25 Aug #8: “The Worst Time to Renew a Contract …”
Commandment #8: “The Worst Time to Renew a Contract …”
Tenacity’s 8th Commandment of Client Retention states: “The Worst Time to Renew a Contract is When it is Due For Renewal.”
We work with our companies directly to facilitate the renewal of major contracts. Of course, we advocate that all clients should be precious when 100% client retention is the goal – it’s just that some we REALLY REALLY can’t afford to lose. Right? (Note: See blogpost dated January 14, 2103, http://clientretention.com/the-blog/page/3/.)
There are six guiding principles that should govern our approach to these ‘opportunities’
- When a contract has a fixed term end date – commence the development of a renewal strategy, not later than 18 months prior to the renewal
- Include all necessary internal approval levels in the development of the strategy (as well as the approval).
- Ensure that all internal functions are represented, along with our side of the Web of Influence® (Note: See blogpost dated September 10, 2012, http://clientretention.com/the-blog/page/4/.)
- Establish clear goals, to include: 1) ensuring the renewal strategy avoids the need for the contract to go to tender / bid, or 2) if the tender is unavoidable, gain input to the writing of the specifications ensuring they comport with all current requirements and unique internal capabilities.
- Engage senior management participation and ensure that a tone is set for the organization to be equally enthused about renewing the business, as we were (or as competitors currently are) enthused about winning it for the first time.
- Select a team leader – the one “go – to” person responsible for coordination, facilitation and dissemination of everything related to the renewal. This individual should have both a vested interest and internal accountability for the success of the effort.
At Tenacity, we often become involved personally with our clients in the direction and stewardship of this renewal process. We even have a name for it – T.A.R.P.® (Team Account Retention Planning). (By the way, we owned the term TARP way before the government broke the bad news to us about “troubled assets”, but who are you going to complain to?)
T.A.R.P. is a proprietary process (obviously we can’t give away all the secret keys to the castle in a free blog). Having said that, however, the single greatest benefit of T.A.R.P. is that it forces our clients to focus on – and plan for – these critical renewals well in advance and to set specific goals around them. (And by “forcing” our clients – what we mean is that we simply won’t initiate the process if the renewal is inside of 18 months. It’s our version of “tough love”.)
“The Worst Time to Renew a Contract is When it is Due for Renewal.” If you procrastinate, you’ve abdicated much of the advantage of being the incumbent and perhaps lost the benefit of the one time in the business cycle when “resistance to change” can actually work for you. As Michael Breed on the “Golf Fix” implores us each week, “Let’s Do This!”
John & Steve