More than one-third of the time, renewal specialists in the sales organization are responsible for closing renewal deals, and 27% of the time, this responsibility falls to the account executive. Customer success managers (CSMs) only own the renewal for 22% of companies. Historically, TSIA has found that renewal rates are higher when a renewal specialist or CSM is the owner because sales executives are typically compensated more for new business than renewals, so they have less of a focus (and skill set) for retention motions.
As with the initial purchase, buyers increasingly want to complete the renewal process online. In fact, only 5% of customers want contact via a phone call for upcoming renewals. The rest prefer that digital contacts (either by email with documents attached or links to a web portal) review and sign agreements or direct integration to ERP systems for fully automated approvals and billing. However, only 27% of technology companies today enable online automated renewals, and for those who do offer this, more than half, 57%, say that less than 20% of renewals transact digitally. Why is this number so low? Though cultural problems and fear of change are common challenges, as it is with moving to fully digital sales, many companies are still trying to understand how to manage renewals successfully. This includes:
- Health scores. Creating accurate health scores to identify which accounts are likely to renew and can choose an automatic option, and which accounts may prove more resistant and require manual intervention, continues to challenge most firms.
- Renewal timing. More than a third of companies, 37%, start renewal activities 90 days prior to the renewal, 22% start 120 days out, and 19% start 180 days out. Understanding the correct cadence is critical before they can automate renewal campaigns.
- Expand selling. On average, 30% of technology subscription renewals include an upsell, and the average expansion rate is 21%. For pacesetters, 54% of renewals include an upsell, with an average expansion rate of 27%. Companies that depend on making expand selling part of the renewal conversation but fear introducing too much automation may prevent the identification of additional revenue opportunities.
Whether they own the renewal and expand selling opportunities or only contribute to them, CSMs must improve their sales acumens. To address this, about 35% of companies have provided selling skills (prospecting, negotiation, closing, and so on) in the past 12 months.