Guide to Successful Customer Renewal and Upsell

July 13, 2016 Guy Nirpaz

Entering The Renewal Period

Customer renewal is a vital driver for every recurring revenue business. Companies invest time and resources to deliver value and help their customers succeed, but without knowing how effective their programs are, the actual renewal event can be stressful and can put their investment in jeopardy.

While it might seem like the customer has all of the decision power, customer success teams can, and must, influence the outcome of the renewal with proactive and focused programs throughout the entire customer journey. Often times companies focus too much on their key accounts (high touch segment) and the biggest danger for non-renewal stems from the middle of the customer base. That leads to large revenue losses. This guide offers proven best practices for driving well-executed renewals for every customer and managing successful upsell opportunities.

Motivations For Renewal

Every customer renewal is an opportunity to communicate the value derived from your products and align future goals with your customer. Here are the most important criteria customers will consider during the renewal process:

  1. The product has created ongoing value

  2. The company has become dependent on the product for one or more business use cases

  3. The cost required to cancel or switch is higher than the value of a replacement product

It may prove difficult to prove #3, but your team can leverage product consumption data to understand #1 and #2. How your customers engage with your products and the features they adopt are critical to understanding and, more importantly, proving your products’ ROI. Customers would be highly motivated to renew if your Customer Success team could prove that your products helped them increase revenue, improve productivity, or generate higher quality work.


Sample Account Metrics in Totango

Getting Customers to Renew

Your customer success team should create a Renewal Success Program for every customer renewing in a specific time period. Each of these programs should include the vital projects and activities necessary to achieve a positive business outcome. They should always be based on your deepest level of understanding about the customer.

There are three key activities associated with a Renewal Success Program:

  • Create a Renewal Plan Early

    • Give your team the necessary time to review the account and create an action plan for renewal starting well before the customer has to make the decision. This will help communicate any escalations or issues faster and more efficiently throughout the process.

  • Communicate via a Renewal Audit

    • Prepare for the renewal meeting with the customer by collecting all the relevant information pertinent to their account with anyone who has interacted with the customer or manages any relevant customer data. Given this information, you should be able to estimate the likelihood of renewal and create specific assignments that will fix as many existing problems as possible before the renewal.

  • Drive the process with your Renewal Plan

    • The CSM should document all the steps taken by your company and the customer leading the renewal contract. Other possible steps in the process include training, upgrades, escalation resolution, or personnel changes that are specifically requested by the customer for renewal.

Expanding the Relationship with Upsells

While customer renewal is tied to a specific window of time, customer upsell and cross-sell opportunities are not timeline-based, but rather a function of two different scenarios. Either your customer is approaching full utilization capacity, or you are launching a new product or feature that aligns with their use case or business goals. Both upsell and cross-sell attempts could (and should) happen at any point there is a customer need.

In this case, you can use an Expansion Success Play to achieve a smooth upsell or cross-sell:

  • Review frequency and depth of product consumption by everyone in the organization

    • Your team needs to know who is using your product, how they are using it, and what results they are achieving for every user on the account. By understanding the product consumption across different levels, you will have a much better chance of convincing the customer that it is the right time for expansion.

  • Incorporate product consumption into regular cadence of reviews with customers

    • Changes in product consumption should not come as a surprise to you or your customers. By including a regular review with your customers, you are helping bring high utilization top-of-mind more frequently, which will make expansion a more logical progression.

  • Have someone other than the CSM close the expansion transaction

    • You do not want the customer to feel as if their CSM is monitoring their consumption for the sole purpose of selling more products at the first sign of high utilization. By having another individual on the team manage the expansion, the relationship between the customer and CSM can remain more stable.

Creating an Efficient Renewal & Expansion Process

Using these best practices will greatly reduce the element of surprise during the renewal process and provide your company greater revenue predictability.

With Totango, companies achieve higher customer retention rates by providing visibility into product consumption, actively monitoring for customer health changes, and driving proactive engagements so your team is well prepared for the renewal events.

Managing renewals and upsells shouldn’t be complex. Totango’s SuccessPlays and Revenue Center can automate tasks associated with your renewal plan and accurately forecast retention, churn, and upsell revenue.


Sample of a Totango Revenue Center



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