How to lose customers and reduce the value of your brand

There is no doubt that the cost of acquiring a new client is several times that of retaining an existing one.  In the current economic climate many organisations have culled new business heads in favour of instructing account managers to maximise spend from existing customers and many have identified Managed Service provision as a strategic priority.
Despite this, many are still missing critical revenue opportunities and failing at the basics as they aren’t paying enough attention to annual support renewals.

This renewals management issue in fact exists with the vast majority of the resellers that Demuto has visited or spoken with.  Surprisingly, most identified that they don’t give that side of the business any sales focus or alternatively admitted that they lack the back office processes to ensure maximum effectiveness.  All that said however, it wasn’t until they were questioned on it that most respondents recognised that this was even an issue. Due to a lack of specialist knowledge most had dismissed the opportunity as too difficult, or that it would produce too small a return to justify their time and focus.

In times of abundance, renewals didn’t always happen because the client would regularly review hardware, but today it is more likely that renewal time will present an opportunity to extend the contract and uplift the Service Level Agreement (SLA) to a higher level. So, any opportunity to speak regularly to a client should be seized upon as strong relationships can keep a competitor at bay or uncover a new project. 

Improving your organisation’s ability to renew
Most value-added distributors and vendors have a renewals programme and access to some historic sales data but the most accurate and timely reports are available from your own ERP system. 

Once you have the data there are essentially three routes to take:
1)    Allocate it to your internal sales people.
2)    Appoint a dedicated renewals team.
3)    Appoint a specialist renewals organisation.

It’s worth noting here that getting the administration process right for a renewal is crucial and a dedicated team can really earn their keep and save your organisation a lot of time and money. 

A significant amount of renewals take place with little consideration as to how the estate has changed over the lifetime so the revised contract may be inaccurate.  It’s important that, as the reseller, you seize upon this opportunity to review the details… add value to your customer at all times!

If you are a service reseller, establishing a relationship with several suitable providers will undoubtedly give you the best opportunity to meet your client’s needs. However, also note that your organisation will be judged on the suppliers you choose so be aware that cutting your cost of sale could ultimately lose your business. If you aren’t an expert in this field, find and work with someone that is try not to be reliant on being fed data by distributors or vendors.

A dedicated and automated renewals database will enable you to be self sufficient and will give you control over identifying potential revenue streams. Understanding how to measure your renewals business separately from other product lines will also let you measure performance of the initiative quickly and be well received by would be investors or suitors.

For more information on best practices around renewal time, or to ask any questions, visit www.demuto.eu