In today’s age of Frugalnomics, numerous SaaS and recurring service organizations grapple with renewals and growth strategies. Buyers, now more meticulous than ever, aim to maximize resources by expanding only those investments that yield tangible results.
Gartner analyst Hank Barnes advises, “If you’re facing expansion and retention challenges, it’s likely time to up your value game.”
Gartner’s research pinpoints two primary factors that fuel renewal success and expansion: customer effort and decision-making criteria. The study highlights that a lower customer effort leads to quicker decision-making and lesser regret associated with the expansion.
According to the research, customers who experienced less effort during the expansion purchase process were primarily driven by two essential factors:
Value – Regular value reviews of the services purchased significantly ease the expansion and renewal process. By consistently demonstrating the realized value, service providers can streamline renewals and expansions, enabling the champion to justify additional spending to executives. Whether your Account Executives, Customer Success Reps, or Value Consultants / Engineers are responsible for maintaining and growing customer relationships, it’s crucial to engage with customers semi-annually or even quarterly. Collaborating on, tallying, and presenting realized value can leverage proven success to sustain and broaden relationships. The research is clear, that helping customers measure, document, and communicate value offers immense potential for retention and expansion.
Evolving Needs – By a significant margin (52% vs 37%), the primary trigger for expansion is the recognition of needs that extend beyond the initial use cases. It’s not merely about usage and adoption metrics; Account Executives and Customer Success Reps should regularly discuss customer pain points and emerging strategic goals. Recognizing new use case potential and business expansion opportunities is a powerful strategy for retaining and growing your customer base.
Although usage and adoption metrics continue to be critical in customer retention and expansion engagements, they are not the defining factors. Service providers that prioritize Value and Evolving Needs gain a distinct edge in mitigating customer churn and unlocking revenue opportunities within existing accounts.
Gartner encapsulates the concept succinctly: “Buyers who participate in regular business or value reviews and utilize performance reports from the provider are more likely to perceive the effort as low. The combination of expanding needs and value analysis simplifies expansion decisions.”