What is Renewals?
In simple words, Renewals is about renewing the customer engagement and generating revenue in a recurring mode, thereby maximizing the revenue in the most cost-effective way. It entails retaining the existing customer base, as it is a well acknowledged fact that the cost of new customer acquisition is far greater than cost of retaining existing customers.
As an industrial setup, we have stepped into a technology-driven era where, along with other tech trends, cloud technology converged with mobility, is leading the trade wagon. Be it any sector, scale or even industry interface, there is an increased adoption of cloud techniques across industries, either through Iaas, PaaS or SaaS model. In fact, as per a Gartner report, the public cloud services market in India is estimated to grow at the rate of 30% by the end of 2016 to the tune of $1.3 billion, up from $0.97 billion in 2015.
By 2020, the total spending on public cloud services in India will increase to $3.6 billion. These statistics reflect a transitional shift to technological platforms. From sales perspective too, there has been a gradual shift to cloud, from both the ends – seller as well as, buyer, and this shift is in complete cognizance with the changing market dynamics. With this transition, the subtleties of retaining as well as expanding the market pie, have become critical for the sales teams.
Amongst the cloud services- PaaS, IaaS or SaaS- customer retention and stickiness is still easier to maintain for the first two, while for SaaS, owing to the subscription-driven nature of the service, retention becomes extremely critical, especially if multiple vendors are providing the same service in the market. Owing to easy usage and expansion- diminution flexibility, subscription based SaaS model has garnered a strong foothold versus the license based models. The SaaS players, therefore, have become major drivers of the tech economy- presenting a large market potential for Renewals based services.
Revenue Maximization- A Natural Evolution of Renewals
Renewals leverage the already established relationship with a customer as it is advantageous in defining the revenue trajectory of the seller. Interestingly, the scope here is not just limited to pure play renewals and there in fact, exists a huge potential wherein the enterprises can bank on doing cross-selling as well as, up-selling in the existing installed base. This becomes more apt in today’s market scenario where tech-upgraded versions of products are getting launched regularly. Such expansive market potential can be harnessed in best manner when a robust and focused renewals engine is installed. Hence, the revenue maximization is as such, a naturally evolved function in the overall process of renewals.
The impact of such revenue recurring management services is manifold.
- Customer retention which is coupled with assured recurring revenue, is maximized
- Increased chances of further increment in revenue owing to the possibility of cross-sell and up-sell practices
- Sustained account engagement and consultative customer relation build-up
- Augmented probability of revenue forecast/ prediction owing to increased business visibility
Amongst the industry players, there is now an increased focus on the ‘Renewals’ operations or the recurring revenue management, which holds optimistic prospects for the market as a whole. Ultimately, every customer counts for the sales organizations and therefore, renewal services, which aims to hold and expand onto the existing customer base, are key drivers of the sales enablement practices; enabling boutique- customer retention solutions.