Renewal Management 101: A Guide To Managing SaaS Renewals

Increasing SaaS renewals is arguably the most powerful way to boost your revenue and grow your SaaS business. While that may sound obvious, renewal management isn't always straightforward, and it's essential to have a customer retention strategy to keep your company on top of the game.

What many organizations don't know is how to leverage strategic process and software to increase renewal rates (also known as customer retention). If you are a SaaS executive or even onboarding / implementation manager professional looking to improve your renewal process? Great, then keep reading.

According to Thrive My Way, the SaaS industry grows on average 18% per year, and having excellent retention rates will enable your company to stack up revenue quickly.

This complete guide will discuss the importance of customer retention and provide best practices for SaaS renewals. On top of that, you'll discover key steps to ensure your customers continue to renew their subscriptions with you. 

What is SaaS Renewal Management (Retention)

SaaS renewal management is the process of managing the renewals of your software as a service (SaaS) product. 

This calls for keeping track of when each customer is in their lifecycle. Specifically, understanding how much value a client is receiving from your SaaS, aligning their outcomes with their stated goals, and gauging how well your company has been building a relationship with the client, and much more. It's essential to have an organized process in place so that you can make sure you and your team can be proactive while also being efficient.

A great process will provide your customers with the best experience along their customer journey and empower your team to effectively forecast customer churn and retention, which is critical information to know accurately as the business scales.

What is the Role of a Renewal Manager?

As the world becomes increasingly reliant on software, the role of software renewal managers is becoming more and more important. Software renewal managers are responsible for handling all the different aspects of subscriptions and preparing invoices and quotations.

Apart from that, they forecast SaaS renewals and market trends for the production team to implement new features, whether paid or free. Finally, a renewal manager must review and perfect strategies to achieve the desired goals and ensure that as many subscriptions are renewed each month or year.

Hiring a renewal manager is instrumental to growing your business, as outdated software can lead to costly disruptions and decreased revenue.

Why SaaS Renewals are Essential

Renewal management is important because it helps ensure that customers continue to use your product or service and that your company keeps growing. If customers are not using your product, they are less likely to renew their subscription, and poor renewal management can lead to lower renewal rates.

Also, SaaS renewals reflect Customer Lifetime Value (CLV) and hence have an impact on Customer Acquisition Costs (CAC), income, and long-term growth. 

In addition, the SaaS renewal rate reflects the company's financial health and growth prospects. It's a mirror of the company's financial health and growth prospects.

What Causes Poor Renewal Management?

Despite its importance, software renewal management is often neglected, leading to poor renewal rates and missed opportunities. So, what causes poor SaaS renewal management? Poor renewal management can be caused by several factors, including:

• Software complexity
• Absence of transparency
• Poor customer onboarding
• Lack of customer engagement
• No communication and added features

Also, when renewals are managed manually, it's easy for things to fall through the cracks. Crucial follow-ups can be missed, deadlines can be missed, and the overall process can be slow and inefficient. 

Finally, poor renewals management can also be caused by a lack of communication between the sales and customer success teams. If these two teams are not aligned on the renewal process, it can lead to confusion and frustration for customers.

Fortunately, there are a number of steps that businesses can take to improve and fix poor renewal management, and we will discuss them in the following paragraphs.

How to Fix Poor Renewal Management

There are several renewal management strategies that software companies can use to improve their renewal rates. Generally speaking, in order to fix poor software renewal, you will need to focus on three key areas, all focusing on the customer:

• Customer onboarding and engagement
• Communicate clearly with customers and ask for feedback
• Personalize renewals and constantly increase value

One of the most important things is to have a good onboarding process. Onboarding helps new customers understand your product and how to use it. It also helps them understand the value of your product and why they should continue using it. Many software companies don't have a good onboarding process, which leads to lower renewal rates.

To improve renewal management, you need to focus on customer engagement and ask for feedback to improve your software. How many times have you heard from product reviewers "The company has finally listened to us"? The goal is to make sure that customers see the value of your product and want to continue using it.

