The defining characteristic of selling subscription software is its never-ending customer life cycle. At least we hope it’s never-ending!   While traditional sales pipelines are drawn as an arrow starting on the left with “lead” and terminating on the right at “closed,” the SaaS pipeline should look like a sideways lolly pop.  Customer life still begins at the stick end with a lead, but ends with an infinite Ferris wheel ride at the “closed” end.  The customer simply climbs on at the first order and we keep them happily turning around and around.  Renewals must be earned with good product experiences and well executed implementations, but making an innocent sales operational error can cause the loss of even a happy user.  Here’s the secret to avoiding that error.

It is very common for SaaS companies to sell a 12 month license which begins on the date of the signed purchase order.  Many of our orders arrive at the beginning of the fiscal year, July 1 here in the US, neatly placing them up for renewal at a time when the district has freshly replenished coffers with which to fund the order.  But the rest of our orders, especially for supplemental curriculum, arrive outside that time frame, posing a major problem for securing a renewal. If you come calling in October or January when the subscription is nearing renewal time, the cupboard might be bare. Unless your customer is unusually engrossed with your product’s long term implementation, they may have forgotten to earmark funds for you back at budget season, and if that happens, even if they want to keep using your service, both your gooses might be cooked.  

The fix is to stop thinking about your budget cycle, the one where you plan sales activities around clients’ subscription anniversaries, and instead start thinking about the client’s budget cycle, the one that operates on a fixed schedule beginning in late winter and is executed July 1.  My advice is to put all your customers on a standard company renewal cycle to match education budget rhythms.  That standard cycle contains a non-negotiable, essential component: The first touch is every year in February to remind them to include your product in their next budget.  Additional steps follow until you secure their verbal commitment to renew.

That advice may have shocked you.  You might be quickly calculating that a sale you just made in November, on-boarded after Thanksgiving, and was followed closely by winter break is someone you are supposed to call right now in mid-February.  Am I really about to contact this school that’s barely off the ground to ask for the decision on a renewal that technically isn’t due for 9 more months?  YES.  Even if you sell a deal in January, you contact them in February to talk about next year’s budget.  It isn’t just a good idea, it’s critical to B2E SaaS success. Because as much as a school or district likes you, if you aren’t in the budget, you are rolling the dice on seeing a renewal purchase order.  Get in that budget before it’s too late.  

It’s not as awkward as it sounds once you’ve done it.  For one thing, you can explain this up front to your customers as you’re closing and on-boarding.  “Linda, this is what our renewal process looks like.  In mid-February you’ll hear from us with your first reminder to please plan for us in your upcoming budget.  This will be a courtesy reminder to set aside funds to maintain the continuity of your implementation.  You just let us know anything you need to assist you in the process including usage reports or quotes to add more students at a better rate or moving you to an easier renewal date.  It’ll seem really early to be thinking about it, but we’ve learned you never can plan ahead too far when it comes to budgeting.”  I’ve never once had a customer respond, “How dare you help me.”

There is the possibility that even when you are the early bird securing the renewal worm that the buyer doesn’t have the power to put you in the general fund.  Without getting sidetracked by explaining it all, there are categories and rules and various gatekeepers that won’t apply to a given service.  Your early contact is never wasted however.  A school may instead find they’ll verbally commit to pay for your services out of their federal Title 1 funds which arrive some time after October.  That is less secure, as these funds arrive when they arrive, and there are two opportunities for every one dollar that can be spent.  But getting a client to commit to funding their renewal with Title money in the spring is an excellent consolation prize to making it into the general funding budget.

There are lots of ways to make that initial contact, be it a form letter to all customers or personalized calls. Don’t forget to use the opportunity to upsell additional licenses or products.  And here’s a cool by-product:  Some customers you contact will use year-end funds or other stray monies to renew EARLY.  Imagine that!  An early renewal, an early commitment, a promise to save Title money for you, or an upsale – all great reasons to start contacting your customers “awkwardly early” for their renewals. 

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