As we make the final push for 2009 and get ready for 2010 let’s try not to forget those clients that got us to where we are today. Sales is often conditioned to believe that “new logos” are the key to future success, but the on-going operations of many companies rely on recurring revenue that sustains them. As part of any thorough revenue planning process, sales leaders must look at the embedded revenue component and make sound judgments as to the health of that base and the potential risk of revenue erosion. No one likes to take contracts out of the drawer to review them – but part of revenue forecasting is understanding when contracts are due to renew and knowing the required “notice period” either party has to inform the other of intended changes. This is also the time to review when price modifiers such as COLA may be applied and to consider anything that is happening from an operational or relationship perspective that could provide an unexpected, negative surprise. The best revenue plans are quickly broken by a contract that is not renewed or shrinks significantly from what was forecasted.
It is a best practice to keep a calendar for major client renewals within your CRM system to alert you well in advance of an upcoming anniversary date. This approach allows your team to proactively discuss the client environment and build a renewal strategy that will satisfy the needs of your organization and be perceived positively by your client. Often this approach can even head off an RFP process, especially in those situations where there are client needs or issues that have gone unaddressed. Finally, make sure that your compensation programs have renewal commission components that support the entire team responsible for renewals. Compared to the expense of losing a client, it costs little to motivate those non-sales members of the team to go the extra mile to help ensure you keep the revenue. It’s always more profitable to keep an existing client than to capture a new one.
- Dan Hudson
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