What I’m about to describe in this blog is not a figment of my imagination! It is all achievable right now and every tech company needs to know about it.
Automation within renewals is no longer a nice to have, it is absolutely essential for ongoing profitability. Yet, there is still confusion and hesitance. Are auto-renewals the same as renewal automation? What and how do you automate?
I will demystify it all here.
What is Renewal Automation?
Renewal automation refers to the digitization of processes and workflows required to achieve a renewal with an existing customer. From a tech sales perspective, this could include renewals for software subscriptions, hardware maintenance, service contracts and even cloud consumption.
For technology providers - vendors, distributors and VARs/MSPs, renewals can often become overwhelming and costly. Due to the high volume involved, it can be difficult to close renewals effectively without the help of automation. Hiring more people isn’t exactly economically viable, especially for low-value renewals (“the long-tail”). Which is why renewal automation is absolutely necessary for closing renewals in the most operationally efficient, cost-effective way.
Renewal automation requires finding the right balance of people, processes and platforms/technology to manage renewals. Too much automation could impact your customer relationships and too little will hurt your bottom line due to high costs.
Below is a summary of key areas where automation should be applied within the renewals process:
1- Data management
It’s very easy to drown in data. According to TSIA1, organizing customer data, price-book data, contract data and channel data is complicated and standard CRMs are not equipped to handle this.
It’s important to have access to all this data in one place, to eliminate data silos, create seamless workflows and have a complete view of your customers and sales. If you’re a vendor or distributor, you also want a clear picture of all transactions flowing through your channel.
The first step is to leverage a revenue technology platform built for this purpose2. Once in place, you can integrate with your existing systems such as your ERP, CRM, service desk management and POS to ensure ongoing data integrity and greater business intelligence.
2- Channel integration
One of the greatest time wasters for renewal reps is the need for constant follow-up between vendors, distributors, and resellers while shepherding the quote through to order. To address the problems of volume and deadlines, renewal reps also need a tool that can minimize the phone calls and emails required for every quote to give them more time back in their day, so they can move on to the next customer. They need a standardized platform where vendors and partners can interact and exchange data in a secure, automated manner.
3- Quoting
Implement a renewals platform that enables bulk updates on pricing and margins and automatically generates order-ready quotes. In addition, any update made to a quote, contract, or asset detail should automatically be published to all other integrated systems, saving hours or days that your specialists or channel partners spend on sending email requests, re-quoting, and reconciling data.
For example, with the right platform, you can also remove the entire manual sales order entry department, because your accepted orders will be automatically sent to your ERP. This can help save companies, in some cases, hundreds of thousands in cost.
4- Expand sales
If expand sales isn’t already part of your renewals cadence, then it should be! Make it easy for your team to find revenue opportunities within your existing customer base (upsell, cross-sell, refresh, upgrades, end of life and end of service). Then, rather than send a simple marketing email, your revenue platform should go one step further and send auto-generated, accurately priced quotes, straight to your customer or partner, making sales conversions much more likely.
What is Auto-renewal?
Auto-renewal is probably the easiest to understand, because it’s part of our daily lives as consumers. From our personal subscriptions to Netflix and Spotify, right through to gym memberships and phone plans, we come across auto-renewals all the time. The same applies within the tech industry, where there are auto-renewals applied to SaaS subscriptions for example.
Essentially, an automatic renewal is a clause within the terms and conditions of your agreement with your provider. It enables a contract term to roll over into a new term, unless written notice is provided by one of the parties to end the agreement. If neither party cancels, then it is assumed that the customer agrees to renew and the provider agrees to continue delivering their services.
Whilst it may work well in some scenarios, I believe that enforcing auto-renewal clauses on software or service contracts within a B2B capacity can be counterproductive. You may think that it helps your business lock in recurring revenue with minimal effort and cost, however it could damage your customer relationships and even your brand if not executed perfectly.
Some factors to consider:
1- Never assume that it’s a straight renewal! Don’t allow your auto-renewal strategy to eliminate potential upside. Ensure that your expansion strategy goes hand in hand with your renewals cadence. Consider whether there are opportunities to capture additional revenue (upsell, cross-sell, upgrade, refresh) and demonstrate further value to your customer.
2- Automatically invoicing a customer can add complications where budgets, approvals and PO’s are involved. In addition, decision makers move on, departments change, priorities shift. An auto-renewal might be convenient for your business, but are you considering what is happening on the customer side? Is it possible that you have may have annoyed them?
3- Don’t forget about the customer in-between onboarding and renewal time. If they only hear from you at auto-renewal time, why would they renew? Do you know if they are getting value from your solution? Do they perceive you as a trusted partner/supplier? If you are going to enforce auto-renewals, make sure your customer success team will maintain that relationship.
Final words
There’s no doubt that customer retention drives profitability, which is why renewal management is so important. Applying automation to your renewals processes offers countless benefits, such as operational efficiency, cost savings, faster quote to cash periods and greater business intelligence. Automate parts of the renewals process that don’t need to be handled manually. Allow your people to focus on building customer relationships, driving revenue and managing complex tasks.
According to a TSIA survey1, 43% of respondents stated that identifying a technology platform represents a large factor for not deploying a digitized or automated renewal workflow. But it is all achievable with iasset! Reach out if you’d like to find out more about how we have helped technology companies save hundreds of thousands of dollars and grow revenue at the same time.
1 TSIA – Renewal Workflow Automation research 2021
2 See www.iasset.com
Blog
Video
Blog
Comments