Working alongside many organizations, one question that consistently arises is, “When should we implement a specific renewals team?” No one answer fits all models here; it depends on your organization’s maturity, customer segments, and growth strategy.
Many organizations start by having their Sales Account Executives take charge of landing, expanding, and renewing. Over time, as they find a product-market fit and see an opportunity for faster growth, many move to a model of hunters (Account Execs and Commercial Sales Reps) and farmers (Account Managers).
So, when do you add a renewal specialist to the mix? Here are some scenarios that can trigger adding this role:
- Contract optimization
- Upside opportunities
- Account risk awareness
- Process optimization
- Product optimization
- Cost Savings
Let’s explore these triggers a little more closely.
An organization with a large, small and medium business logo count may have enough contract volume to specialize. A dedicated renewals team focusing on renewal processes can help optimize contracts and keep renewals on track. Since this is their number one focus, they can ensure renewals don’t get lost in the daily shuffle.
An organization may need to revamp contracts altogether because they may have new SKUs replacing old ones, need to add price increases, move customers to the cloud, etc. A dedicated renewals team can help drive these contract changes without bogging down account managers’ expansion efforts.
An organization may be expanding on its existing customer base by 15%+ with a solid ARR base. A dedicated renewals team can allow account managers to drive expansions and support them in ensuring all renewals come in on time.
Account risk awareness
An organization might need to tighten risk awareness in its account base. It might also need to know about risk tolerance much earlier in the customer lifecycle. A dedicated renewals team can provide a process to signal what mitigation plans a post-sales organization may need to execute. They can also offer specific touchpoints with customers nine and six months before contract end dates to improve customer satisfaction.
An organization may hit a point of hyper-focus on specific renewal KPIs that need to be measured, tracked, and achieved. A dedicated renewals team and manager can implement specific KPIs, including gross retention rates, renewal rates, net retention rates, and land/expand ratios. They can also handle win/loss analysis, quotes, early renewals rates, multi-year contracts, price increases, renewal trends, etc.
An organization may start to miss its renewal numbers in general but have no one team or manager overseeing this area and providing insights to the organization. A dedicated renewals team and manager can help double down on renewals optimizing many of the areas listed above to drive the business back to health. In addition, they can gather key insights into why customers are churning and collaborate with product/engineering on roadmap decisions.
An organization may hit a point of market maturity, and stickiness where having high cost/highly experienced Account Executives dedicate time to renewals instead of growth no longer makes financial sense for the business. Every minute a costly Account Exec spends on a flat renewal is time they could be spending bringing in a net new growth business. A dedicated renewal team can be implemented at much lower costs yet provide the same results, especially in the small and mid-market business areas.
Time for a renewals team
Overall, if any of the above ring a bell, it may be time to consider a renewals-specific team. Renewal teams do not have to cover all of your segments right away. Instead, you can start with the small and mid-market business areas and move up the stack from there. A tenured renewals manager is recommended to oversee a new team to help drive proper hiring, KPIs, and outcomes.