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3 Reasons Why You Need a Chief Renewal Officer

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Your chief renewal officer maximizes renewal of recurring revenues to ensure the impact is positive, not negative, to overall company performance. Learn more: www.tsia.com

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3 Reasons Why You Need a Chief Renewal Officer

  1. 1. www.tsia.com 3 Reasons Why You Need a Chief Renewal Officer © Technology Services Industry Association
  2. 2. www.tsia.com Reason #1 Subscription annual contract values have a material impact on company performance. A Chief Renewal Officer will ensure the renewal of recurring revenues has a positive impact on overall company performance.
  3. 3. www.tsia.com Technology Subscription Annuity Services Many pure play cloud companies are considered “Future Value Aggregators.” They are focused on gaining technology subscription market share. Their revenue mix is almost exclusively recurring revenues. For pure play cloud companies, 90+% of company revenues are recurring revenues. FUTURE VALUE AGGREGATOR REVENUE MIX This necessitates a strong focus on renewals. 90% 10%
  4. 4. www.tsia.com Of total hybrid company revenues are represented as technology subscription revenue. 4 Technology subscription revenues are now material for hybrid companies too. 10%
  5. 5. www.tsia.com $100M$1B $200M$2b $2B$20B 5 The subscription businesses of hybrid companies are as large as the total revenue of many pure play cloud companies. TOTAL REVENUE SUBSCRIPTION REVENUE
  6. 6. www.tsia.com Your chief renewal officer maximizes renewal of recurring revenues to ensure the impact is positive, not negative, to overall company performance. 6
  7. 7. www.tsia.com Reason #2 It is critical to identify who is responsible for the commercial relationship for each and every renewal. A Chief Renewal Officer will design the go-to-market strategy across multiple functions to optimize the renewal coverage model.
  8. 8. www.tsia.com Land Adopt Expand Renew Maximize net new sales Lead the commercial transaction to renew the relationship Unlock value for existing customers Grow revenue with existing customers Many people can be influencers, but the person responsible for securing payment for the renewal is responsible for the commercial relationship. 8
  9. 9. www.tsia.com Renewal coverage models are messy and require objectivity to apply the right resource at the right time. Here is an example of 5 different renewal models in play. 6% 13% 13% 30% 38% Customer Success Led Channel Partner Led Outsourced Renewal Specialist Led In-house Renewal Specialist Led Account Executive Led % OF COMPANIES DEPLOYING EACH MODEL 9
  10. 10. www.tsia.com 10 • Well-covered with account executives, renewal specialists, and customer success managers. • Commonly covered with renewal specialists, who wear both hats of renewal and adoption, but not doing enough on adoption. • Often lacking customer success managers. • Opportunity for trigger-based outreach. • Apply frictionless (tech touch) renewal capabilities. • Determine the role of channel partners. Renewal coverage gaps vary by account size, with small to medium-size accounts often underserved. Large Accounts Medium Accounts Small Accounts
  11. 11. Renewal Specialist Customer Success Mktg + Automation Assign the commercial responsibility for the renewal to the lowest cost resource …and adapt as situations change. Account Executive
  12. 12. www.tsia.com Reason #3 Renewal executive leadership is required to plug the leaky bucket, leading to revenue growth from existing customers. A Chief Renewal Officer will be responsible for optimizing your retention and expansion rates with existing customers.
  13. 13. www.tsia.com Given that we lose a certain number of customers each year, the natural tendency for recurring revenues is flat to declining. But they don’t have to be. 13
  14. 14. www.tsia.com 14 Starting Annual Contract Value Churn Downsell Retention Retention Rate = x% Recurring Revenue Waterfall
  15. 15. www.tsia.com 15 Optimizing retention and expansion can contribute to overall company growth and profitability. Starting Annual Contract Value Churn Downsell Retention Upsell Cross Sell End of Year Revenue 119% to 134% Retention Rate = x% Expansion Rate = x% Pacesetter Performance
  16. 16. www.tsia.com Are your renewals charter and funding model keeping up with the times? 16
  17. 17. www.tsia.com 17 OLD RENEWAL CHARTER NEW RENEWAL CHARTER > Ensure customers are engaged throughout contract period > Secure payments > Upsell and X-Sell > Secure payments > Upsell OLD RENEWAL FUNDING MODEL NEW RENEWAL FUNDING MODEL 3.6% of maintenance & support revenue 6% of subscription revenue Expanded renewal charter requires a deeper investment.
  18. 18. www.tsia.com What’s Next? The Chief Renewal Officer Charter 18 Establish clear accountability for the commercial relationship for every renewal. Ensure all compensation models are appropriately weighted with renewal incentives. Document the expected customer engagement process and inspect what you expect. Lead and manage the global Renewal Specialist and Renewal Operations teams across all subscription renewals. 1 2 3 4
  19. 19. www.tsia.com www.tsia.com © Technology Services Industry Association Are You Ready To Optimize Your Renewal Rate? Talk with us about your recurring revenue SOURCES: TSIA SRG Cloud Renewal Benchmark Study, Q1 2018; TSIA SRG Benchmark Studies, Q1 2018; Technology-as-a-Service Playbook; and TSIA Research Report: "Renewal Engagement Models for XaaS”.

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