Renewal Ownership

In a SaaS-model business, renewals are of utmost importance. With that in mind the question of who in the company owns the renewal inevitably arises. In this post we’ll discuss the some of the steps that define the renewal process, and a few different possible ownership models. 

‍What Goes Into a Renewal

There are quite a few steps and actions that go into customer retention. One can argue that any interactions that happen after the initial purchase play a role in the renewal, and this is technically correct. However, for the purposes of this article we will separate the renewal event from normal customer success activities like, Business Reviews, Sentiment Tracking, and Onboarding. So, what does that leave? 

The renewal event typically starts with notifying a customer of an upcoming contract expiration. This can be handled within your product environment, with a call, or an email. From there the quoting and negotiation process starts where the terms of the next contract and pricing are hashed out. Finally, the renewal is closed by the customer signing the contract (invoicing and payment is technically a part of this process, but this is best handled by your finance department).

Per the steps outlined above, the renewal owner needs to be well-versed in navigating negotiations, have an in-depth understanding of how your product or services are priced, be an expert in your company’s contract terms, and have a closer’s mindset. Knowing this, let’s discuss some of the possible ways these responsibilities are distributed in a company. 

‍New Business Reps

The first method is to have new business reps manage renewals, and this provides a couple of different advantages. First, the customer will have a single, familiar point of contact throughout their lifecycle, and the same is true for the AE. Since they had the experience of closing the initial purchase, they should have a good understanding of how the client negotiates, what business issues need to be addressed, and which people are the decision-makers. The downside of this approach is that any time spent managing renewals is time that the rep could use to close net new business. For that reason, we only recommend this approach if you don’t have the budget for additional headcount, or you are not focused on closing new logos. 

‍Customer Success Managers

Another possibility is to have CSM’s own the renewal in addition to their normal responsibilities. This method can be really powerful, as the customer should already be familiar with their rep. As the CSM works through the lifecycle, they’ll also have plenty of opportunities to uncover churn risks, objections, and possibilities for expansion and cross-sells. There are a couple of possible shortcomings with this approach. First, depending on the number of accounts that each CSM manages, it’s possible that they can become so focused on the renewal event that their other activities that proactively improve the health of a client fall by the wayside. This risk can be mitigated by maintaining a realistic rep:account ratio, and reinforcing the importance of other activities during 1:1’s and team meetings. Another objection that arises is that having a CSM handle negotiations and pricing can undermine the trusted advisor role. This makes sense in theory, but in practice, if the CSM is able to build trust in the relationship through other activities, that trust won’t be damaged during fair negotiations. 

‍Account Managers

The third method involves having renewal responsibilities fall to a team that is completely separate from new business reps and CSM’s. These reps will be hands off during the rest of the customer lifecycle, and will only step in for contract and price negotiations. This can be advantageous if your company’s contracts are very complex, or if the renewal process is typically to time-consuming to be handled in addition to other responsibilities. Having a third rep that the customer needs to build a relationship with can really complicate their understanding of your business, however, and there is of course the cost of hiring and maintaining a third team. 

Any of these models can be effective depending on the stage and nature of your business. You just have to decide which is right for you.