What Happens Between the Contract Signature and the Renewal And Why Most Companies Get It Wrong

What happens in between determines everything.

In between the time your SaaS contract with a customer is signed and renewed (12 months for monthly contracts, 24 months for annual contracts and 36 months for multi-year contracts), a lot can happen. Most of this time though is outside of your control as the vendor of the SaaS product to that customer. In this article, we will go through the various phases of the customer relationship in between contract signature and renewal.

Whether they become an upsell/cross-sell opportunity, a great customer reference, a Customer Advocate (helps shorten sales cycle & validates value proposition to new leads & customers), or one of your biggest customer advocates & then quietly churn out & write a very lukewarm review that your sales team will have to avoid.

The twelve months in between signature and renewal are where customer relationships are made and can be lost. In my work with SaaS companies and PE backed companies at various stages of growth, I have found that this period is by far the least intentionally managed part of the customer lifecycle.

"The twelve months in between signature and renewal are where customer relationships are made and can be lost."

Sandrine Moreau, Fractional Chief Customer Officer

Step 1: The Illusion of a Good Start

Most companies acknowledge that they have an onboarding process in place. Welcome emails are typically sent out in the first few days after a contract has been signed. A kickoff call is scheduled between the newly assigned Customer Success Manager (CSM) and the customer. The CSM introduces himself/herself to the customer and his/her team, and the customer and his/her team go through a getting-started guide that has a list of boxes for them to check off one by one to ensure that they complete all the necessary steps to become fully onboarded.

Another common pitfall of onboarding processes is the lack of an outcome orientation. Most onboarding processes are designed to get customers to complete onboarding as quickly as possible. However, onboarding is not just about getting customers to complete onboarding as quickly as possible. Onboarding is about getting customers to achieve the desired outcomes as quickly as possible. Customers did not sign up for your product or service because of the right features. They signed up for your product or service because it delivers the right results. And customers will measure their experience with your product or service against the results that were promised during the sales process.

Onboarding is typically designed to drive the completion of product adoption metrics such as % completed onboarding, # of features activated by users, login frequency, etc. However, customers are typically judging the success of onboarding against the outcomes that were promised to them during the sales process such as "I will be able to support 10 more people", "I will be able to close sales in 50% of the time that I'm spending today" etc. As such, it is entirely possible for a customer to be fully 'onboarded' by all the internal metrics but not feeling that the product is delivering on the promised outcomes 3 months after signing a contract.

Ask yourself:

· What would be a win for the customer at 90 days?
· What would the customer need to show their own stakeholders (e.g. CFO, CEO) to prove that the investment in your SaaS product was worthwhile?
· What would make renewal a no-brainer for the customer?

Step 2: The Middle of the Contract Is Where Attention Dies

Kickoffs and renewals get a lot of attention but the real meat of work for CS teams is in the middle of the contract. The 8-10 months or so where they are simply managing to deal with the volume of tickets coming in and try to put together a QBR every now and then. Doing check-ins as required on some arbitrary cadence set at the start of the year that hasn't been revisited since.

Most what CS teams do on a day-to-day basis is deal with volume of tickets and try to resolve them in the best way possible for the customer. On top of that is QBRs (as they are called) and all the checks that are set up at the beginning of the year to keep track of all the customers and ensure they are getting the best service possible. For most of the time the customer is 'familiar' i.e. 'invisible'. The customer is in the data somewhere, but no one is actively thinking about them until something goes wrong and they raise a ticket.

This is when the relationship can deteriorate the fastest. As events with negative customer sentiment happen over time they can create a decline in overall customer sentiment. These individual events in and of themselves are typically not problematic and can be handled as they occur. However, as they happen over time and in aggregate, they can have a profound impact on a customer's perception and lead to a negative overall sentiment towards a company.

While it is true that constant contact with customers is ideal during the Contract Middle, the reality is that engagement models don't have to be that way. In most cases, it is sufficient to establish a regular cadence of contact with customers at the right moments -- when their usage pattern indicates it is time for a check-in, around their business milestones, etc. And, of course, having a clear plan in place for how to escalate any problems that may come up is also important.

Ask yourself:

· Is your check-in cadence driven by real customer data and milestones, or set arbitrarily at the start of the year?
· Do you have a system to track the accumulation of negative sentiment events before they compound?
· When a customer goes quiet mid-contract, does your team treat that as a risk signal?

