Ever had a customer that really doesn’t want to renew their service contract? It’s really not that uncommon especially when they’ve never had to call tech support or log a case for a product they purchased last year.
As the renewal specialist or team leader supporting them, it can be challenging to get these customers across the line, especially if they are not seeing the value, so we’ve identified a few techniques that may be helpful.
Make Sure They Have the Facts on What Services Have Actually Been Provided
Just because a customer hasn’t had a service issue doesn’t mean they haven’t received support. Typically support contracts provide firmware and software updates, which are often not well communicated to the customer or do not require any participation from him or her. They are therefore, hidden value which once explained, may help demonstrate actual value rather than his or her perceived value.
Highlight Risks Associated with Not Renewing
Many renewals include a bundling of hardware replacement as well as software updates. Highlighting the risks of not renewing including that a potential hardware breakdown will not be covered may help overcome a customer’s reluctance. Also advise him or her of the cost of replacing this hardware versus the cost of the renewal. The difference is usually worth it, especially when you factor in additional labour cost and time.
Emphasize Business Criticality
It would be a rare case where a customer doesn’t want to renew an IT product that’s critical to their business environment. However, that doesn’t mean it doesn’t ever happen. If it does happen, it may be a case of drawing on similar examples with other customers and the impact it had in the event of a breakdown or issue.
Make Reinstatement and Penalty Fees for Non-Renewal Unattractively Expensive
Reinstatement and penalty fees are a good way to encourage customers to renew, although it is very much the “stick” approach rather than the “carrot”. The important thing about reinstatement and penalty fees is that customers need to know about them well before the renewal is due. A customer that renews a few days late (for whatever reason) and is charged reinstatement fees is unlikely to be a customer for life especially if they feel the fees were unfairly applied.
Ask for Feedback
Asking your customer for feedback as to why they won’t renew may sound obvious, but is easily overlooked. There may be a bottleneck or process that is creating an inhibitor to the renewal or a product usage issue, which once uncovered can be addressed. Chances are if a bottleneck is affecting one customer, it will be affecting others as well.
In addition, it may offer you the opportunity to directly address and resolve the issue, which in a best case scenario, may lead to closing that renewal opportunity or at least limit the damage it’s causing with that customer.
And if they really don’t want to renew….
Propose an Alternative Solution
For example with aging products and services, rather than renewing a contract, it may be better to promote a new offering instead. These options are often cheaper in the long-run as well as offer better performance. Read our other blog for tips your non-renewing customers into Tech Refresh opportunities.
While there are various reasons why customers are reluctant to renew, overcoming these can be challenging for any renewal specialist. But by being honest in providing the facts as well as empathetic to your customers, you will be rewarded with better customer engagement and hopefully close more renewals!