SaaS companies spend so much time focusing on new customer acquisition that renewals and expansion sales become an afterthought. The reality is it requires its own strategy, tools, processes, and ownership.
Cacheflow recently hosted RevOps Directors Julia Kim (Elecrtic AI) and Patrick Sweny (Qualia) on a RevOps Co-op roundtable to learn from the best on this subject.
We highlighted all the tactics and best practices so that you're prepared to win renewal and expansion deals.
1. Personalized SaaS renewals
You want to treat renewals as a key customer lifecycle moment, and emphasize the ongoing value of the product rather than a simple transaction.
Using a renewals framework will promote consistency across your sales, CS, and finance teams. You can track each step in your CRM, similar to how you use sales deal stages for the first deal.
How to implement personalized renewals
#1: Value recognition
Confirm customer is achieving the desired value
Review early calls and notes to align on why they bought your product in the first place
Do this within three months of the contract
Determine why the customer value outcomes were achieved or missed
Find if any new outcomes are desired
#3: Connect and confirm
Connect new customer objectives to the renewal offer
Company and personal objectives
Tools that help people get promoted get renewed much easier
Meet to remind them of product impact and confirm it meets their objectives
#4: Next steps
Set goals, outcomes, and meeting dates to ensure impact is recognized
Review new products with customers to showcase further value that can be achieved
Sometimes, customers love your product and team, but due to market factors, they need to scale back. Don't accept "no" quite yet. You would be surprised how much NRR you can keep by getting creative.
If customers are genuinely finding value in your product, they will want to stay with you, and it will help build the relationship long-term. People remember who was willing to work with them when times were tough.
#1. Offer product swaps
Allows you to retain the same TCV when customers need to remove products
Replace products customers want to churn with more valuable ones (around the same price)
#2. Extend renewal term length
Customer renews at the same TCV, but contract length is extended (a 12-month contract is renewed at the same price for 18 months)
Think of this as 'subsidized free months'
#3. Ramp pricing
Think of this as a payment plan for the renewal
Customer gets discounts in the first six months, then makes it up in increments the following 6
If all of the above fails, allow customer to downgrade packages or quantity
Keeps communication channels open and makes for easier re-engagement to upsell eventually
Auto-renewals are not about being sneaky. It's about shifting the conversation to focus on the value you're bringing to your customers.
A good auto-renewal flow automates 'what needs to be renewed,' 'what is the new cost', and 'who is responsible for following up on this.'
Bad billing practices can cause customers to churn. A renewal should never feel more complex than the initial sale, but this is still true for many SaaS companies.
How to implement auto-renewals
#1: Determine best customer segments
SMB customers are typically better suited for auto-renewals vs enterprise customers.
#2. Add the right contract language
Work with legal to ensure an auto-renewal clause is added to all appropriate contracts (MSA and Terms of Service)
Work with finance to determine if you need to include a CPI/inflation increase (2 to 5%)
#3: Enable sales to handle objections
Train sales team on how to handle questions or objections on auto-renewal clause
#4: Communicate clearly with customers
Create language that proves the renewal is important to both the customer and company
Determine best channel to communicate auto-renewal reminder
Email, meeting, or in-app notification
90, 60, 30-day reminders are recommended
#5: Automate billing
Create manual processes or use a SaaS billing tool to auto-charge the renewal amount
Update your CRM to confirm the new contract amount and dates
Update your ERP or accounting system
Keeping these fields consistent across your CRM, quotes, and ERP is essential
Integrations and workflows are the most effective and efficient with employee time
♻️ Auto-renewals: Cacheflow
Collaborate with sales, finance, legal, and RevOps to create the strategy, but assign a DRI (directly responsible individual) to own the auto-renewal process. Otherwise, customer communication will break down, and renewal opportunities will be lost.
4. Expansion sales
Expansion sales occur when a customer wants to upgrade, add products, or increase quantity before the end of their contract. They're like mini-renewals that help you grow ARR fast.
Many SaaS companies have adopted the 'land and expand' model, where they start small and increase the total contract value in spread-out chunks. The best companies doing this aren't waiting for the renewal date to up-sell.
To get this right, you need robust processes and tech to handle the co-terming of contracts and proration calculations. Without this, you'll wind up with several billing cycles and contracts for the same customer. You can see how this can compound quickly and become unmanageable.
Remember, you want to avoid burdening your customer with more paperwork and payment instructions.
SaaS expansion software not only helps with the finance paperwork, but it also clearly outlines the change in price and products to your customer.
Implementing a SaaS expansion program is one of the best ways to highlight the value of RevOps. Here are some steps on how to make it successful.
Seat additions, product add-ons, integrations, and usage plans are great expansion opportunities for every SaaS company.
Seat expansions often come in the form of cross-selling departments.
Integrations and product add-on opportunities sometimes present themselves as a result of customer growth.
Complex products usually aren't best suited for expansion sales if you're co-terming the contracts. If there's a longer implementation and time-to-value period involved, it's more likely the customer will churn on that product since they had less than 12 months access to it.
#2. Estimate white space across expansion types and customer demographics
"White space" in sales is the opportunity to address unmet customer needs with your products (existing or new ones).
It should focus on high-value areas that your customers care about and would be willing to pay more for.
Trying to force expansions for non-relevant products will not only fail but can damage the relationship on the original contract you closed them on.
#3: Approach high white space customers early and at key events
Listen for key growth events like funding, M&A, hiring announcements, product launches, etc..
Use data providers to find non-obvious events like new technologies added, entering new geographical territories
#4: Enable sales with expansion tech, rules and workflows
You need to be prepared before activating expansion sales. If you nail the closing without the tech and process, you'll end up wasting more company time than the expansion revenue is even worth.
#5: Promote with customer marketing
Align marketing campaigns with expansion sales goals (examples below)
Target new departments at customer accounts with LinkedIn ads
Host executive dinners and invite customers who use different products
Launch a referral incentive email campaign (ex: $1000 for Closed/Won deals)
The best reporting is integrated and triggers a call for action to the user.
Doing all the steps above will make for easier and cleaner reporting. However, it's up to you to determine which metrics are most valuable, to make it digestible for the reader, and make very clear what the 'next steps' should be based on the results.
How to implement
#1: Begin with high-quality data (quality, quantity, and source)
Want to avoid your stakeholders questioning the trust of your data and reports
Best to spend time nailing this before jumping in
Integrate your CRM, subscription management, and ERP data
Create a taxonomy for which data is important for people to see, with everything rolling up to the executives. Break it down by
#2: Determine metrics that impact revenue the most
Marketing = Number and pipeline value of qualified opportunities
Sales = Sales velocity and win rate
CS = Churn rate and NRR
Once you have consistently clean data, identify the leading indicators that lead to renewals and expansion sales
SaaS renewals and expansions get messy because legacy CPQs and CRMs weren't designed for selling software. They're great for one-time sales, but when the concept of time is introduced, they fall flat (many companies find this out too late)
That's why we designed Cacheflow exclusively for the SaaS sales motion. We know you need to land, expand, renew, and change products across 100's of customer subscriptions. So, we made this extremely easy.
At the end of the day, your product and relationships will earn the renewal. But Cacheflow ensures you'll never lose a deal because of lousy billing practices. (And your finance team will thank you for it, too).