How to retain that hard fought contract, before the renewal date.
By Steve Gerlach | Aurora
Marketing | April 13th, 2023
So, you’ve won the contract after a long and complicated tender process which has tied up your sales, operations and bidding teams, everyone
has celebrated the hard-fought victory and your operations team has mobilised to site….now what?
Two key rules of business are often stated, but usually ignored.
One is, “Keeping and growing your existing customers is the easiest and the most profitable way to grow your business.”
The second is, “Renewal starts from Day One of the contract.”
While these rules are known, and often stated in team meetings and boardrooms, more often than not nothing is done to ensure they are
followed or acted upon. The contract has begun, the team is on site, job done.
After all, sales teams sell services, operations teams operate those services.
Frequently, these two teams only meet and work cohesively together in the heat of a tender submission and through contract transition. Once
the contract is up and running, the operations team turns to focus on day-to-day issues, while the sales team goes off to hunt the next
But, now more than ever, contract renewal is the key to growth for many companies. Customer sales churn hurts business bottom lines, leads
to disruption in contracts, affects staffing levels and also retention/satisfaction rates. In the end, it’s bad for business.
Contract renewal is even more compelling when you consider that acquiring
a new customer is anywhere from 5 to 25 times more expensive than
retaining an existing one, depending on the study.
Further studies, including research by Frederick Reichheld of
Bain & Company (who
invented the Net Promoter Score), state that boosting customer retention rates by 5% boosts profits by 25% to 95%. With figures like this,
it’s perplexing to think why organisations still focus the majority of their time on acquisition, when there’s so much to be gained by
providing value throughout the customer lifecycle on contracts that return to market every 3-6 years.
These studies confirm the very real corporate advantage in having a retention focus throughout the contract lifecycle. It ensures contracts
run smoothly, and your customers are more than just happy – they are over the moon with the services your teams deliver.
But, if a fully-fledged retention team is not something that’s workable in your organisation, then a smarter approach to service delivery –
with an eye on retention being a critical part of this process – is required.
The view to the horizon
We need to reframe what “retendering” means in the minds of the sales and operations teams. Retenders should not be seen as “just part of a
contract cycle” or “what happens at the end of the contract.”
That kind of thinking leads to last minute tendering panics or – worse still – missing critical client engagement windows because the
operations team is not talking to the sales team. If you re-engage with the client at the start of a retender process, you’re more than
likely not going to retain the contract.
It’s a sobering thought, but if you have to retender for a current contract, then your renewal process has failed.
The success factors of high-performing, renewal-focused teams
So, what do high-performing, integrated and renewal focused teams do differently to the usual “ping pong” approach of sales > operations >
sales > operations? It’s all about a renewal mindset that is embedded throughout the contract lifecycle, not just switched on when the
Characteristics of a renewal team’s mindset include:
Engaging with your clients from day one of the contract, and not letting the conversation stop across operations, sales and
management levels. Know them, build the relationship until they see you not as providers, but as “part of the team”
Investing in renewal, as it’s critical to ongoing business success and growth. Don’t leave it to the last minute and
shoehorn it in as part of sales or retendering activities
Understanding your contract knowledge is valuable IP and your differentiator, ensure all your teams “live and breathe”
renewal priorities and activities – think now, and the future, in all activities you undertake
Owning the renewal process at all levels – management, sales and operations – and from day one. Do this by making it a
priority and keeping it “front of mind.” Create a renewal plan, list renewal priorities now (not when the retender is released) and include
renewal discussions as agenda items on all meetings.
Additionally, as outlined in the Gartner report Design
Customer Experiences to Improve Brand Advocacy and Growth, customers
also tend to have long memories regarding times where they encountered “moments of doubt” with service delivery or service expectations.
Renewal-focused teams look for client or contract red flags such as these and mitigate these issues as soon as possible:
- Shallow relationships with your client touchpoints at any level – management, operations, sales
- Change in support levels for your team or services – usually due to client supporters moving or changing jobs
- Client complaints about your services or members of your team
- Client-side communication within the contract is lacking or infrequent
- Client is questioning service costs, invoicing or is not paying on time
- Client approach to your services has changed leading to a gap in expectations of delivery
Customer Experience is key to delivering on client expectations and surpassing them. Delivering on your commitments, while providing
additional levels of service, and focusing on the value that customers achieve from those services is critical.
As the internal team delivering critical services to your clients, you need to ensure you are providing unique perspectives that help their
business be more efficient or effective across the life of the contract. You provide depth to those perspectives by influencing,
guiding, recommending and outlining how those actions can be taken whenever possible. And you focus on the impact, the ROI, of those efforts
for your client.
You’re already there. You hold the keys to success in your hands.
Being an incumbent on a contract is a critical advantage. Remember, you have something your customers desperately want and
It’s your expertise.
The day-to-day insights, wisdom and plain, practical know-how you and your operations team have accumulated in the course of doing business –
learning from day one, transitioning into the contract, identifying the challenges and meeting (or exceeding) them with expert solutions.
You may in fact know more about the contract you are running than your client. That’s critical IP which your staff have cultivated,
understood, learnt from and delivered upon.
Your customers are looking for strongly forged partnerships with suppliers who understand their pain points, who can provide solutions,
and – yes – provide value for money.
Once imbedded in a contract, you become the credible authority in your service delivery. And once you’ve proven yourself capable and have
your clients thinking, “They really understand us,” you’re uniquely positioned to roll the contract over without your client heading back
into the stressful and expensive procurement process of tenders.
Focus on the horizon, make your service offering and integration with the client unbreakable, deliver over and above expectations and your
contract will rollover without going back to market.
How can we help?
Throughout this renewal process, Aurora Marketing works with our customer’s business development and operational teams, management and
key bid/sales personnel to facilitate a proactive and interactive series of workshops to ensure all the necessary requirements are
in place with enough lead time to deliver successful contract extension or roll-over, without going back to market.