SaaS businesses in B2E like every other sector depend on one success factor in the long run: renewal rate. If you think of new client acquisition as a plane taking off on the runway, renewal rate is like achieving lift. You fail to achieve lift, you fail to fly. If you aren’t renewing at least 70% of your customers, you are in a slow motion nose dive. As opposed to software in a box sales that have a big price tag up front, SaaS has relatively high customer acquisition costs compared to a small annual price tag. It levels out, or rather it is supposed to level out when you retain a customer for many years. A low renewal rate means you are pouring unprofitable first year customers into a sieve that is slowly leaking highly profitable established accounts out the bottom. Not only are non-renewing accounts P/L “losers” after acquisition and implementation costs, they could become “bad references,” and can halt your growth in neighboring areas.

Securing a strong renewal rate involves a combination of product performance, implementation success, and an affordable pricing model, but sales people impact it too. Let’s explore the things sales reps can do on their own to drive a better renewal rate, or at least better the odds in your favor.

Set Realistic Expectations

Obviously if a product is not performing up to the client’s expectations, or it is difficult and non-intuitive, lacks adequate support, or goes down more than is acceptable, renewal rate will be impacted. “Phew,” you’re thinking, “my product isn’t that bad.” Newsflash: the key words were “the client’s expectations.” If your new client thinks your product is the software equivalent of a day at the beach, it will be hard to live up to expectations even if you only have very minor flaws. Or if the client doesn’t do their part in the roll-out and implementation phase. Or if they are busy. Or typical teachers. Uh oh…that’s all of them.

Salespeople can help that renewal rate by setting reasonable expectations with the client. When you help the buyer understand exactly what they are really getting into (in the most positive possible language of course), you are improving your company’s renewal rate.   Don’t oversell your product just to close a sale. Don’t lie by omission. If anything, temper the prospect’s enthusiasm when they start getting that glassy-eyed look about your genie in a bottle that will make all students progress 3 grade levels in one semester.

Training is Not an Option

I mean Not Doing Training should never be an option for your customers. Sometimes districts want to cut corners by skipping either the time or expense of training. Remember, even if your training fee is free or reasonable, there’s a huge cost involved to a district in bringing their staff together for a half day or an hour. They may need subs or their teacher contract may limit them to only so many such afterschool events. No matter how easy your product is, training is needed to dedicate time to launching a new program, thinking about where, when and how it will be used, and working in teaching teams to decide how to measure success.

  • Be firm about launching for success and hold hard to training and planning sessions to make sure your customers have a good experience with your product.
  • Add training line items or package in ample training with every proposal.
  • Remind your client that results will be based on implementation with fidelity and that takes time and effort on the district’s part.
  • Ask for your client’s personal commitment to the partnership, and cash that chip in if you get pushback on training time.

Treat Building Admins Uniquely

One of the most unique roles in a district is the building admin. They often don’t interact at all with the tools their teachers use, but they often sign the P.O. or are asked to vote on renewal contracts at district meetings. Dangerous paradox. You can make sure they get on board with your product and help increase your renewal rate by engineering ways to involve them in the new sales, on-boarding, and on-going implementation process.

  • If you are making a district sale, request some time at the principals’ meeting to keep them in the loop.
  • Realize principals often don’t feel they need to participate in teacher training. Do a special online training for principals where you cover what effective administrators do with your product, as well as modeling how all their subscribed teachers can implement your tool. Perhaps show them a tech-novice approach, a typical approach and a power user approach to find success.
  • Report usage and easily understood student metrics to your principals. Do this by email, not on their “dashboard” to make it easier to keep on top of which grades or teachers are implementing and which are not.
  • If you’ve got a principal that doesn’t seem to engage, don’t wait until you are calling them for a renewal order to connect. Drop by with a summary report and offer to do a quick 1 on 1 training on how to access that report. If you’re an Inside Rep, you can do this via screen share just as well. You can also pre-schedule a 1 on 1 reporting review meeting at an opportune date, such as 3-4 months in, or at the end of a semester.

Keep an Eye on Usage

If you are with a larger organization you may have reporting tools or teams of account managers that do this for you, but smaller group and startup reps need to check in on their client accounts once in a while to see that usage statistics are accruing. I’ve often said you can take the word “renewal” out of your dictionary and replace it with “usage;” they are one in the same. If a client’s usage is falling off or anemic—time for a touch, re-training, conversation with your best internal educator about how to perk up the implementation, or some form of intervention with that customer.

Think Sustainable Funding

I get it.  You and your client are swept up in the moment of finding $2805 in the PTA fund to cover 82% of your quote and your sales manager allows you call it even, get that school on board. Before you skip home, you have to talk about sustaining this program. When it’s renewal time, will that discount be available again? If not, be up front. Can the PTA ear-mark funds to keep your service alive at renewal time or does your client need to plan ahead to find funding elsewhere.

Those of us in the B2E biz back in 2009 have mixed feelings about the letters A-R-R-A. We loved it at the time. Stimulus funds were a BOON to education as floodgates released our backlog of held up purchase orders. Many reps and managers still can look to 2009 as their record year. But many of those same reps can look to 2010 as a low point. ARRA was an aberration. When used for a new subscription, and when a sales rep didn’t help that client create a plan to sustain funding post-ARRA, there was no way for the school to renew. I know that we will always bring a customer on board even when they don’t know how to sustain funding past year one, but when we bring the subject up, and touch base every few months until more sustainable funds are located, we are contributing to a higher renewal rate.

There’s much more to say on the topic of renewal rates, so I promise we’ll come back to it. Post questions or other ideas in the comments section to keep the conversation going.  In the meantime, plan for going the distance with each and every new sale!

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