Renewal Strategies | Customer Retention
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If you are an executive at an information technology company you have a lot to think about on a day to day basis, but there are 5 more things that you need to be aware of.
Your service organization is an incredible source of metrics and measurements that describe ongoing interactions with your customers. They can tell you about the top concerns of your customers, the challenges they face using your products and the features they want to see in the future.
Service interactions with customers offer a wealth of insights into how to sustain and grow customer relationship value and create opportunities to differentiate your products. Of all the metrics your service team tracks there are 5 important areas that you should key a close eye on.
If you inventory all the metrics used by your customer-facing organizations – Sales, Marketing and Service – you will find an impressive collection of data elements that describe how you interact with your customers. Marketing metrics describe the ability to reach and influence customers; Sales metrics provide insights into the time and efficiency to book revenue; and Service metrics describe the volume, timeliness, and effectiveness of interacting with them. Add to this, insights provided from customer satisfaction assessment efforts. As an industry we have a lot of customer data, but does it tell us everything we need to know about how to engage and sustain long term profitable relationships?
The amount of recurring revenue a company receives may increase, stay the same, or decline for a given period. Recurring Revenue Rate indicates the percent change in the amount of recurring revenue at the end of a specified period compared to the recurring revenue at the beginning of the same period. Measuring recurring revenue rate is essential to help identify the factors that lead to revenue retention and attrition and provides an indicator of the overall state of customer relationship health.
We have become too dependent on electronic surveys and NPS/CSat scores to tell us that our customers are okay. These are fine indicators but do not always tell us why we lose customers.
Service renewal metrics indicate the level of performance for sustaining service relationships and retaining recurring revenue. Tracking both service contract renewal and recurring revenue retention is essential to help identify the factors that lead to customer and revenue retention and attrition and provide important indicators about the overall state of customer relationship health.
The ability to accurately track the effectiveness of Service Revenue Generation activities is essential to maximizing revenue from new and existing customers. There are three primary opportunities to capture service revenue including the sale of new contracts at the time of the initial product sale (Attach); renewal of existing service contracts (Renew); and as reinstatements (Win Back) of contracts that have been previously cancelled by customers. This article presents a consistent set of metrics and definitions to help companies measure the overall of service sales and renewal policies, programs and personnel.
Use ServiceXRG’s Contract Renewal Assessment tool to get an immediate evaluation of your current renewal practices and performance. The assessment takes just a few minutes and will provide you with a customized performance scorecard with recommendations for improving contract renewals.
When achieving industry-average renewal performance the percent of customers under contract erodes to 46% of the original relationships at the end of a five-year period. Here are suggestions for moving beyond industry average performance.
If there is one service performance indicator to steer by it is RETENTION. You can have plenty of satisfied customers but still not grow, but you can’t grow unless you retain the customers you have.
Why aren’t you renewing more of your service contracts. The most common reasons for non-renewal are: Lack of perceived value; a customer stops using your product; a product reaches maturity; or poor service quality. Non-renewal is also caused by poor renewal practices. This article introduces the top reasons for non-renewal and offers practical advice for how to improve renewal rates.
There are many reasons why customers choose to cancel their service relationship. The most common reason for cancelation is that they do not perceive that the benefits outweigh the cost of continuing the service. Or, they do not feel that the risk is too great to cancel – this is a common perception by customers that use mature products. The least likely cause of customer cancelation is poor service quality.
Definition Renewal rates measure renewal performance and may indicate the number of contracts or revenue retained. Once a company has established a service relationship with a customer the service renewal policies and practices it uses determine whether it sustains...