Renewals is a primary SaaS metric for good reason – it means your customer is continuing to recognize value from your product and service and is willing to continue to pay for it. 

Most understand that it is expensive to obtain a new customer – lead acquisition, sales expenses, and time and opportunity costs add up quickly. And after your team/company has done the expensive work of acquiring a customer, you certainly don’t want to waste that time and effort. That’s one of the main reasons for the increased focus on the Customer Success function these days. High renewal rates + new ARR growth provides the rapid growth acceleration that all successful Saas companies strive for.

Over the years, leading teams focused on ensuring Customer Success, I have noticed common themes in those that renew easily, year after year. Here are four keys to an straightforward, successful renewal:

Ensure The Right Fit For Your Customer

Ensuring the right fit for your customer starts during the sales process. The sales team need to take the time to assess the quality of the fit between the customer’s needs, and your product and offerings. It is important that the customer’s requirements and success factors have been identified and mapped appropriately so there is a clear path to success for both parties. If instead the customer is oversold or over promised, it makes renewals infinitely more difficult because your teams are immediately fighting uphill.

Customer Success Team Is Invested in the Success of the Customer

It’s in the name but it is not always true! Do the Customer Success team understand what success looks like to the customer? Do they understand the customer’s KPIs and business drivers? Are they effective educators and truly invested in the success of the customer? Do they know how to build a Trusted Advisor relationship? Are they properly incented to deliver a great and effective experience for the customer? If not, the renewal is in trouble right away.

Continual Listening and Improvement

SaaS contracts last for a period of time – typically a year. Over the course of that contract, many things change for your customer. Requirements shift, priorities are substituted, stakeholders leave, employees turnover, etc. The Customer Success team has to be able to adjust, read and react so that they stay attuned to the changing business needs of the customer, and delivering to those changing needs is greatly facilitated by active and frequent interaction.

Constantly Communicate Value

Technology is cool and all, but let’s face it, companies buy software because it meets a business need, not a technical one.

Once your product is purchased, companies begin evaluating the return on their investment and do so continually throughout the term of the contract. If they are spending $200k a year with your company, they will need to see high multiples of that amount in order to be able to justify it to their manager, their manager’s manager, procurement, etc. Therefore, it becomes essential that the Customer Success team not only does an effective job of mapping the company’s requirements and KPIs to your product’s output, but they continually communicate the value of that output to the appropriate stakeholders. 

That value communication needs to be compelling to all of the audiences who see it, meaning it will need to have several levels of value demonstration – to the main user(s) of your product, their managers, and at the executive level. Each of those levels will require different information and indications of business impact. This is where Art meets Science – the numbers are the science, the story telling at various levels is the Art.

If your Customer Success team does these four things well, then the renewal will be straightforward because the impact of not renewing will be clear. If they don’t renew, they will understand that all of that business value that you and your product bring to the table will be gone, as well as the value of your partnership and your insights.