In the SaaS industry (and those that share similar traits), renewals are crucial for long-term growth and profitability. Locking in customers to continue their subscriptions involves understanding their ongoing needs and demonstrating the value of your product – every day, not just at renewal.
The key question is whether customer success teams should manage renewals or if businesses should invest in a specialized renewals team. Here, we give a bulleted summary of the pros and cons of both strategies and provide insights on how to incentivize these teams effectively.
Customer Success Teams Overseeing Renewals
Pros:
- Deep Customer Relationships: CSMs understand the customer's journey, making them well-positioned to manage renewals through personalized interactions.
- Holistic Experience: A single point of contact for both success and renewals ensures a seamless customer experience.
- Value-Driven Conversations: CSMs can use their knowledge to make compelling arguments for renewals based on real use cases.
- Add-ons: Upsell Opportunities are more likely at time of renewal and CSMs know customer needs, budgets, and tolerances best.
Cons:
- Conflicting Priorities: Balancing success and renewals can lead to burnout or neglected tasks.
- Sales Skills Gap: CSMs may lack the specialized skills needed for renewals.
- Scalability Issues: Managing both roles for a growing customer base can be challenging.
Building a Specialized Renewals Team
Pros:
- Dedicated Focus: A renewals team concentrates solely on securing renewals, leading to higher rates.
- Expert Negotiation Skills: Specialists are trained in sales techniques and negotiations.
- Scalability: A dedicated team can handle a larger volume of accounts efficiently.
- Relationship Stability: A third-party renewals agent can minimize friction between the customer and the CSMs outside of the renewal window.
Cons:
- Fragmented Experience: Separate teams can lead to a fragmented customer experience.
- Hand-Off Challenges: Transitioning customers can cause confusion or dissatisfaction.
- Increased Costs: Additional hiring and training expenses must be justified by improved renewal rates.
Incentivizing Teams to Close Renewals
Performance-Based Bonuses
- Renewal Rates: Offer bonuses based on successful renewals.
- Customer Retention: Provide bonuses for high retention rates.
Commission Structures
- Tiered Commissions: Higher renewal rates earn higher commissions.
- Cross-Selling: Commissions for cross-selling or upselling during renewals.
Recognition Programs
- Top Performers: Monthly awards and perks for top performers.
- Team Achievements: Group rewards for collective success.
Professional Development Opportunities
- Training and Certifications: Access to training programs and certifications.
- Career Advancement: Clear pathways for career growth.
Feedback and Improvement Incentives
- Customer Feedback: Rewards for positive customer feedback and high NPS.
- Process Improvement: Incentives for implementing process improvements.
In Conclusion
Deciding whether customer success teams or a specialized renewals team should manage renewals depends on your organization’s needs and goals. Assess these factors carefully and implement effective incentives to ensure high renewal rates, satisfied customers, and sustainable growth.
At Acknowledge Solutions, we specialize in optimizing customer success and renewal strategies. Contact us today to learn how we can help you maximize customer retention and drive long-term success.