How to Tackle Your Unprocessed Renewals

The ideal scenario for any renewal organization is that when a support contract becomes due for renewal, it’s published by the vendor at least 90 days from contract expiry. It is then automatically picked up by the relevant channel partner, with minimal additional effort to close the transaction at a price that offers everyone a reasonable margin.

Despite an organization’s best efforts to achieve this, unfortunately, a significant number of contracts will still fail to be renewed. Here’s some of the reasons why.

1. Incumbency Issues

I discussed the incumbency policy recently in a blog, but it can actually have quite a significant impact on the ability for a contract to be renewed. Basically, incumbency issues arise when a contract is “orphaned”—that is, it has no channel partner owner—or where a change in the channel partner allocation occurs but the vendor is not made aware of this change. In these cases, the renewal contract can easily slip through the cracks.

To overcome this issue, it’s essential to proactively plan renewals in advance, such as a 90 day initial notification. If no action is taken, for example at 30 days, vendors can establish a process where the renewal notice is automatically escalated to another channel partner or 3rd party telesales operation such as our iasset.com Sweepers.  

2. Transaction Size

Due to the volume of contracts renewals organizations are trying to renew every day, some contracts are invariably too minor to expend the effort on and as a result many are left to lapse creating what we call the long-tail of renewals. Both vendors and channel partners simply do not have the time to spend on them.

For small dollar value renewal transactions should be either completely automated transactions using a dedicated technology solution or be processed using an automatic escalation to an outsourced 3rd party.

3. Channel Bottlenecks

These can occur at multiple stages of the channel. For example, there may be a failure to process the opportunity down to the reseller tier from the distributor tier, or equally from the reseller tier directly to the end customer. In both cases, it can be difficult for the vendor to become aware that these bottlenecks are slowing down the renewal process.

Ideally, vendors that closely monitor the renewals opportunity pipeline themselves (or have a solution that does it for them) will be better able to avoid non-renewals caused by channel bottlenecks. These would also qualify for automated escalation processes.

4. Trading Issues

A trading issue may arise if for example a partner goes out of business or is no longer representing the vendor and may be offering the end customer an alternative solution. In both cases, unless the vendor is notified of this change, the contracts may sit un-actioned in the overdue and expired queue.

Again, this is situation where having an escalation process established will help overcome the gaps created by partners going out of business or not representing vendors anymore.

5. Product is No Longer in Use

If the customer has ceased operating or utilizing the product or service or they have replaced it with an alternative vendor’s product, then the likelihood of them renewing a contract is non existant.

It’s difficult to come up with a quick fix for this scenario, however, it’s important that the vendor doesn’t completely abandon their customer as there may be future opportunities to promote new technology or alternative lines. Keep these customers on your campaign lists to send them information at regular intervals.

While you may not be able to capture absolutely every renewal opportunity that sits on your books, there’s probably a substantial proportion (even up to 30% of your renewal business) that is not being converted due to one or more of the reasons listed above. By establishing processes such as proactive monitoring (a minimum 90-120 day initial review) of the renewal pipeline and automatic escalation procedures, you will see a vast improvement in those that would typically not close, contributing to greater renewal rates and more revenue.

For more information on establishing some of these processes in your renewal organization, visit us at http://iasset.com.