Contract renewal is one of the most delicate points in the business relationship between an IT-managed service provider and its customers. However, great care must be taken to ensure the continuity of the agreement.
The lack of customer satisfaction with your services may come to the surface just at that moment. Thus, making negotiations difficult and ultimately preventing renewal, causing the service provider to lose the customer and revenue.
To prevent a situation like this from happening in your company and ensure a smooth contract renewal negotiation, we have selected some very important information for you. Just keep reading!
The importance of loyalty
Loyal and satisfied customers are the best advertisement for any business. After all, they can work as evangelists for your brand and recommend your company without charging anything for it.
When we talk about providing services, the importance of customer loyalty grows. Because keeping your current customers is much more economical than conquering new ones.
Among the advantages of loyalty, we can mention:
- Increased demand for new services;
- Indications;
- An increase in the average ticket;
- Predictable revenue;
- Feedback about your services.
Tips for renewing the contract
There are several attitudes that can be taken to ensure the renewal of a contract for the provision of managed IT services with your customers. We’ve put together some of the top tips to share with you.
1. Plan your renewal in advance
Renewal can never be left until the last few months of the agreement, as this causes a sense of urgency on both sides, the service provider and the customer. Thus, directly impacting the quality of the negotiation. As a clear example, we have soccer and volleyball athletes and players, whose contracts are almost always renewed more than one year after the end of the current agreement, thus increasing the chances of success in the negotiation.
In the same way, moving ahead with the renovation allows you and your team to plan very well the proposals that will be made to the client and build something much more interesting for both parties.
Therefore, when presenting this proposal, even if it is rejected, it may open up a good margin for negotiation. In addition, the time available for this will still be viable, ensuring a good conversation between the parties so that they understand each other. What you and your team should always keep in mind is that acquiring a new customer is much more expensive than keeping the ones you already have, and it is essential for the company’s financial health to avoid leaving.
Renewal planning must be carried out from the moment the agreement is signed, as it is possible to gather relevant information about the customer at any time to be used later when renewing the contract.
2. Ensure that the customer has a clear view of your services
Does your customer know exactly what they pay your company for each month? The lack of this knowledge can be very harmful when renewing a contract. By not knowing what services he is paying for, the client finds it difficult to visualize the real value of this contract and ends up failing to maintain an agreement with your company.
He needs to see, preferably every month, updated information about what his organization is doing and general data about the services provided. For example, when providing information security, a good indicator to present to your customer is the number of threats that were blocked in the last month and the losses that were avoided by doing so.
This is clear information that your services are bringing greater value to the client’s business and that contract renewal is a way to maintain this value.
3. Care about your customer relationships
It is very common in IT service companies that all professionals are always busy with something. But whenever a customer contacts or makes a request, you have to respond.
This attitude is part of building a relationship between supplier and consumer. If that relationship isn’t good, when it’s your turn to contact the customer to seek renewal, you may also not receive any feedback.
In addition, you need to listen and respond to customers. They often make requests that cannot be met, but even so, some sort of explanation must be provided.
4. Be transparent about adjustments
Renewal always includes price adjustments, after all, all operating costs always rise and must be passed on to the end customer so that the company can maintain its profitability.
It is clear that the customer, even though it is also a profit-seeking organization, is not always satisfied with this need to readjust the values practiced and, therefore, may seek another IT service provider.
For this reason, it is necessary to be very transparent during the renewal negotiation phase, to ensure that the customer understands the real reason for the adjustments being applied.
5. Deliver what was promised
This, which is one of the main tips for contract renewal, should be put into practice even before signing the first agreement: do not promise what your company cannot deliver.
Promising something that you can’t deliver and even guarantee the customer at first, but will end up wearing down your relationship with them and lead to dissatisfaction, hurting your image in the market and preventing future business.
Another point is that the renewal is unlikely to occur, as the customer will not believe in new promises, and early cancellation may occur.
The service provision contract
Finally, let’s just give you a final tip that can be applied to the first subscription and renewals. Always be aware when writing the contract for the provision of managed IT services.
This document will be responsible for managing the relationship between your company and your customers and, because of that, it must be very clear about the responsibilities and duties of each of the parties.
A good contract is always a great way to protect the service provider’s relationship with the customer and keep everyone happy. Also, avoid performing any type of service that is not in the document, and, if there is such a need, a new clause can be attached that gives legal certainty to the fact.
Contract renewal is a problem for most managed IT service providers, but we are sure that if you follow the tips listed in this post, everything will be much simpler.
