Sabina Pons is Operating Partner at Growth Molecules™ and a 2022 Top 100 CS Strategist.
We recently covered how Customer Success (CS) teams can create digital scale at moments of truth during the implementation and adoption phases of the customer lifecycle. Building upon that strong foundation, you can also add digital-led strategies to critical moments such as revenue expansion opportunities and contract renewal.
The importance of these phases is tied to the customers’ focus on the value they are getting from your product or service. If a customer has been successfully engaging with your products, they are a promising candidate to expand into other areas of your offering. If customers are expanding their use of your product, they have a higher likelihood of renewal. Renewal and expansion activity is a driver of Net Retention Revenue (NRR) and durable growth for your business.
With value realization being an indicator of both expansion and renewal, it’s imperative to work with customers from the onset about how value will be defined, and how success will be measured. Having a strategic success plan in place allows you to chart out the digital touchpoints that can add automation and efficiency in the process. Let’s look at the moments of truth, and corresponding digital strategies, for both expansion and renewal.
Put Your Team in the Best Position to Convert Expansion Revenue
Expansion opportunities are generated when you’ve developed a trusted advisor relationship with your customer that helps them to see the value they are getting from your product. According to the Gartner Group, 20% of your existing customers will generate 80% of your future revenue.
At Growth Molecules, we teach the philosophy that we call “Start the Renewal At Hello.” This means that by launching true customer centricity from the very first kickoff call, Customer Success Managers (CSMs) will be privy to the customers’ intended business outcomes. This means that CSMs are also better poised to start identifying upsell and expansion opportunities. Leveraging the assistance of operational telemetry data (e.g. What feature set is the customer using / not using?) CSMs can better understand customer behavior and then action off of it accordingly. For example, automated messages can share status of contract entitlements and product usage. If a CSM’s strategies to drive adoption are making an impact, those entitlements may get utilized sooner than expected. Additionally, in-product or emailed messages can highlight the value of certain features the customer isn’t currently paying for. These touchpoints can demonstrate how incremental investment can unlock more value from your product.
Beyond customer-facing automation, your digital strategy can also contain internal messages that prompt and prioritize action by CSMs so that they can optimize their impact each day. When you continuously show customers that you understand their needs and challenges, by providing valuable data, insights, and resources, you will be set up for long-term, sustainable growth for your organization.
The chart below highlights more specific examples of digital-led strategies that can help support customer expansion opportunities in your business.
Create a More Efficient Approach to Securing Contract Renewals
According to a study by Bain & Company, just a 10% increase in customer retention yields a 30% rise in the value of the company. This stat emphasizes why churn prevention has always been a key focus for CS teams. A digital-led strategy that adds automation to your renewal process will help you stay ahead on the timeline to renewal so you aren’t in a position of scrambling at the last minute. Digital touchpoints can prevent situations that heighten churn risk, such as when a customer hasn’t been engaged for three, six, or more months, but then suddenly receives a renewal notice.
Relationships are the foundation of success with your customers, but they don’t need to be just human-powered. Leaning on the power of a digital-led strategy can be seamless for your customer with their experience feeling personalized, relevant, and valuable. These touchpoints can be timed out to provide enough runway before any renewal conversations, and ensure the right people from both sides are involved in renewal discussions.
For example, we recommend a sequence of messages that ideally start 6 months from the contract renewal date (and a minimum of 90 days) that increase in intensity and urgency. Note that the timeframe is dependent upon the length of your product’s average implementation time, contract duration, and other situational nuances. Regardless of when they start, the emails should be crisp, clear, friendly, informative, and enlightening. For example, you may start with a reminder of the upcoming contract renewal date and a “did you know” helpful tool tip about your software and a new feature or product launch. Or perhaps you can drive an early renewal, where the customer agrees to sign the renewal contract in advance of the due date, with an enticing incentive like an extra added product, or a cap on the next contract’s percentage increase. When you have the renewal communication early and often, you have the runway to account for any potential unexpected pushback, and also to devise creative solutions with the contract negotiation.
We’ve provided a couple of examples below about ways automation can get used in your renewal playbooks to make your team more efficient, without taking away the human side of the relationship with your customers:
Digital-led strategies for customer expansion and renewal are essential for any business looking to create durable growth. By leveraging technology in the customer journey, you’re able to improve the customer experience while managing cost impact on your customer success budget. Effective digital strategies will create loyalty within your customer base, leading to repeat purchases and incremental revenue from your existing customers.
Looking for more insight on digital-led strategies? Be sure to look at the previous blog posts in this series for guidance and examples on aligning digital-led CS strategies to the entire customer lifecycle.
- Customer Moments of Truth Are Your Map to Digital Scale
- Digital Strategies to Help You Activate Your Customers
You can also get more tips about building strategic accounts plans for your customers that make it easier to identify expansion opportunities through this essential tool: