Protecting and Growing Your Customer Base

Protecting and Growing Your Customer Base

TSIA Research Journeys are our initiative to solve the top problems plaguing the tech industry today. Join us as we launch discovery research, build practical theories, and deliver industry-validated, board-ready insights designed to help empower every tech company.

Revenue growth and customer renewals are critical for the long-term success of any organization. However, many revenue leaders, chief revenue officers (CROs), chief customer officers (CCOs), heads of sales, and customer success (CS) executives are grappling with the challenge of finding the best approach to handle renewals effectively. The central problem they face isn’t simply retaining and growing existing customers; it’s doing so cost-effectively while maximizing their teams' effectiveness.

To address these pressing concerns, TSIA is launching our latest Research Journey, Protecting and Growing Your Customer Base, as part of our overall journey to profitable SaaS. Led by industry experts and backed by extensive studies and insights, this initiative aims to uncover the best practices organizations can adopt to safeguard their existing customer relationships and drive revenue growth through successful renewals.

It’s our hope that this Research Journey will provide organizations with a roadmap, enabling them to avoid past mistakes, overcome challenges, and efficiently navigate the complexities of customer renewals and revenue growth.

By participating in our Research Journeys, you’ll become part of a vibrant community that seeks to push the boundaries of what's possible in the tech industry. Together, we can navigate the challenges that all tech companies face as they work toward profitability, uncovering hidden opportunities and paving the way for success.

So jump in with us as we:

  • Define the Problem: By clearly identifying the challenge, we’re ready to start tackling it.
  • Launch Discovery: With polls, surveys, and interviews, here’s where we dig deep into the facts and contributing factors.
  • Develop the Theory: With data in hand, our researchers and analysts can start developing and/or enhancing frameworks.
  • Guide the Industry: Correlations to financial results lead to conclusions that will help your organization protect and grow its customer base.

Define the Problem: Protecting and Growing Your Customer Base

In the realm of software-as-a-service (SaaS), it’s widely acknowledged that relying solely on acquiring new customers is an expensive and ultimately unsustainable approach to revenue growth. Organizations must prioritize their existing customer base and nurture those relationships to achieve sustainable profitability. When executed correctly, revenue derived from existing customers should prove more cost-effective and efficient than acquiring new customers.

However, a key challenge arises when companies apply the same strategies, processes, and incentives to their existing customers as they do to acquire new ones, undermining profitability and hindering the potential for successful renewals.

The Risks of Neglecting Customer Base Renewals and Revenue Growth

By not actively seeking solutions to this issue, businesses face potential consequences that can destabilize their financial durability and long-term success:

  • Revenue Leakage and Loss: Revenue earned from existing customers forms the foundation for sustained growth in the realm of recurring revenue models. However, if organizations are unable to effectively renew contracts and retain their customer base, they risk losing hard-earned revenue. Just like a leaky bucket, the inability to plug the leaks results in a gradual depletion of the revenue base, making it difficult to sustain profitability and meet growth targets.
  • Inefficient Growth Models: Organizations that rely primarily on acquiring new customers to fuel growth face a daunting challenge. The acquisition of new customers is often more expensive and time-consuming than nurturing and expanding existing relationships. By not focusing on protecting and growing the existing customer base, businesses undermine their potential for profitable growth. Sustainable revenue growth necessitates a shift in mindset toward prioritizing customer retention and expansion.
  • Ineffective Allocation of Resources: Neglecting the renewal process and failing to leverage existing customer relationships can result in an inefficient allocation of resources. When companies continually rely on acquiring new customers, they often overlook the advantages gained by focusing their efforts on their customer base. By not capitalizing on the knowledge and insights gained from working with these customers, organizations miss out on cost-saving opportunities and the ability to tailor their offerings to specific customer needs.
  • Increased Costs and Reduced Profitability: Acquiring new customers typically requires higher marketing and sales investments than retaining existing ones. If organizations neglect customer base renewals, they face the risk of excessive costs associated with customer acquisition. Moreover, without a robust renewal strategy, businesses may fail to maximize their profit potential and leave revenue on the table. In the pursuit of profitable as-a-service models, it is crucial to prioritize the retention and expansion of existing customers.
  • Churn and Non-Renewal Challenges: A high churn rate and non-renewal rate can hinder the growth of recurring revenue. Failing to protect and grow the existing customer base leads to a constant need to acquire new customers to compensate for lost revenue. Unsurprisingly, this cycle only becomes more challenging and unsustainable over time. To achieve sustainable revenue growth, organizations must address the leaky bucket issue by prioritizing customer retention and successful renewals.

The risks associated with neglecting customer base renewals and revenue growth are substantial and can have severe consequences for organizations. To mitigate these risks and unlock sustainable growth, it is essential for companies to adopt a proactive approach to protecting and growing their existing customer base. By prioritizing customer renewals and leveraging existing relationships, organizations can secure their revenue streams, improve profitability, and thrive in today's competitive business landscape.