Finally, it would be best if you personalized renewals. This means sending custom renewal offers to customers based on their usage and preferences. It also means offering discounts and other incentives to customers who are at risk of churning.

There are more renewal strategies that you can implement, and we'll go deep into the details later in this complete SaaS renewals guide.

Pros and Cons of SaaS Renewals for Software Producers

As any business owner knows, software as a service (SaaS) can be a great way to get the tools that companies need to run their business without having to make a large upfront investment. But there's more; here are the pros of SaaS Renewals.

Recurring Revenue for Your Organization

Under a subscription software licensing model, as a business, you can expect revenue growth and recurring revenue streams, which lead to greater corporate values. Customers will continue subscribing to your software in the long run if it provides valuable value, resulting in more predictable income streams that last far into the future.

It's worth noting that, according to LeadSquared, 48% of companies make one-year contracts when buying SaaS solutions. For this reason, you should definitely increase your percentage to grow you company more quickly and making customers happier in the long run.

Expanding Customer Base

Subscription models usually have lower upfront expenses, which may be appealing to businesses who want to tie software costs to real use and value over time rather than paying the entire price right now before the program has demonstrated itself. 

As a result, you will be expanding your customer base since they will prefer your product compared to other solutions on the market with steep prices.

Decreased Need to Offer Discounts and Promotions

There's less need to discount because there are fewer upfront costs and the built-in consumer option to terminate the subscription once it expires, reducing customer risk. This can help you as a producer avoid having to lower their prices and offer discounts continuously.

However, one downside of SaaS is that it typically requires a recurring subscription fee. This can pose a challenge when it comes time to renew your subscription, as a client will need to weigh the pros and cons of continuing to use the service. Keep reading; these are the cons of SaaS renewal:

Business Process Changes

Updating subscription-based licensing to include subscriptions necessitates business process modifications, such as changes or additions to the subscription agreement. This will eventually cost you more, and, unless you expand your customer base, it will impact your overall revenue.

Producer Engagement

Under a subscription model, producers have strong incentives to ensure customer satisfaction since future income is based on renewals. As a result, you will need to invest on engaging with the customer in order to stay on top of their mind.

SaaS Renewal Strategies

Most people know that a good renewal management strategy is key for any software company, but few understand the importance of renewal management and how to fix poor renewal management. Here are the best SaaS renewals strategies that you should implement to secure more software renewals from customers.

Positive Onboarding Process for SaaS Renewals

As mentioned previously in this guide, one of the best renewal management strategies is to have a positive onboarding process. This means that you need to do more than just send a welcome email when someone first subscribes to your service. Instead, you should take the time to engage with new customers and help them properly connect all the relevant systems, integrations and data in order to fully utilize the value of your product.

If you want to take your onboarding process to the next level, you should use a software like Onboard, which is software that will streamline and automate your customer onboarding where all stakeholders can see who needs to do what and how -- easily.

On top of that, we offer a 7-day trial and a free 30-minute call to be properly trained by our team of onboarding experts. Needless to say, this is the tool to boost your subscriptions and keep your team efficient.

In addition, you should also ensure that they have everything they need to be successful. You can provide tutorials, videos, live webinars, or even engage on social media groups. The goal is to help customers better leverage the value of your product and how it can benefit them.

Proactive Communication Throughout the Entire Customer Lifecycle

Another important software renewal strategy is to proactively communicate with customers throughout the customer lifecycle. This means that you should keep in touch with customers even after they've subscribed to your service.

If they opt-in for this service, you can do this by sending them regular emails, reaching out to them on social media, and getting on phone calls or web-based meetings. The goal is to keep them updated on new features, answer any questions they have, and ensure your company and product are continuing to meet their needs.

For premium customers that spend a high amount of money each month, make sure to give them preferential services such as personalized calls, training on new features, and scheduled meetings.

