How to Build A Software Renewal Program

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A customer renewal program is a vital part of every software firm's GTM strategy. It helps maximize revenue, reduce churn, and improve forecasts. A well-designed program lets you engage customers, address risks, and upsell. This article breaks down a "T-minus" strategy you can use so that no customer is left behind.

Why a subscription renewal program is important.

A good renewal program drives growth and stability for subscription-based software companies.

Protect recurring revenue and reduce churn.

Predictable recurring revenue is the backbone of the business. Renewals ensure that existing customers continue paying, creating stability and fueling growth. By finding at-risk customers and addressing their concerns, companies can re-engage them.

Foster long-term relationships and maximizes LTV.

Happy customers are more likely to renew and recommend the product. They are also more open to upsell opportunities. These long-term relationships boost Lifetime Value (LTV). It measures the total revenue from a customer over their engagement. A renewal program boosts loyalty and profits by keeping customers longer.

Improves business forecasting.

Accurate forecasting becomes easier when companies can predict how many customers will renew. This insight helps businesses make smart decisions on hiring, investments, and growth. Renewal income gives companies the confidence to grow and plan for the long term.

All effective renewal programs should follow a T-minus cadence.

A T-minus cadence is the backbone of a renewal program.

A structured renewal program starts six months before a contract expires. We break it down into these simple steps.

T-6 Months: Initial Customer Engagement

Contact customers to check their status. Segment accounts by renewal risk and upsell potential.

  • Taskssome text
    • Segment accounts into safe and at-risk based on relationship health and usage data
    • Segment accounts based on potential upsell and cross-sell opportunities
    • Conduct an initial, priority outreach to re-establish contact and gauge satisfaction
  • Tools and Resourcessome text
    • Renewal playbook guidance on initial outreach
    • Feature usage data dashboard and support tickets
    • Email templates for re-engagement and account check-in (which can be customized)

T-5 Months: Value Review

Hold a Value Review meeting. It should highlight ROI, discuss product usage, and address adoption issues.

  • Taskssome text
    • Schedule a one hour “Value Review” meeting
    • Review customer’s goals, strategies, satisfaction, and alignment with solution
    • Identify actions to improve alignment and enhance the relationship
  • Tools and Resourcessome text
    • Business Review and usage report templates
    • Guidance for conducting effective Value Review meetings
    • Scripts and talking points for discussing value and usage insights.

T-4 Months: Act on Value Review and Usage Insights

Use the Value Review to close engagement gaps. Align with customer goals. Pursue upsell opportunities to boost renewal readiness.

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    • Provide tailored training or resources to customers with low product use
    • Recommend features or best practices that meet the goals in the Value Review
    • Complete a product roadmap discussion as appropriate.
  • Tools and Resources:some text
    • Product team resources to support at-risk and upsell opportunity accounts
    • Customizable training session template
    • Customizable upsell and cross-sell proposal template

T-3 Months: Formal Renewal Proposal Preparation

Prepare a renewal proposal. Tailor it to the customer's goals. Then, schedule a meeting to present it.

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    • Prepare a formal renewal proposal. It must suit the customer's goals and usage.
    • Include potential upsell options based on previous discussions
    • Schedule a meeting with the customer to review the proposal and address concerns
  • Tools and Resourcessome text
    • Renewal proposal template
    • Pricing and upsell guidance
    • Meeting agenda and talking points for presenting the proposal

T-2 Months: Renewal Negotiation and Objection Handling

Begin negotiations, address objections, and offer incentives as needed to secure commitment.

  • Taskssome text
    • Begin renewal negotiations with flexibility on terms based on account value and risks
    • Address any objections or concerns raised by the customer during the proposal review
    • Offer incentives or customized options to address customer needs, if necessary
  • Tools and Resourcessome text
    • Objection-handling playbook
    • Renewal negotiation email templates
    • List of approved incentives or custom options

T-1 Month: Finalize Renewal Agreement

Confirm the customer’s decision, finalize terms, and send the purchase order or contract for signature.

  • Taskssome text
    • Confirm the customer’s decision and finalize the remaining terms of the renewal agreement.
    • Ensure all necessary internal approvals are secured for the final proposal
    • Generate and send the purchase order (PO) or contract to the customer
  • Tools and Resourcessome text
    • Final proposal checklist
    • Contract templates and PO request forms
    • Internal approvals checklist

T-2 Weeks: Follow-Up and Pre-Billing Preparation

Check on signatures. Coordinate with billing. Then, send a confirmation email to ensure a smooth renewal.

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    • Ensure the customer has signed the renewal agreement and submitted payment details.
    • Coordinate with billing and customer success for a seamless transition into the renewal term.
    • Send a confirmation email to the customer with renewal details.
  • Tools and Resourcessome text
    • Follow-up email templates
    • Billing and finance handoff checklist
    • Renewal confirmation messaging

T-0 Day: Renewal Completion and Welcome to New Term

Confirm the renewal. Welcome the customer to the new term. Offer support from the customer success team.

  • Taskssome text
    • Confirm the renewal process is complete
    • Send a “Welcome to the New Term” message summarizing the new benefits or features
    • Offer support to help the customer maximize usage in the new term
  • Tools and Resourcessome text
    • “Welcome to New Term” email templates
    • Customer Success follow-up scripts
    • Summary of new benefits or features document

Managing Escalations

Despite best efforts, some renewals may face challenges. Unresponsive customers, dissatisfaction, or at-risk renewals require immediate escalation. The first step is to alert the program owner and involve key stakeholders. Work together to develop a "get well" plan. This could include executive-to-executive discussions or tailored solutions to re-engage the customer. Clear escalation pathways ensure no account is left unsupported.

How to Measure the Success of Your Renewal Program

To measure a software renewal program's success, track specific metrics. They provide insights into customer retention and program effectiveness. Renewal Rate is a key metric. It shows the percentage of customers who renew their subscriptions. A high renewal rate shows a healthy program. A low rate shows where to improve. Churn Rate measures the percentage of customers who cancel their subscriptions. A lower rate is the ultimate goal. These metrics show how well your program retains customers and reduces attrition.

Retention is important. But, profitability metrics are also key. These include Customer Lifetime Value (CLV) and Net Revenue Retention (NRR). They help you understand the long-term financial impact of your renewal efforts. CLV tracks the average revenue from a customer over their lifecycle. Successful programs steadily increase this figure. NRR measures revenue from existing customers. It factors in churn, upsells, and expansions. So, it is a key growth metric. A strong renewal program keeps customers. It also uses renewal talks to boost account value.

Metrics like Customer Satisfaction (CSAT) and Net Promoter Score (NPS) show customer satisfaction, which affects the likelihood of renewal. Also, tracking Average Time to Renewal gauges process efficiency. Shorter times free up resources for other priorities. Finally, Upsell and Cross-Sell Revenue shows how well the team maximizes renewals by meeting customers' needs. These metrics give a complete view of your program's success.

Wrap Up

A subscription renewal program is a must for software firms. It's not just a nice-to-have. Engaged customers see your product's value. This reduces churn, protects revenue, and builds lasting relationships. A successful program needs clear goals, engagement, and the right tools. But, it pays off with growth and customer loyalty.

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