...the output every CSM anxiously awaits at the conclusion of a customer's contract term. Did I do enough to establish a strong relationship to warrant their renewal? Did I do enough to demonstrate to them the ROI/value they’ve generated from using our tool? While all valid questions, you’re missing THE number one question you should have asked 6 months into your customer's current contract to truly know the fate of their renewal...
“If your renewal were tomorrow would you renew?
BOOM! Fate known.
Of the many times I’ve asked this question to my customers over the years, I’ve always received one of two answers...
Answer 1: Yes, I would.
Sometimes the customer will divulge more, but if they don’t, you want to understand why. “Why are they willing to renew? What factors did they evaluate when generating that opinion?” This insight will help you understand what’s working to drive renewals. Then share that information internally and have everyone repeat! Repeat! Repeat!
Answer 2: No, I wouldn’t.
Ughhhh gut wrenching! BUT...here’s why this isn’t the end of the world. Your follow-up question is CRITICAL: “I appreciate your honesty. What would it take between now and your renewal in 6 months to change your answer to 'yes'?”
This is where magic happens! You immediately get a direct line of sight into your charter for the next 6 months to prevent this customer from churning. That is a HECK of a lot better than having mere weeks to try and change their mind at the conclusion of their contract when you’ve just initiated their renewal conversation.
In addition to 6 months runway to action the inputs they’re after to secure their renewal, there are also some additional benefits for you as a CSM, your boss, leadership and the company as a whole:
- Less anxiety: Actually! You have the facts and now you’ve got time. This significantly reduces your stress levels and the panicked feeling of scrambling to convince a customer to renew on the basis of a vision.
- No surprises: there is nothing a boss/executive team dislikes more than churn surprises. Knowing this answer 6 months in advance and devising a plan to change the outcome shows a strong command of your book. This is a strength!
- Better forecast predicability: with this 6+ month heads-up visibility, the broader business can adjust to still hit targets. For example, if you’re going to churn a $60K account, leadership now knows the team needs to make up $60K elsewhere to hit revenue targets (ie. close an additional new logo for $60K or upsell several customers equating to $60K).
Less stress! Showing command of your book! Better predicability for your business and most importantly...a stronger, more transparent partnership with your customer that now has you in lock-step to achieve a very specific outcome, within a defined period of time!
Get after it