Why Distributors Need a Renewals Tsar?



Whilst the future of some technology profits lie in the cloud, right now the industry is still struggling with how to convert revenue success to profits. As TSIA discussed recently, this is due largely to “the high costs to operate and support a cloud offer, as well as the high costs of acquiring and retaining customers.”

TSIA, “What Does it Take to Win in the Cloud?” shows that most tech companies have lost significant value in their traditional product-based businesses, but haven’t yet been successful realizing profits from their fledgling cloud offerings.

A Huge Opportunity to Grow Renewals

It’s easy to rely on your vendors for a renewals pipeline (if they have the information needed). But easy rarely equals profitable. Waiting on your vendors to hand-deliver renewals means that you’re likely overlooking renewal deadlines left and right, and probably missing renewals entirely. Which means unhappy customers (especially if they log a service call and discover the product in question isn’t covered), lost revenue and delayed payments for all channel partners.

It's difficult to manage renewals efficiently and effectively when they are typically piled on to an already busy product sales team, with little to no incentive to focus on high-volume but low-value work.

So how can distributors help convert cloud revenues to profits, and support future gains in the cloud for themselves and the industry as a whole? The structure of the renewals function presents a clear and significant opportunity. Distributors should establish a standalone renewals team that is entirely separate from net new sales and is charged with maximizing recurring revenues.

In other words: get yourself a renewals tsar.

What is a Renewals Tsar, and Why Do You Need One?

Distributor organizations, however, sit at a critical juncture within the channel, potentially ingesting massive amounts of data coming from both vendors and VARs. To make the most of this data, the best practice for distributors is to hire a supreme ruler (or executive) to lead a team dedicated to maximizing the revenue derived from annuity or recurring revenue streams (renewals, cloud consumption, and/or subscriptions) and making sure lifecycle opportunities are pushed back onto the sales organization. This role is your Renewals Tsar.

The Renewals Tsar oversees a renewals organization that is separated from the net new sales team. This distinction creates focus that will ultimately translate into revenues. This strategy can also help future-proof your distribution organization from the slow decay of declining product sales.

A renewals organization championed by a Renewals Tsar can:

  • Differentiate your business to vendors: An effective renewals function can deliver significantly more revenues for your vendors, with little-to-no effort on their part.
  • Increased revenues: Focused attention on renewals can maximize recurring revenue for your business.
  • Identify upsell and cross-sell opportunities: A focused renewals team can more easily identify where to extend beyond existing vendor quotes.
  • Streamline processes through the channel: Using data and data management tools effectively can make it faster and easier to process renewal sales both up and down the channel.

Learn more about how to establish an effective renewals organization with our ebook, “Deploying a Renewals Program in Distribution,” which walks you through how to implement a renewals management program, the technology tools needed to support it, and the benefits of a renewal management program for distribution.

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