TSIA’s Research Journey: Exploring Renewals and Customer Growth

At TSIA, we approach our Research Journeys in a disciplined and methodical manner in order to ensure reliable and actionable results. When embarking on this particular Research Journey, we have implemented a specific methodology to gather insights and perspectives from a wide range of companies:

  • Inclusive Participation: We aim to engage as many companies as possible in our research to create a robust and diverse sample size. By involving a more significant number of participants, we can analyze the data from different angles, enhancing the credibility and reliability of our findings. Additionally, it’s important to note that the challenges surrounding renewals and revenue growth are prevalent throughout the tech industry, making it crucial to gather insights from as many organizations as possible.
  • Developing Working Hypotheses: To guide our research efforts, we have developed working hypotheses. These hypotheses serve as initial theories regarding what strategies and practices will yield favorable results. They provide a starting point for our research and enable us to test and validate our assumptions.
  • Polls and Surveys: We utilize polls and surveys as powerful tools to collect data and gather feedback from industry professionals. By combining the insights derived from these polls with our existing knowledge and beliefs, we aim to generate comprehensive and valuable research findings.
  • Active Participation: Successful journeys are accomplished together. We encourage active participation from industry professionals by participating in our surveys, polls, and webinars. This Research Journey is an opportunity for individuals and organizations to gain valuable insights, contribute their perspectives, and collectively work toward finding solutions to the complex and unique challenges of renewals and revenue growth.

At TSIA, our goal is to help you avoid the mistakes of the past and guide you toward success. Drawing from our extensive experience working with hundreds of prominent technology companies, we've witnessed both mistakes and triumphs. By embarking on this journey with us, you'll gain a roadmap that provides concrete steps, highlights where to tread carefully, and enables you to sidestep the mistakes made by others. This roadmap will accelerate your progress and lead you toward efficient and effective growth, ultimately driving profitability as a service. Stay tuned as the journey unfolds.

Timeline of This Research Journey

Define the Problem

By clearly identifying the business challenge, we can start tackling it.
May 2023

This Blog (Above): Protecting and Growing Your Customer Base

Revenue growth and customer renewals are critical for the long-term success of any organization. However, many revenue leaders, CROs, heads of sales, and customer success teams are grappling with the challenge of finding the best approach to handle renewals effectively. The central problem they face isn’t simply retaining and growing existing customers–it’s doing so in a cost-effective manner while maximizing the effectiveness of their teams.

To address these pressing concerns, TSIA is launching our latest Research Journey, Protecting and Growing Your Customer Base, as part of our overall journey to profitable SaaS.

Launch Discovery

With polls, interviews, and more, here’s where we dig deep into the facts and contributing factors.
May 2023

Watch the Webinar: Who Owns Renewals (and Expansion)?

As companies strive for profitable XaaS, they often run into pressure to grow revenue without the benefit of more resources. To do this, their focus often shifts to their existing customer base. In rough economic conditions, it's more important than ever to maintain revenue that's already on the books while actively farming lower-cost growth opportunities with existing customers.

This situation prompts companies to ask some tough questions, such as:

  • Who should own renewals: Sales? Customer success? Specialists? Partners?
  • How can companies cost-effectively grow their current customers?
  • How do all of the pieces fit together?

Join Steve Frost and Jared Raftery to learn more about the pressures that companies are facing regarding profitable XaaS and the steps you can take in the short, medium, and long term to grow recurring revenue in the most cost-efficient way.

Read the Quick Poll Insights: Who Owns Renewals and Expansion?

The understanding of key players during the renewal and expansion stage is crucial for sustainable growth and prosperity. The 2023 Who Owns Renewals and Expansion quick poll examined which major stakeholders are involved during the LAER stages of customer engagement. Overall, it found that customer success managers (CSMs) play a major role during the adoption and expansion stages, and renewal specialists play a primary role during the renewal stage.

Watch the Webinar: The Renewal Specialist, An Essential Role for Profitable Revenue Growth

Renewals are the largest source of revenue for SaaS companies, yet many organizations struggle to achieve growth and profit because of inefficient sales models. There is clear evidence that renewal specialists can positively impact financial performance, yet the lines are blurry regarding when, where, and how these specialists should be involved.

Join Jack Johnson, TSIA’s Vice President of Customer Growth and Renewal as he discusses how companies are orchestrating using renewal specialists to reduce the high cost of sales and improve net retention rate performance.

In this interactive session, Jack will explore key levers to pull when renewals and expansions are on the line and answer key questions such as:

  • Who should own renewals: Sales, customer success, or a dedicated renewals function?
  • What is the appropriate charter for a renewal specialist?
  • And more!

Develop the Theory

With data in hand, our researchers and analysts can start developing frameworks.