By staying in touch with customers, you'll be top of mind when renewing their subscription. In addition, they'll appreciate the fact that you're taking the time to stay in touch and that you're interested in their success.

Ensure Outstanding Customer Success

Moreover, it's important to provide an outstanding customer success experience. This means that you should always be available to answer questions, resolve issues, and just generally be there for your customers in a prompt and professional manner.

Furthermore, your team should monitor social media, and ensure that you can quickly address any questions or issues that arise. In addition, you'll be able to see which prospects or customers are engaging with your social content and can be sure to reciprocate!

You'll increase customer satisfaction and loyalty by providing an outstanding customer success experience. In addition, customers will be more likely to renew their subscription if they know that they can always reach out to you when they need help.

Offer Continuous and Increasing Value

A final renewal management strategy is to offer continuous and increasing value to your customers. This means that you should always be looking for ways to improve your product and add new features that will benefit your customers. One of the best ways to continue to increase value for customers is to monitor and survey them to understand their goals. You should be storing this data into your CRM and empower your success team to regularly share this information with the product team so that your product roadmap can include some of the features and functionality that may better solve for customers goals.

Make Clients Understand Your Product is Unique

When renewal time comes around, some clients may be considering other options. It is crucial at this stage that you make it clear to them how your product is unique and what sets it apart from the competition.

Educate customers on all the features your product offers and how it can benefit them. Use data to show clients why your product is worth the price. Renewal rates will improve when customers are confident they are getting the best possible value for their money.

Make sure to keep your client informed about the latest features and improvements. Customers should feel like they are always getting the most up-to-date version when they renew. Show them that you are constantly working to make your product better, and they will be more likely to stay and renew their subscription. In addition, if you can incorporate any of their prior feedback and show current or future features which are based upon that feedback usually provides some timely goodwill that you may need.

Implement Proactive SaaS Renewal Management 

The best way to manage SaaS renewals is to be proactive about it and hire a professional, experienced renewal manager. They can ensure that your team proactively stays in touch with customers throughout their subscription and keeps them updated on new features, deals, etc.

This strategy should include a way to track customer engagement and usage, as well as regular check-ins with customers to see how they are using the product and if they are still satisfied based on the strategic goals of their organization.

What to Avoid to Increase Renewal Rates

On top of the best practices, we listed above to increase renewal rates, there are some elements to avoid if you want your customers to stay.

Hiding Contract Terms - Hiding renewal date

As a business owner, it's important to be upfront and transparent with your customers. That means being clear about any contracts you have in place. 

Hiding the contract terms will only make customers suspicious and unwilling to do business with you. Take the time to sit down with your customers and explain the details of your contract, or set up a FAQ page on your website to display all the terms they may need to know.

Implement Unhelpful Features and Not Listening to Your Customers

As a company, it is always important to listen to your customers. They are the ones who use your products and services, so they know what works and what doesn't. However, there are times when companies refuse to listen to their customers and instead implement unhelpful features. 

This often leads to customers becoming frustrated and eventually running away from the company. This hurts the bottom line, but it also damages the relationship between the company and its customers.

Not Having a Friendly Admin Interface

Not having an intuitive user-interface can be a deal-breaker for some clients. They may get frustrated with your software if they can't easily find the information they need. Worse, they may even take their business elsewhere. 

So, what can you do to avoid this fate? First, make sure that your product is easy to use and navigate. Second, provide clear and concise instructions on how to use its features.

Finally, as mentioned earlier, make sure that you have a customer success and support team that is ready and willing to help users with any problems they may encounter. 

Conclusion

Renewals can be a hassle, but they don't have to be - by following the tips in this guide, you can make renewals a breeze and keep your subscription revenue flowing in.

You can increase renewal rates and create loyal, satisfied customers with the above renewal management tips. 

Remember, it's crucial to offer continuous and increasing value, make it easy for customers to renew, and be proactive about software renewal. With these strategies, you will ensure that your software and SaaS company are successful for years to come.

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