The end of the year is creeping up, which means contract renewal season is upon us! Unfortunately, contract renewals can be accidentally forgotten and procrastinated upon if they’re not properly tracked.
Neglecting contracts can lead to:
- Unhappy customers due to interruptions in critical resources and, therefore, business operations
- Weakened or lost customer relationships due to the above and clients not feeling valued
- Lost revenue due to expiring contracts and missed opportunities for upselling/cross-selling
- A decrease in trust and reputation due to unreliability and/or inefficiency
- Legal risks due to outdated contract terms like confidentiality, data privacy, or regulatory compliance
Safe to say, letting contracts fall by the wayside is a significant wasted opportunity. After all, retaining clients should be at the top of your business growth strategies, and well-oiled contract renewal management greatly helps you keep clients happy.
Additionally, a thorough contract renewal process gives you insights and time to focus on your most valuable accounts and potentially grow them. Below, we’re sharing some key methods to keep track of contracts and have renewal discussions promptly—and why outsourcing this essential task to an inbound call center is often the best strategy.
Research Organization & Technology Options
The first step toward an effective contract renewal strategy is keeping track of renewal dates and thorough documentation throughout the contract’s lifecycle. This means:
- Knowing where your contracts are stored—for many businesses, they’re scattered.
- Knowing what types of contracts each client has (e.g., service contracts, warranties, extended warranties, and performance-based contracts)
- Understanding what data you need to track (e.g., renewal dates, deliverables and responsibilities, cancellation/renegotiation periods, termination notice requirements, etc.)
- Evaluating and improving your contract renewal process regularly
Storing and monitoring contract renewals manually can become disorganized and cumbersome, which is where a contract management software, or contract lifecycle management (CLM) platform, comes in. This essential B2B tool provides:
- A place to store and organize contract information for every client
- Insights that can help your team identify opportunities and deliver better client experiences
- Alerts and reminders to help your team initiate contract conversations at optimal times
- Streamlined communication and collaboration between team members and clients
- Efficient contract creation thanks to templates and automation tools
As with any small business technology, contract management software still requires work and management from your employees. If you invest in a CLM, you will need to:
- Develop standardized contract templates for all of your offerings, which will then need to be customized to each client
- Setting and tracking contract metrics to understand which agreements are most effective and which leave room for improvement (e.g., Do customers take longer to sign some contracts than others?)
- Monitor contract obligations to ensure both parties fulfill their responsibilities
- Set up alerts and reminders to ensure questions and comments can be handled timely without holding up agreements
Stay Ahead of Contract Renewal Dates With Proactive Alerts
Being proactive is crucial to establishing an effective contract renewal process. This means discussing contracts with your customers well before the renewal date. Early action will allow time for the customer to request any changes or ask questions.
Cutting it too close to their contract expiration date—even a few weeks before—could be too late. Your client might have already had time to research and decide on another option if they haven’t heard from you.
To take a proactive approach to contract renewals, you’ll first need to invest in a contract management system, as discussed above. CLM features like alerts, tracking, and reporting capabilities will empower your team to stay on top of renewals. Then, you can prepare for contract renewals by:
- Reviewing existing contracts and assessing their performance. What are the terms and conditions? Where do they need adjustments or renegotiation? How has the contract performed, and is the client satisfied?
- Evaluating the market and competition. What are the industry trends and benchmarks indicating? Use this data to help determine contract updates such as pricing, scope, performance expectations, or terms.
- Getting all teams on the same page. Discuss contract renewals with your legal, finance, operations, and sales departments to ensure they remain compliant, profitable, and streamlined or identify areas of concern.
- Documenting thoroughly. That means noting all contract renewal interactions, negotiations, and agreements to protect both sides. Include conversations, proposals, or adjustments made during negotiations.
- Scheduling meetings to discuss negotiations well before the contract expires. This ensures neither side is rushed and allows your team to conduct a detailed review and provide a better customer experience.
- Have your attorneys review contracts. Once the final contract renewal is prepared, your legal team should check it to ensure it’s still compliant, defensible, and mitigates potential risks.
And this goes for accounts of ALL sizes. Yes, your larger customers are who you may prioritize upon initial thought, but don’t forget about smaller clients—even small monthly maintenance renewals can add up in annual revenue.
Weigh Out the Benefits of Outsourcing
By now, you understand that managing this process in-house—even with the right technology—entails heavy lifting from your customer service and sales teams.
That’s why outsourcing contract renewals is the easiest and most cost-effective option! Partnering with an inbound call center that does this work day in and day out allows you to implement automatic contract renewals. This is an agreement in which a contract renews automatically after a certain period unless one of the parties takes action before the renewal date.
Automatic contract renewals have their pros and cons. On one hand, they offer:
- Faster contract renewal and less work for either party
- No need for renegotiation
- No service disruptions
- Guaranteed repeat revenue, which means more precise forecasting
On the other hand, automatic renewals also require oversight—just because they’re automatic doesn’t mean it’s a set-it-and-forget-it situation. Plus, they can create friction for your business and customers by:
- Locking clients into services and/or terms they may no longer want or need
- Making it more difficult if customers want to renegotiate
- Creating a high volume of contracts for your team to manage
By outsourcing contract renewal management, however, you can ensure:
- All contracts will be renewed on time
- Your company and clients will spend less time worrying about contracts
- Less paperwork to manage
- All details are taken care of, including documentation, communication, and reporting
- No service interruption
- Consistent, high-quality customer service—even with multilingual capabilities.
Even with top-of-the-line contract management technology and automation, contract renewals are too important to neglect. Yet, for many businesses, they are too significant and expensive of an undertaking for their internal teams. Considering the time and cost involved, many companies find outsourcing the best option.
Final Thoughts on Contract Renewal Success
As we approach contract renewal season, you may be wondering how to maximize revenue from your existing clients. You can start by:
- Researching optimization and technology options to determine what will work best for your business
- Being proactive with contract renewal reminders and discussions—this one is vital!
- Assessing the benefits of outsourcing to avoid things slipping through the cracks and relieve your team
Contract renewals are a critical piece of your company’s growth. However, we understand that the whole process can be intimidating. So, if your team needs a hand in staying on top of it all, learn more about our contract renewal services today to get started. Our team will happily take this burden off your plate while helping you maximize revenue from your existing clients!