Watch the Webinar: Partnering to Protect and Grow Your Customer Base

August 2, 2023

CROs, CCOs, and other top executives know how important it is to keep and grow your existing customers, especially when economic headwinds make finding new customers difficult. But how do you orchestrate the relationship between your sales team and your customer success organization to optimize for growth? What role should sales play, and how much of the revenue burden can be handled by Customer Success? Continue on TSIA’s Research Journey, Protecting and Growing Your Customer Base, as we explore important questions such as:

  • Who “owns” the customer?
  • What are other companies doing, and what are the current industry trends?
  • When can Customer Success handle a renewal, and when do we need a salesperson?
  • Should we have renewal specialists, and where should they report?
  • How can my company optimize our Sales and Customer Success relationship to optimize growth and renewal?

This 45-minute webinar will give you some new insights and perspectives on how Sales and Customer Success can work together to drive growth in an efficient, cost effective way.

Watch the Webinar: Optimize Renewal Performance with the Channel Webinar
August 9, 2023

Renewals are often the largest source of revenue for SaaS companies, and there is clear evidence that the channel can positively impact financial performance. However, many companies struggle to deploy business practices that promote achievement of high renewal rate performance with their channel partners.

In this Research Journey webinar, TSIA’s Jared Raftery, Director, Revenue Research & Advisory, and Jack Johnson, VP, Customer Growth and Renewal Research, explored best practices that organizations like yours must deploy to drive renewal and expansion performance with channel partners. They addressed several key points that will arise on your journey:

  • Key processes and policies that promote efficient renewal processing with channel partners.
  • Engagement models for optimizing growth and accountability through channel partners.
  • Critical metrics and KPIs that monitor partner performance.

View the Survey Insights: Mobilize the Customer Growth Team for Renewals

The dichotomy between siloed and collaborative roles has emerged as a pivotal theme for renewal performance. This duality is found within the realms of account executives, account managers, customer success managers (CSMs), and renewal specialists where renewal performance often mirrors the tensions between the two approaches.

The TSIA 2023 Renewal survey delves into the interplay between these roles and the balance between organizational ownership and role-specific responsibilities. The following analysis provides a comprehensive overview of the diverse approaches employed by different companies. To read the full insights, click here.

View the Survey Insights: Renewal Strategies in the Age of AI and Automation

The development of artificial intelligence (AI), machine learning (ML), and automation has ushered in a new era in the realm of renewals, empowering companies to harness predictive insights, anticipate customer behavior, and streamline the intricate process of renewals. As these capabilities are still at its early stages, companies are striving to fully harness their potential to understand which capabilities are important for renewals and how it impacts their overall success.

The 2023 Renewal survey delves into the utilization of capabilities by companies and examines their overall influence on performance. The paper aims to provide a comprehensive overview of the survey findings, shedding light on the critical roles these capabilities play in shaping the renewal landscape. Read the full insights report here.

Listen to the Podcast: The Evolution of Customer Success and Renewals at HP Inc.

Tech companies everywhere are being challenged to grow recurring service revenues and scale customer success to nurture these recurring revenues. In this episode, TECHtonic host, Thomas Lah, is joined by Grad Rosenbaum, VP of Global Customer Success at HP Inc., to discuss these challenges, which are central to this Research Journey.

Lah and Rosenbaum discuss the development of customer success at HP, the roles of sales and customer success in the expansion and renewal motions, and cost-effectively scaling customer success.

Check Out An Industry Story: Hewlett-Packard’s Quest for Global Success

Hewlett-Packard (HP) is a renowned multinational company that is currently transitioning its focus toward expanding recurring service revenues. In a recent episode of the TECHtonic podcast, Thomas Lah, the executive director and executive vice president of TSIA, spoke with Grad Rosenbaum, the vice president of customer success at HP, to discuss the company’s aim to nurture recurring revenue while undergoing significant transformation. They discussed HP’s long-standing presence in the market and how to evolve and tailor services to meet customer needs. Click the link to read more.

Guide the Industry

Correlations to financial results lead to conclusions. We’re ready to present our findings!
October 2023

Read the Report: Owning Renewals

Who should own renewals is a persistent business challenge for today’s technology companies. The growth of technology subscriptions—XaaS, and the continued growth of attached customer success on top of traditional maintenance and support contracts has caused companies to re-evaluate the most efficient and effective manner to go to market for managing these revenue streams. Revenue streams are increasingly the lifeblood of these companies.

Eight years ago, TSIA proposed an organizational response to this dynamic in Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business. This framework realized that the traditional sales account manager or account executive could not cost-effectively scale to attend to the increase in small-dollar renewable events. The newly created customer success organization was well-positioned to take up the slack for low-complexity upsells and renewals, direct ownership, or support the account executive and the renewals specialist to achieve revenue growth charters.

This report is the result of a six-month-long research study.

What's Next? Join Us. Be the Answer.

The transformative journey of AI is constantly unfolding. Keeping up with its pace can be daunting. With AI’s undeniable ascent, where does your company stand? Are you already surfing the AI wave or gathering insights at the shoreline?

To follow along and participate in our next Research Journey, Enterprise AI in Technology and Service Operations, subscribe today!

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