Is it time to rethink your Contract Renewal strategy?

In a recent LinkedIn poll conducted by Aurora Marketing, we sought to uncover professional perspectives on the ideal timing for initiating contract renewal activities. The results are now in, and are both fascinating and illuminating, shedding light on the varied opinions across the bidding and sales communities.

Out of all respondents, a significant 40% favoured the approach of commencing contract renewal discussions with their clients a full year before the conclusion of the existing contract. This finding underscores a proactive mindset among bid and sales teams who recognise the value of forward planning and strategic negotiation. By initiating talks well in advance, parties can navigate potential complexities, anticipate evolving needs, and ensure a smooth transition into the subsequent contract term or contract extension.

Interestingly, a sizable 33% of respondents advocated for an even earlier start, suggesting that contract renewal deliberations should ideally begin from Day 1 of the initial contract. Many in our industry will have heard the old saying “Retention begins from Day One” of the initial contract. And while this is a worthy and visionary approach, oftentimes practicalities of the new contract, such as transitioning in, are – naturally – of higher concern. However, this viewpoint does emphasise the correct mindset of prioritising the importance of ongoing dialogue and continuous improvement throughout the contract lifecycle. By embedding renewal considerations into the very fabric – the DNA – of the working relationship from inception, parties can cultivate a culture of transparency, adaptability, and mutual understanding.

Conversely, 27% of respondents favoured a more condensed timeframe, asserting that contract renewal discussions should commence three months prior to the expiration of the current contract. This flies mighty close to the sun, risking being caught in a retendering loop, where the incumbent is in no better position than any other competitor bidding for the new contract, as opportunities to forge stronger bonds with the end client, undertake proactive solutions and problem-solving together, and critical positioning opportunities are left to the red-time scramble of the soon-to-be-released new tender. This approach, while possibly driven by a desire to address renewal specifics closer to the contract's end while maintaining flexibility for changing circumstances, is the highest-risk option of the three scenarios, leaving little time for the incumbent to influence, guide or persuade contract management of retention or extension options.

The diversity of opinions expressed in this poll underscores the nuanced nature of contract renewal activities and management. Timing, undoubtedly, plays a pivotal role in shaping the renewal process and, yes, each contract and end client is different with a complex array of requirements, competing priorities and time-poor management needs to fill. As such, each viewpoint carries its own merits, reflecting unique organisational dynamics, industry norms, and team/business preferences.

As we reflect on these insights, it becomes evident that there is no one-size-fits-all approach to contract renewal, just as there is no out-of-the-box process for each and every tender. However, as the survey indicates, the sooner operations, sales and business development teams join together during a live contract to plan, forecast and set a strategy for retaining that hard fought contract win, the better.

Boosting customer retention rates by 5% boosts profits by 25% to 95% -?Frederick Reichheld of Bain & Company

So, where does your company fit when it comes to renewal activities?

Day 1 planners?

The 365 countdowners?

Or the Red-time Sprinters?

Click?here?for more information about the Aurora Marketing Contract Renewal process that will help your business build better client relationships and operational delivery, foster enduring partnerships and drive sustained business success.