It’s important to make more money, but it’s equally important to keep the customers you already have. In SaaS, where the business is based on subscription management, renewal means that customers choose to stay with you even though they can leave at any time.
Keeping business with existing customers is a key source of revenue for organizations, but it can be hard to keep up with renewal opportunities at scale. Software that automates renewals in an easy and friendly way saves a lot of time for sales personnel. So, why don’t try Salesforce CPQ?
Challenges
Imagine: a SaaS gets 4 new subscriptions every month. After 12 months, there are over 300! Managing them manually could be more than a challenge. The Salesforce CPQ solution comes as an answer to work with contract renewals.
Besides the growing number of subscriptions, there are other challenges concerning contract renewals for SaaS businesses:
- Fast-changing market. With new companies coming out with new solutions, SaaS companies must work hard to keep their customer base. Customers are becoming increasingly price-sensitive and expect more value for their investment, which is why strategies play a pivotal role.
- Customer satisfaction. If customers have problems with the software, they might not want to keep their contracts. To solve this problem, companies need to provide excellent customer service and keep improving their products based on user feedback.
- Data security. Cloud computing businesses must ensure that their offerings meet the required safety and compliance requirements. Failure to do so can lead to customers not renewing because they are worried about data protection.
- Contract negotiations. SaaS businesses need to find a balance between flexibility and profitability in their contract terms. Long-term agreements can be stable, but some customers prefer shorter agreements.
Salesforce CPQ is a powerful solution that can address the challenges which fast-growing businesses encounter. Let’s find some remedies for them!
Salesforce CPQ: Transforming SaaS sales with best practices
The best practices for implementing CPQ in SaaS businesses provide insights into how organizations can harness the full potential of this solution to drive revenue and maintain a competitive edge in an increasingly dynamic market.
Know your customer
- The contract renewal starts with a thorough understanding of your customers’ needs, aspirations, and expectations.
- It is important to know how they use your product or service, the benefits they get from it, and the problems they experience.
- This knowledge allows you to tailor your contract renewal proposal to meet their requirements and showcase the unique value you bring to the table.
Communicate early and often
- It starts with fostering open dialogue among all parties involved—sales teams, customers, and stakeholders.
- Begin the renewal process early, so you can address any concerns or changes.
- Expectations are clearly defined and support is readily available.
Provide value and incentives
- Ensure that your solution aligns with your customers’ goals, demonstrating how it helps them achieve success.
- Use referrals and testimonials to prove it.
- Strong customer relationships should begin with the onboarding process, ensuring that their journey begins with a positive and personalized experience.
Anticipate and overcome objections
- The importance of pricing flexibility lies in its ability to allow for negotiation and accommodate budgetary constraints.
- Moreover, offering subscription renewal incentives, such as discounts or added features, can make the deal sweeter and give value.
- Instead of handling objections reactively, it is important to identify potential issues early and work to mitigate them.
Ask for feedback and referrals
- By gathering feedback at various touchpoints, you will be able to refine your offerings and services and tailor solutions to align with customer objectives.
- This approach improves customer satisfaction and increases the chances of successful contract renewals.
Keep an eye on metrics
- To streamline the process, automation is key, ensuring efficient, error-free renewals.
- Tracking crucial key performance indicators (KPIs) provides you with valuable information about customer behavior and renewal trends.
For calculating renewal, you should use other data-driven insights and metrics, such as:
- Customer renewal
- Monthly Recurring revenue (MRR) or annual recurring revenue (ARR) renewal
- Revenue renewal
- Gross renewal rate (GRR)
- Net renewal rate (NRR)
A renewal rate of more than 80% is usually a sign of a healthy business. However, the top-tier SaaS companies achieve a revenue renewal rate exceeding 100%. This indicates that they are not only keeping a lot of their existing customers, but also getting new business through upgrades, upsells, cross-sells, and extra offers.
Contract renewals made easy with Salesforce CPQ
It is good to start with the knowledge of how Salesforce CPQ creates and maintains contracts. This helps to understand the possibilities to amend contracts:
- Increase or decrease the quantity
- Add new subscription products
- Cancel before the subscription end date (early termination)
- Cancel and replace.
A contract in CPQ originates in quotes. That means that the sales rep creates a quote, adds products, and they appear in their quote lines.
When the sale is confirmed, the quote is converted into an order record with order products. The result of the next step is generating a contract with related subscription records.
What information is stored in a subscription record?
- Product Lookup
- Start Date
- End Date
- Quantity
- Pricing data
- And other useful information.
Salesforce CPQ allows for various amendments in contracts. As an example, the sales team can make the amended subscriptions end at the same time as the original one (co-termination).
Another example is multidimensional quoting (MDQ). This kind of subscription selling occurs when customers want to buy multiple years of a subscription, but they need to start small, with only a few licenses for the first year and steadily increase quantity over time. The reason for such an approach is that the customer does not have to pay for a larger quantity of licenses for the whole duration.
Salesforce CPQ helps to address the challenges of SaaS businesses. It offers amendment possibilities and provides helpful insights into choosing the right activities for the growth of the business.
The shift towards SaaS solutions
Cloud computing has changed the way companies use software. A couple of years ago, business leaders had to ask for software purchases through official channels like Procurement or IT. Today, any employee can get Software as a Service (SaaS) with a simple click.
The global Software as a Service (SaaS) market is projected to grow from $273.55 billion in 2023 to $908.21 billion by 2030.
Source: https://www.fortunebusinessinsights.com/software-as-a-service-saas-market-102222
However, this newfound accessibility has created a challenge for SaaS expansion: creating a very dynamic environment. In order to manage it, they must use efficient solutions. Salesforce CPQ will help them with this for sure.
