— June 21, 2017
?Who wouldn’t like to secure 20 years’ worth of renewals with each of their customers? Well, this is doable and, in fact, if you sell on a subscription basis, this should be your goal from the very beginning. But how do you get there? Ask yourself, “How would I need to approach and manage a new client relationship from the very start?”
Achieving the 20-year renewal requires a shift in thinking and in action. It requires that you change how you approach your sales discussions from the very beginning. Then, it requires that you change your service and value delivery approach to create an environment in which a client is delighted to renew year, over year, over year.
Selling for Logos (and Churn)
When we talk with SaaS vendors, we routinely hear some version of a story about how “sales is really focused on getting new logos” and will “do anything to land a new customer”. Typically, the conversations focus on the features and functionality of the software, how easy it is to use, and how fast they can have the system live. The sales rep closes the deal, gets the commission, and turns things over to the implementation and delivery team to make it happen.
And then it doesn’t happen.
Sure, the system gets turned on and some people get trained on it. Then, the customer waits for it to be used and anticipates all the great business benefits to come rolling in. And they wait. And they wait. And no (or only limited) benefits appear. Soon after that the customer complaints arrive, followed by the inevitable, disastrous Quarterly Business Reviews (QBRs), a clear sign of the churn that is yet to come. And then that comes too.
Selling and Delivering for the 20-Year Renewal
So, what went wrong? You won the deal, right? The problem is that if this is your approach, chances are you may have won the deal but already lost the renewal.
Selling for the 20-year renewal requires you shift your sales discussion from the features, functionality and potential benefits of your system to instead focus on how your Customer Success capabilities will ensure customers are successful in adopting the system. From that flows the clear business value from the use of your software, and based on that, customers will be thrilled to continue renewing for the next 20 years.
Here are three ways to do this:
1. Set the Goal of a 20-Year Relationship from the Very Start.
It may seem counter-intuitive, but your initial sales conversations need to move beyond focusing on the immediate, pressing business problem. Instead, address how you will solve the new challenges that will emerge once the current need is met. Jointly think past the immediate need to what happens next. Focus the discussion on the long-term, sustained business value that the customer will need to realize in order to renew for the next 20 years.
2. Map the Critical Path to Value Creation and 20 Years of Renewals.
Most technology project plans focus on the path to go-live and a little bit beyond. But when you map out the critical path to ROI and renewals, you quickly see that accelerated and sustained, effective user adoption is what leads to renewals. So, what are actions and deliverables required over time to make sure you get the levels of user adoption you need to deliver 20 years’ worth of renewable value to your customer? Not sure? Chances are, your customers don’t know either, which is why you need to help them figure it out.
When you walk your prospect through a 20-year renewal timeframe, what will become clear is that after the system is live what becomes most important is having a sustained effort to maximize adoption. Help your customer discover that over 20 years there will be changes to their internal structure, staff composition, products/services, operating environment, and overall organizational performance. The key to a 20-year renewal is helping them develop the capability to accelerate and sustain effective internal user adoption over the course of 20 years of ongoing organizational change and uncertainty.
3. Provide and Sustain User Adoption & Value Realization Capabilities for Your Customer
Most of your customers will not have a clue about how to put in place a program that drives and sustains adoption for 20 years. You may not either. But you, and they, need to figure it out.
Helping your customers map out and proactively manage all the organizational complexities affecting user adoption and value realization they will encounter over time is not a core capability of most software vendors – even those with a great Customer Success team. Yet, this capability is exactly what your customers require to achieve 20 years of value from your system.
To address this need, you either need to build this capability in-house, partner with software adoption and organizational change companies to provide this expertise, or discover some way for your customers to solve this problem on their own. Ultimately, unless your customers can sufficiently sustain adoption and ongoing value realization, the 20-year renewal will remain elusive.