Effective Renewal Strategies

For too many sales and account teams, developing proposals is a largely reactive task – waiting for the RFP or Tender to land and then furiously scurrying around to get a response out of the door. Too few take advantage of the pre-proposal or ‘capture’ phase and don’t use it to gain competitive advantage. This includes incumbents – our research shows us that only 10% of account teams have a defined process for renewals.

An opportunity missed

Buyers are almost 60% of their way through their purchasing cycle when they issue an RFP¹. As you can see from the typical sourcing process below, this means that there are lots of opportunities for influencing your customer before they go to market.

Aside from the obvious work that can be done during the pre-RFP phase, here’s what the best incumbents gather:

• A clear picture of how your customer is spending and has spent with you
• Information on other accounts where similar customers are getting better outcomes
• An estimate of the cost of changing from you to another provider
• The value that you have delivered to date to your customer

As well as being able to remind them of the great work you’ve done so far, gathering this information will help you:

• Clearly articulate the risk in moving away from you
• Identify opportunities for you to offer more value to your customer
• Show them you have insights on them and others
• Demonstrate the value they get from doing business with you

¹ According to research presented in The Challenger Sale: How to Take Control of the Customer Conversation, Adamson, B and Dixon, M (2013)

The typical sourcing process…

Going further…

Why not do what many fail to do and use the pre- RFP time to really get on the front foot and develop a proactive renewal proposal that asks your customer to re-award you with their business? As our research shows, many buyers would consider extending an incumbent’s contract if they did this.

Renewal proposals are effective

Almost 75% would consider extending the contract of an incumbent supplier if they sent them a great proposal before the start of a formal procurement process.

How to define your own renewal strategy

Let us introduce you to the pyramid of renewal doom – our tried-and-tested approach. This shows you all the renewal paths available for you to choose from, including some you might want to avoid:

So, the first thing for you to do is assess which of these paths will deliver the result that you can realistically achieve. Then build a renewal plan to deliver that strategy including: a story, a contact plan, solution development and commercial workstreams. And then work out which deliverables you need to produce along the way.

How the proposal team helps deliver the renewal strategy

Each renewal strategy will require several deliverables. This is where the proposal team can use its skills and experience to help. Some examples we’ve used on very successful renewals include:

• Producing a Value Report to remind the customer of successes so far – delivered as a piece of account management collateral and used to influence retaining your services
• Generating proactive renewal proposals and presentations that articulate your compelling renewal story and influencing your customer
• Innovation workshops where you present ideas on different and new approaches that your customer could adopt to achieve further improvements
• Offering to write the RFP for your customer, wired in your favour of course (and creating your answers at the same time)

What benefits can you expect from running effective renewal strategies?

We recently ran a workshop to coach senior account directors on how to use the pyramid of renewal doom and develop effective renewal strategies. This formed part of our client’s programme to improve their interactions with their top 100 clients. The sessions gained amazing feedback and have already resulted in three successful renewals worth in excess of £50m revenue.

In summary

Developing proactive renewal strategies maximises retentions. To do this, use the pyramid of renewal doom to help define your strategy for each opportunity. Aim high – target achieving a better deal for you and your customer and start preparing early. Then build a plan that influences your customer using some of the methods described here. Done well, you’ll be gaining competitive advantage and be better than the Challenger Sale statistic that says incumbents only win 48% of the time. Good luck!

This article was written by Graham Ablett.

Back to Foreword