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4 Key Metrics All CS Teams Should Measure

How To Win at Renewal

After a year of engaging with a customer and walking them through the entire customer journey, customer success teams face an exciting prospect: first-year renewal. This is when you see the fruits of your effort if the customer sticks around for another year.

Renewal is critical, both from a relationship and financial standpoint. Acquiring a new customer is five to 25 times more expensive than retaining an existing customer, meaning retaining customers is more cost-effective and helps your company grow.

So, how do you win at first-year renewal?

By putting in the work from day one.

Renewal Is an Event, Not a Stage

For many companies, renewal is a date on the calendar. Client success managers (CSMs) reach out to clients 30 days before their contract renewal is due — often after not checking on them for months — in hopes of answering questions and re-selling the product to get the customer to stick around.

But that mindset doesn’t win renewal.

Renewal isn’t an event or a box you can check off. It’s the outcome of a year of dedication, relationship-building, and proactively moving the customer down the right path. When you’ve put in the work, renewal is nearly automatic because you’ve already created a champion who sees the full value of your product in reaching their goals.

When you haven’t put in that work, renewal becomes a stressful event. If you haven’t dedicated the time and effort during the first three stages of adoption, implementation, and engagement, renewal isn’t certain. That’s when teams have to dive in and frantically start trying to re-sell the customer so they don’t miss out on renewing the contract.

But trying to recover a customer when you have no idea how they are doing is like digging for treasure without a map. You’ll find yourself looking around in the dark instead of proactively preparing ahead of time and taking advantage of opportunities to learn about the customer and showcase the unique value of your product.

“Although there is a treasure trove of data on how customers interact with the selling organization and a growing customer engagement technology stack that enables analysis and action on that information, many organizations treat the customer as if the relationship is new each day. Then they are dismayed when that generic customer experience doesn’t result in renewal,” said Lisa Nakano, VP, Research Director at Forrester.

When you know customers and have walked along the customer path with them for the entire first year, renewal becomes a natural outcome, not a stressful event.

Renewal Comes From Providing Value

In the rush for renewal, many companies fall into the trap of manipulating customers into extending their contracts. They may use scare tactics, paint an ominous picture of what will happen without the product, or say it’s the only way to keep up with the competition.

But renewal comes from constantly providing value, not rushing to manipulate customers at the last hour.

When customers see the full value of the product and are confident in its usage and the role it plays in their business operations, they naturally want to continue with your product. Renewal comes from providing value and ensuring customers know and understand all the features of your product, not from using shady tactics or manipulation.

When you focus on engagement and building strong relationships with customers, the need to rush towards renewal or the temptation to coerce customers to sign the deal goes away. The transaction becomes more organic and a natural progression of the relationship instead of something you must fight to achieve.

For customers who see the full value of your product, renewal isn’t even a question. They are so engaged that they want to continue with your company without a second thought.

What Happens After Renewal?

You’ve put in the work to create a power user in your customer and renewed the contract. Where do you go from here?

A lighter version of engagement continues over many years, especially as your product changes and you introduce new features. There are always opportunities to check-in with customers. But if you’ve done the work during the first year, especially during the engagement stage, your customer will be a power user on their own. By putting in that effort during the first year, you’ll infinitely increase the customer’s lifetime value, and they will stay with you much longer.

First-year renewal doesn’t have to be a dreaded day on the calendar. When you have a plan that walks your customers through the three specific stages of adoption, implementation, and engagement, renewal is the natural outcome. You win at renewal by winning at the other three stages.


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