Create a set of criteria you can use at time of renewal to target customer accounts with unfavorable terms and prioritize them for renegotiation. We typically begin with the terms that drive economic value for your deals—things like excessive discounts, termination for convenience, missing “price uplift” clauses, or SLA penalties. By identifying these less-than-optimal relationships, you can quickly send them over to the deal desk or other proper team to negotiate better overall deal economics.
By focusing your team on these three considerations, you can achieve greater coverage of your renewal efforts with better outcomes, all while maintain the size of your team.
Learn more about our solutions for install base selling and renewals strategy here.