Effective Contract Renewals for Cloud & Communications Services
Contract renewals are a vital component of the Quote-to-Cash (QtC) for cloud and communications services such as data centers, Internet access, SaaS subscriptions and others.
Effective processing of service renewals is key to reducing churn, keeping recurring revenue under contract, and ultimately driving higher customer lifetime value (LTV).
Many providers adopt a passive approach to contract renewals, often relying on “evergreen” clauses, such as automatic renewals that mirror the initial service term. However, taking a proactive approach to contract renewals can yield significant benefits, including:
- Higher renewal success rate — Engaging customers before their contracts auto-renew reduces the likelihood of disputes and surprises, which are common with “evergreen” renewals.
- Lower churn — Providers can engage in early conversations before the term is up and prevent customers from selecting other providers.
- Reduced month-to-month revenue — Proactive discussions allow customers to negotiate better terms, while providers can secure longer contract commitments.
- Increased customer-satisfaction — Renewal conversations provide an opportunity to listen to customer needs, boosting CSAT (Customer Satisfaction Score) and uncovering potential upsell and cross-sell opportunities.
While the concept may seem straightforward, equipping account management and customer success teams with the right tools and technology to efficiently manage contract renewals can be challenging.
Many CRM and CPQ tools available today are primarily designed to support new product sales, with limited focus on renewals and customer retention.
Nextian Quote-to-Cash takes a different approach by supporting the entire service and contract lifecycle — from initial sales and delivery to changes like re-terms and re-rates, and even cancellations.
Nextian contract management and renewals live within the Salesforce Sales Cloud CRM reducing user learning curve and ensuring that all renewal information is captured in the CRM.
Contract Renewals Tracking
A robust contract management system that ensures accurate term tracking and automated renewal processing — whether for evergreen or month-to-month contracts — is essential for an efficient renewal process.
Nextian provides end-to-end contract lifecycle management with the following key features:
- Individual term tracking per service — Each service’s term and renewal information is tracked separately, while multiple services can be aligned to share the same term start date using the re-term process.
- Separation of term and service dates — Current and historical term information is kept distinct from service start and end dates, simplifying auto-renewals, re-terms, and other adjustments.
- Automated evergreen renewals — Evergreen contracts renew automatically in the background, eliminating the need for user intervention.
- Real-time term metrics — Metrics like “Days until end of term” are updated daily and readily available for use in Salesforce list views and reports.
Contract Renewals Reporting
With accurate term and renewal tracking in place, Salesforce list views and reports can be leveraged to address key business questions, such as:
- How much monthly recurring revenue (MRR) is under contract versus month-to-month?
- How much MRR is turning month-to-month over the next 12 months?
- What is the distribution between month-to-month and evergreen contracts?
- Which products are most commonly on month-to-month contracts, indicating customer reluctance to re-term?
- And others.
Nextian Salesforce package includes prebuilt set of dashboards, reports and list views such as month-to-month services, accounts with month-to-month services, services turning month-to-month in the next 30 days, revenue under contract, etc. These templates can be easily copied and customized to fit additional business needs.
One-Click Renewal Quote Creation
Identifying which services are nearing the end of their term is just the first step in implementing a renewal process that is both highly effective (with a high success rate) and efficient (as low-touch as possible).
An ideal renewal process should look as follows:
Renewal Identification → Quote Creation → Negotiations & Customer Acceptance → Contract and Billing Update
This process should involve as much automation as possible.
Nextian CPQ simplifies this by supporting Re-Term/Re-Rate as a quote line item type. A boilerplate “as-is” renewal quote can be created with just one click. The quote can then be internally approved, converted to a PDF, and sent for electronic signature — exactly the same way as a new product quote would.
From account management or customer success perspective, the scenario looks as follows:
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This process offers several key benefits:
- Increased renewal success rate and customer satisfaction (CSAT) — The ability to customize quotes based on customer needs helps ensure a higher renewal rate.
- Upsell and cross-sell opportunities — Present additional services or upgrades directly within the renewal quote.
- Proactive customer engagement — Open communication channels ahead of renewals to strengthen relationships.
- Renewal performance tracking – Leverage the standard CRM opportunity and quote process to easily report and analyze renewal win rates.
- Comprehensive history tracking – Maintain a full record of service and account interactions within the CRM for future reference and analysis.
| Important | The process can be further automated with generation of renewal quotes automatically in the background for each upcoming renewal. |
Enabling Self-Service Contract Renewals with the Customer Portal
The Nextian Customer Portal can display service renewal information, along with proposed renewal quotes. Customers can accept these quotes without the need for an electronic signature, instantly converting them into orders through the following process:
- The system automatically creates a renewal opportunity for each service reaching month-to-month status.
- A renewal quote is generated automatically.
- The quote is made available to the customer via the portal.
- The customer accepts the quote.
- Accepted quote is immediately turned into order and submitted for processing.
This streamlined approach significantly reduces processing overhead and is especially beneficial for low-dollar-value, “as-is” renewals.
Summary
Contract renewals are a critical part of the Quote-to-Cash (QtC) process for cloud and communications services. Effective contract management and automated renewals contribute to:
- Higher renewal success rates,
- Reduced churn,
- Reduced month-to-month revenue,
- Increased customer satisfaction.
Together, these factors drive revenue growth, customer lifetime value, and revenue retention, positioning providers for sustainable growth.
Contact us today to find out how we can help your business grow!
