One hundred years ago, in 1913, Henry Ford invented the assembly line. By introducing role specialisation and division of labor, Ford reduced the time it took to build a car from 12 hours to 30 minutes. And he opened the door for a new and different kind of economy.
Without role specialisation, one person is doing everything – the quintessential jack-of-all-trades and master of none. In agrarian times, each family grew their own food, made their own furniture and clothes, cared for the homestead, schooled the kids… I think you get my point. This model makes one self sufficient, but it doesn’t drive wealth creation, and it certainly doesn’t leave much time for activities beyond subsistence.
So why am I talking about cars, potatoes and chairs? Believe it or not, many companies still operate in an agrarian model when it comes to growing renewal sales and other recurring revenue streams. With renewal selling, most companies dump the data, quoting, and selling tasks on the desk of their renewals team leaving it up to the team to figure out how to maximise the potential revenue locked within the customer data.
And in most companies this means that the big, high dollar customers are covered and the rest are not. You can only do so much from a spreadsheet, and there are only so many hours in a day. The initial challenge for renewal teams is how to locate all of the customer information and piece together the data that is typically located across 5-7 disparate systems. There is no single point of truth to answer questions like:
- What is the current contact information?
- What does the customer own now? What is up for renewal this quarter?
- Is the customer happy? Are they getting value from their purchase and using the service/subscription?
- Is there an up-sell or cross-sell opportunity?
It’s a big data problem, and if the renewal sales team doesn’t have a tool to automate data collection and provide analysis that they can act on, then data has to be aggregated, organised, cleaned and segmented by hand. You might as well call it “hoeing the data fields.”
This is why renewal sales reps typically spend less than 50% of their time selling and the remainder on administrative tasks and non-value-add activities trying to gather the data to answer these basic questions. Being a data farmer doesn’t leave much time for sowing and reaping. The good news is there are 3 keys to turn this situation around and drive business growth through recurring revenue.
Get your data renewal-ready
Gather your data. Clean your data. Organise your data. Not once, but continually, or its dirty again as soon as the ink on the spreadsheet dries. It’s a data whirlwind. You don’t have to use Renew OnDemand – you can use whatever tool or spreadsheet makes sense for your business – but this is essential for success. It is also the one area where the right tool and approach can turn big data into immediate currency for your business making it a predictable revenue stream. However, a solution to the data alone isn’t enough.
Focus on analytics that drive cecisions
Knowing what you have is very different from knowing what to do with what you have. You need to take your data a step further and use strong analytics that provide real-time insight.
Being able to measure key metrics like days in advance (how many days in advance are you contacting customers), conversion rate (your ability to upsell), close rate (how many customers that you reach do you close), contact rate (are you reaching the customer at all?), quoting accuracy (number of times quotes need to be re-written), and cancellation causes (tracking to show why customers do not renew) will give the information you need to drive your business.
Using a flat lagging indicator like the overall renewal rate won’t help you know where you are in the quarter, or how much upside you might drive with the right strategies and focus.
Apply the science of selling to your renewals
And, of course, knowing what you have and what to do with it is only effective if you have the right people in the right roles accomplish each task. This is where specialisation and division of labor really come in. Asking a single renewal sales rep to do everything from data gathering and analytics, to quoting, to selling, to reporting is a sure-fire way to leave money on the table and under perform against competitive benchmarks.
Its like each person growing their own food, and making their own furniture and clothes. Renewal sales teams need to be segmented into roles. We suggest data analytics, quoting, and selling coupled with an automation tool to enhance the productivity of each as well as provide the dashboard for executives to track real time progress. The end result is better for everyone, and more money to fund more innovation across your business.
Are you using modern methods of production for renewals selling, or stuck in hoeing data fields?