Customer Success | 5 MIN READ
An Essential Guide to Forecasting Renewals in Customer Success
In this write-up, we will discuss different ways to forecast renewals in customer success.
One of the primary things essential to make a hit customer success function is the need for a smooth renewal process. It is one of the most crucial aspects on which the entire B2B SaaS community depends.
But the problem starts when the B2B SaaS organizations need to forecast renewals. One of the primary reasons for that is the primary decision-makers are not fully aware of how to take advantage of the truckload of data in front of them. There is also a dearth of time and a lack of effective tools to fully take advantage of the data.
One of the primary reasons for that is the art of forecasting renewals needs your total dedication. It is not like your regular forecasting for new net sales. You cannot simply utilize your existing sales forecasting tools as forecasting renewals is a different ball game altogether.
Forecasting renewals is a fine art that needs to be learned. Fortunately, you have come to the right place to learn that art.
So, let’s get started.
Machine learning and artificial intelligence can help you see if a customer is on track in their journey. You can assess customer data, know at-risk customers, and generate a renewal likelihood score. You can notice signs of whether the customer is happy or not. This will help forecast renewals in customer success. Artificial intelligence can improve customer success outcomes. You will still need human interaction because that is the core element of every relationship.
Forecasting renewals can be done if there are certain key metrics, we are sure of. These important metrics will help forecast renewals in customer success.
The churn rate is known as the attrition rate and lets you know how many customers are canceling your service or unsubscribing every month. By keeping track of churn rate, you can know on average how long customers will stay with the company. This information can help reduce churn.
Annual recurring revenue or monthly recurring revenue is one where the revenue is calculated. It helps you know which segment of the business is performing. You can forecast how your business will earn each month/year.
Customer lifetime value is calculating what each customer is worth to your business. You can understand the true cost of acquiring a new customer and how it is expensive compared to keeping an existing one.
To forecast renewals and updates, you need to know the details of whatever happens across the company. A dashboard to centralize renewals will clarify where each customer is at their customer journey stages. You can just log in and see how each customer is doing without any problem. A dashboard will help know which customer is on a downgrade and who could use an upgrade. This will help with understanding cross-selling and upselling opportunities.
You need to analyze the business for risks. Risk is present in many forms. It may affect each business differently. Risk can be anything- internal or external. In some cases, external competition can be hurtful to your business. You can minimize risks with some proactive measures. Common risk factors in businesses include the following-
Another way to forecast renewals in customer success is through dynamic modeling. In dynamic modeling, a customer can belong to any segment at any time. Customers can change segments as time progresses. When you focus on dynamic modeling, you send the right message to customers. You can perform the best action to get the right results. For instance, if the customer is approaching renewal and is not performing the intended action. You can identify the driver of adoption and send relevant coaching material that highlights the key points of the product feature.
Tracking renewals is crucial for any company. They will help spot trends, growth backlogs, and help increase renewal rates. Customer renewal rates show customer satisfaction trends and even predict customer loyalty. You can measure how many customers want to continue doing business with you. Customer satisfaction by tracking renewals will help arrest churn and ensure that the renewals are high.
A customer success software can help keep track of renewals, customer health scores, churn rates, and more. SmartKarrot offers solutions to companies to keep their customers. You can know what customers are doing- what problems they face, renewals, upgrades, new acquisitions, and churn. SmartKarrot’s customer touchpoint management, playbook feature, task management, augmented intelligence, customer health score management, and other features help companies effectively manage their customers.
At the end of the day, the B2B SaaS organization needs to determine who is the best person to manage the forecasting of the renewal process.
Having a concrete renewal management timeline can help you ascertain when you need to commence and why you need to start at a particular timeline.
Also, you need to ensure that the timeline you select matches your business’s specific reasons.
Use customer success software like SmartKarrot to track the renewal opportunities. This will help you to be one step ahead of your customers!
Originally Published December 29th, 2021, Updated December 20th, 2021