24th Jan, 2018
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Maintaining and enhancing the existing is always an easier proposition than building a new one from scratch. The same sense prevails even when we look at the business landscape.
Lately, we all would have noticed that the terms like renewals, recurring revenue management, customer retention or revenue maximization etc. are being talked about much. Reason is simple, organisations have started realizing the repercussions of giving it less importance than it was required.
To brush the basics, Renewals services, as it is popularly known, is about renewing the customer engagement and generating revenue in a recurring mode, thereby maximizing the revenue in the most cost-effective way.
After all, it is a well acknowledged fact that the cost of new customer acquisition is far greater than the cost of retaining existing customers.
Understanding the turf
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.
Challenge or opportunity
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.
Interestingly, beyond basic renewals also there 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.
What do you get in return?
- 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
Industry data, analysis reports and forecast trends indicate the increasing emphasis on ‘Renewals’ Services or Recurring Revenue Management which is a positive sign for the overall market.
Upholding the thumb rule of sales – every customer is important, Renewals-based services act as a key component in driving sales enablement in the same direction by enabling tailored-customer retention solutions.