We’re officially in Q4, and I assume your business, like mine, will have several clients “up for renewal” by year’s end.
How do we ensure those conversations go smoothly and, ultimately, keep their business?
I’ve distilled my negotiation best practices into three digestible rules of thumb you can consider and start to follow as soon as tomorrow as you work to extend contracts and, in some cases, even expand them to new heights. Let’s dig in.
Tip #1: Start the renewal journey as early as possible.
You want to be in control of the renewal negotiation. Get in that driver’s seat so you can set the timeline, steer the dialogue, and dictate the speed.
Hint: Welcome your client into the car with you. Have them in the passenger seat, because a collaborative process is the best way to negotiate. You’ll see why later.
You want to start your renewal journey as early as reasonably possible. Don’t wait until you’re in your final weeks or even month of your current agreement. Be proactive and consider beginning that dialogue as early as three months in advance – if your contract expires December 31, it’s time to get a move on!
Starting discussions early provides two primary benefits. First, it shows your client how much you value their work by showing you want to continue the relationship. Secondly, it allows you to propose and collaborate on a rough timeline of key milestones during the negotiation, which offers you ample time to develop any materials you need to put your best foot forward.
Tip #2: Lean on your experience about what the customer needs.
Renewal conversations and new business opportunities have a lot in common, but there’s one massive difference – and it’s a huge benefit: your experience.
It’s likely the original scope you proposed was either responding to a request for services or assuming needs based on preliminary conversations. Now, fast-forward to today. What’s changed? What have you learned?
As an experienced partner, you have first-hand insight on what your client values, how they operate, and what moves the needle for their business. Use this to frame the renewal discussion. For example, if your client prefers to dictate terms, tee up the conversation by describing the landscape as you currently see it – and ask them to illuminate what is changing so you can prepare a response.
Tip #3: Align your renewal terms to the customer’s bottom line.
Ask probing questions (especially about the goals of executive leadership), and dive deeper when you hear passion for a certain topic. Don’t be afraid to push when they seem to be uncomfortable. If your work is contributing to their success or failure, it’s natural for them to feel excited and nervous discussing it.
Once you understand what your client values, build your scope of work to continue your services. It’s key here to propose objective standards. Even with a strong personal relationship, your client will judge you on certain benchmarks – so be proactive about demonstrating your commitment to those key performance indicators (KPIs). If you’re unable to connect your service offering directly to impact data points, focus on being a driver in their larger, more qualitative business objectives.
The bottom line here is just that – their bottom line. Your client wants and needs a partner who is as accountable (or more) to their success metrics.
Always Remember the Value of Business That Comes from Renewals
According to a U.S. News and World Report study, 80 percent of business revenue, on average, comes from repeat customers. Focus on your loyal consumer base and end your year strong. Next year’s Q1 will thank you.
Andres Lares is managing partner of Shapiro Negotiations Institute (SNI).