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How can you develop a scalable and efficient renewal negotiation process?

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Renewal negotiation is a crucial part of customer retention, especially for subscription-based businesses. However, it can also be a time-consuming and unpredictable process, especially if you have a large and diverse customer base. How can you streamline and optimize your renewal negotiation process to achieve higher retention rates, lower churn, and more revenue? Here are some tips to help you develop a scalable and efficient renewal negotiation process.

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Sugandha R.

Customer Success Strategist: Orchestrating Excellence and Growth
Raman Bindra

Customer Success Leader | 2x Top 25 Creative CS Leader??| 3x Top 100 Customer Success Strategist?? | B2B SAAS

1 Define your renewal strategy

Prior to beginning negotiations with customers, it is essential to have a clear and consistent renewal strategy that is in line with your business goals and customer segments. This strategy should include your renewal pricing model and policy, such as discounts, incentives, and price increases; your renewal timeline and milestones; and your value proposition and messaging. By having a well-defined renewal strategy, you can plan and execute your renewal negotiations more efficiently, as well as avoid any confusion or inconsistency with your team or customers.

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Raman Bindra

Customer Success Leader | 2x Top 25 Creative CS Leader??| 3x Top 100 Customer Success Strategist?? | B2B SAAS
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Successful renewals are critical for every business considering it ensures to save the existing revenue as well as the number of customers that help in the growth of the business. For successful renewal, we ensure to build a strategic and process-oriented apporach wherein we define: 1. Customer Segments to ensure the approach is customized as per the customer 2. Stakeholder Mangement to ensure we are aware of the decision-makers 3. Account Plan to ensure we build the entire customer success journey with critical touch points and milestones 4. Proactively Showcase Value delivery 5. Alignment with customers goals 6. Having a Customer Health score to keep track of all the customers 7. Well-informed about changes in customer's org

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2 Segment and prioritize your customers

When it comes to renewal negotiation, not all customers are created equal. To ensure you’re allocating resources and efforts efficiently, you should segment and prioritize your customers based on criteria such as customer health score, lifetime value, and potential. The customer health score indicates how likely a customer is to renew, while the lifetime value estimates how much revenue a customer will generate over their entire relationship with you. Additionally, the customer potential metric assesses how much room there is for upselling, cross-selling, or expanding the relationship. By segmenting and prioritizing your customers, you can tailor your renewal negotiation approach and tactics to each customer segment.

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3 Prepare and train your team

Your team is the key to successful renewal negotiation, and it's important to ensure they have the skills, knowledge, and tools to negotiate effectively and confidently with customers. To prepare and train your team, you should define roles and responsibilities, provide guidelines and scripts, equip them with data and insights, and offer feedback and coaching. Doing so will help improve your team's renewal negotiation competence and confidence, as well as increase retention and motivation. Moreover, you should consider best practices and procedures for conducting renewal negotiations, anticipate common scenarios and objections that may arise, leverage metrics and indicators to justify and negotiate prices/terms, and monitor/evaluate skills/results to provide timely feedback/coaching.

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Sugandha R.

Customer Success Strategist: Orchestrating Excellence and Growth
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Creating a renewal strategy is paramount for the success of any retention team, with team training being the second most crucial factor. CSM industry divided in 2 school of thoughts: 1. CSMs should only focus on creating value 2. CSMs should renew as well. Hence, a lot of CSMs, even after having years of experience in value creation may not have exposure to renewal negotiations. It becomes imperative, therefore, to provide comprehensive training to the team, addressing essential issues they might encounter. This includes equipping them with the skills to navigate common price objections, competition/industry related questions, handle last-minute feature requests, and adeptly manage product issues highlighted during renewal calls.

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4 Automate and optimize your process

Renewal negotiation can be a complex and tedious process. To make it more efficient, you should consider automating and optimizing your process with tools such as CRM software, contract management software, and analytics software. These tools can help you manage customer relationships and track interactions, create, store, and manage renewal contracts, and collect, analyze, and visualize data. Automating and optimizing your process will reduce manual work and errors, as well as improve renewal speed and accuracy.

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5 Learn and improve continuously

Renewal negotiation is not just a one-time event, but an ongoing cycle of learning and improvement. It's important to constantly monitor and measure your renewal negotiation process and outcomes, as well as collect and act on customer feedback and satisfaction. You should set and track specific, measurable, achievable, relevant, and time-bound goals and KPIs, conduct regular reviews and audits to identify strengths and weaknesses, and solicit and implement customer feedback to improve satisfaction, loyalty, and retention. By learning and improving continuously, you can identify and address gaps and opportunities in your process while adapting to changing customer needs.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you develop a scalable and efficient renewal negotiation process?

1

2

3

4

5

6

1 Define your renewal strategy

2 Segment and prioritize your customers

3 Prepare and train your team

4 Automate and optimize your process

5 Learn and improve continuously

6 Here’s what else to consider

Customer Retention

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How can you develop a scalable and efficient renewal negotiation process?

1

2

3

4

5

6

1 Define your renewal strategy

2 Segment and prioritize your customers

3 Prepare and train your team

4 Automate and optimize your process

5 Learn and improve continuously

6 Here’s what else to consider

Customer Retention

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