Price Increases at Contract Renewal

Adam Moore

Hi All,

I am about a month in at my new company. They are taking a first pass at having the CSM's actively involved in renewals and more specifically how we can work on increasing annual spend since most customers are paying the same or less than original contracted value.

In my career, when I have been tasked with increasing the arr the an increase my process is to treat it like an EBR and present pricing/contract during the call.

Our director is asking us to provide a letter a formal letter instead of a conversation to start that would include pricing and contracting.

My ask

A) any feedback on pro's and con's of the new process

if you have sent a formal letter for increase would you mind sharing your thoughts on what's most important.

C) any and all thoughts on how I can better present my thinking experience to a director who doesn't have CS experience.

Grant Pankonien

I feel the way you had approached it previously is a better method than sending over a letter without discussion. It does depend a bit on how many customers we're talking about, perhaps your director is worried about scale? Can't talk to every customer if you're in the thousands of customers, and so may need to do a hybrid model of letter to your smaller customers and a conversation to your larger.

More often than not, an unprompted piece of collateral can be construed in ways you did not expect, whereas a conversation can be tailored and managed with real time feedback. I just think that a letter would be easily glanced over and dismissed.

I'd also be careful about having the CSMs being in charge of delivering this. My take is you want to have CSMs remain a trusted contact, with a customer not worried about "what are they trying to sell me now" in a conversation. You play a part behind the scenes, sure, but not leading the show when it comes time to delivery.

Looking forward to hearing others feedback on this as well!

Adam Moore

Thanks Grant. I brought up that my  fellow CSM's at other orgs are doing the way described and we are now reengaging the process.

Sometimes it pays to have the data from a community of 3k plus CSMs!

BenB

Hi @Adam Moore - curious if you have an update for how the new process worked out?  Did you settle on a presentation or stick with the originally requested "formal letter"

I'm guessing most people here will agree that if you're trying to increase the ARR by adding new solutions/service, than a presentation/phone call/follow up is the way to go.  IF this was strikly a "we're raising your price at renewal for the same service" then I can see how maybe a formal letter would act as the "we told you" when they complain later. 

Let us know what the final playbook was! 

Adam Moore

@Ben Bunting Great follow up.

Did some A/B testing, one person did the letter first and I did presentations first.

Renewal rates were roughly the same. 

Speed to closure was the biggest difference. Leading with the call was significantly quicker and closed the renewals faster with less frustration.