You should begin your contract renewal strategy 12 – 24 months ahead of contract expiry depending on the contract’s complexity and the strategic nature of your client. You have a natural advantage as the incumbent when your client is considering their renewal options (even in public sector contracts where tenders are awarded on a ‘level playing field’ basis).
But having spent 15 years in procurement before entering the world of work winning, I have learned many incumbents are complacent when it comes to contract renewal. Use your position as incumbent to engage early with your key client stakeholders, capture intelligence and help shape their requirements for the new contract.
Why are they renewing, and what has changed?
Understanding why your client is thinking of renewing their contract is important.
It may simply be because public procurement regulations dictate the contract needs to be re-tendered. Or it could be they want to test the market to understand if other companies can bring something new, better or different to the table.
You should also consider what has changed in your client’s world since they last awarded you the contract. This could be within a political or external context, e.g. government policy or their priorities in relation to ESG. It could also be from an internal change, or where they want to take advantage of new technologies or innovations in the market.
Reinforce the value you have already delivered
Be sure to remind clients of the value you have delivered throughout the lifetime of the existing contract, whether that be performance improvement, efficiencies or cost savings. Use performance data against contract KPIs and proof points captured as part of your contract management process to reinforce this.
Use your position to influence the client’s specification this time around
As the contract holder, you can use your contract insights to your advantage. Help your client understand how you can work more efficiently or introduce innovations and technology to deliver contract improvements. Position these improvements/cost savings in a way that demonstrates their benefits to the client and offer examples of successful implementation on other contracts. Also identify the discriminators important to your client and highlight your unique ability to deliver them.
Pull everything together in your renewal proposal/re-tender
Once it comes to re-tender (or if you can get yourself into a negotiated renewal position), use the intelligence and positioning to develop a compelling, client-focused proposal that makes it easy for your client to reappoint you while leaving the competition in your wake.
This article was written by Paul Johnstone.
Paul is a ‘poacher-turned-gamekeeper’. He established Optimum Business Growth in 2020 after spending 15 years in procurement roles across financial services, manufacturing and the public sector. He has led strategic infrastructure deals and large Framework Agreements. He knows ’what good looks like’ to buyers, enabling him to help clients win profitable contracts using a more strategic approach to winning work. Paul has also developed the award-winning Bid Journey methodology.