Step 3: The Renewal Conversation Starts at Month Three

The renewal planning really starts at Month Three of the Customer Journey, when all of the Customer Journey efforts up until that point start to build a case for renewal. Ninety percent of the renewal planning that companies do today takes place 60 to 90 days prior to the end of the contract term. And by that point, it is way too late to change the Customer Journey to get the results that are needed for a successful renewal.

This is the key shift in perspective that allows companies with high NRR to differentiate themselves from their competitors fighting for renewal after renewal. The best customer-facing teams at such companies treat every step of their customers' journey within a contract as part of the process of building a case for the customer's renewal. In other words, they are documenting the customer's delivered outcomes, their wins, and the substance of their relationship with all relevant stakeholders (i.e. not just end-users) throughout the contract.

But that economic buyer of SaaS (the person who signs the check to pay for your software) is typically a group of people that your Customer Success team interacts with very little (if at all). And because of that, their influence on how your SaaS product is framed by stakeholders inside of a customer's organization can have a huge impact on the outcome of renewal for that customer. If the CIO of a company is the "owner" of a SaaS product, then Customer Success teams at those companies would benefit greatly from proactive executive engagement -- business conversations with a customer's senior stakeholders to find out what matters to them and then make sure that the benefits to be derived from using their SaaS product are framed up in a way that are easily consumable by that CIO and then in turn by his/her team.

There is another critical element to ensuring that customers are properly prepared for renewal: proactive executive engagement. I've seen far too many instances where Sales would bring to bear tremendous amounts of sales pressure on customers at renewal time. However, because the customer's had minimal interaction with the CS organization in the interim between contract signature and renewal time, the Salesperson would only be able to speak to the contractual terms and conditions of the existing agreement and what new financial commitments would be required to continue the relationship.

To create such an easy renewal process for customers, CS organizations must develop a relationship with senior stakeholders in customer organizations. The CS organization must understand what senior stakeholders care about and then speak in that language to describe the ways in which the customer's product or service is helping the customer achieve their business outcomes. In such instances, renewal becomes almost a formality for the customer.

Ask yourself:

· Does your CS team have active relationships with economic buyers throughout the contract, not just at renewal?
· Are you documenting delivered outcomes and stakeholder wins on an ongoing basis?
· Could your CS team articulate the renewal business case in the language of your customer's CFO or CIO?

Step 4: Expansion Does Not Happen at Renewal Either

These same principles can be applied to maximize opportunities for increased revenue from existing customers throughout the entire customer lifecycle and not let them resurface at renewal time.

But it's also the case that there are so many signals or opportunities for Expansion revenue throughout the Customer Lifecycle and that by embedding the operations of Support and Customer Success throughout SaaS companies, that there are so many opportunities that are already surfacing on an ongoing basis, particularly in terms of a variety of signals that indicate Expansion potential for existing customers.

A CS team's ability to enable an expansion motion requires them to be proactive, manage opportunities through to closure, have clear accountability, a defined process and have a compensation model that enables them to focus on expanding our current customers.

Looking at the percentage of revenue that is generated from existing customers compared to that of new customers, successful companies tend to generate a higher percentage of revenue from their existing customers. Revenue generated from existing customers is less expensive to acquire, closed faster and is more predictable than that of new customers, making companies that are generating most of their revenue from existing customers more resilient in times of economic change.

Ask yourself:

· Does your CS team have a defined process for identifying and acting on expansion signals mid-contract?
· Is there clear accountability and a compensation model that incentivizes your team to focus on expanding existing customers?
· How much expansion revenue are you leaving on the table by waiting until renewal to surface it?

Final Thoughts: The Journey Is the Product

In SaaS companies the Product is what's behind the login. But it's also the experience of the customer from the time they talk to Sales until they sign the renewal.

Most organizations running a customer success organization see the customer journey through the contract period as the customer journey through the product offered by the company. A company running a customer success organization will design a customer journey for all touchpoints, handoffs, and milestones in the customer experience. A company running a customer success organization will track all relevant metrics per step in the journey towards the desired outcomes for the customer. Many companies are running a customer success organization and see their customers as partners. For these companies, the 'customer' is just another account to be kept or lost.

The gap between signature and renewal is NOT a black box for these companies. In fact, it is the most important part of the territory they service, and they treat it with the same amount of discipline and rigor that they would any other part of their operation.

Sandrine Moreau, Fractional Chief Customer Officer at International Executive Consulting (IEC), works with SaaS companies and PE-backed companies to build customer success architectures, scale support operations, and drive post-sale revenue growth.

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