Make Renewals Easy

True story. Nearly every three weeks since the day I first signed up for a software-as-a-service (SaaS) solution for web hosting, email, and domain registration services, I've been receiving renewal notifications. I think the first notice indicated "345 days remaining on your subscription."

Last week, I saw that the subscription term was down to 34 days remaining, so I clicked on the button labeled "Renew."

In the interests of accuracy, the button should have been labeled "Remember, Re-evaluate, Resist, & then maybe Renew... But Not Without First Costing the Provider Money." Good luck to the graphic designer working on that button.

Step one of the renewal process went smoothly. Each of the domains I had originally registered was listed alongside check boxes to indicate if I wanted to renew them. So far, so good.

Steps two through eight, though, got more complicated. In the "remember stage," I was presented with a list of services, some of which I knew I had, some of which I knew I didn't have, and some of which I didn't remember anything about at all.
  • "Private or public registration?"
  • "Unix or Windows hosting server?"
  • "Paper or plastic?"
Once I went through the memory test, it was onto the "re-evaluate and resist" phase.
  • "Are you sure you don't want more storage space?"
  • "Don't you want to add new domain names?"
  • "You really should evaluate the advantages of private registration."

Here's the deal. I renew my service annually and, believe it or not, over the intervening 52 weeks, I do other things. Folks at the SaaS solution provider may be eating and breathing the nuances of their service, but unless something has gone wrong, I really don't think about it. In fact, that's one of the reasons I buy this functionality as a service. I don't want to think about it. When I log in and it works, I'm a happy guy. Period, full stop.

The same sentiment applies when it comes to renewal time. The service is doing everything I want it to do. Just keeping doing it. Here's my money. Thank you very much. See you in another 12 months.

There are lessons here for other SaaS providers:

Make renewals easy. Remember that the primary objective of the "renewal process" is to renew. Anything that impedes renewal - too many choices and too much information - is counter-productive.

Provide a "Keep Everything the Same" option. Show subscribers what they already have. You already know that information because it's a SaaS solution. If they're happy, make it easy to let them stick with what they have. Resist the urge to up-sell at every opportunity.

Don't nag. Reminders that a service is expiring is an excellent idea. And if you're selling into a corporate environment, allow extra time. Someone may need to audit the existing users or process payment through the corporate procurement process, so the process could drag on. But be careful not to send reminders too early or too frequently. That's nagging and annoying.

Educate on new features as they become available. As you enhance the product, notify the customer. Show them the value of the new feature and how it might help them. But don't conflate this education process with the renewal process. Don't wait until the final hour to remind customers of all the improvements you've made to the service over the last year... but neglected to tell them about until now. Continue to market to existing customers throughout the life of the subscription.

What does a poor renewal process cost?

In the worst case, a poor renewal process so alienates the customer that they let their subscription lapse. As I've discussed in earlier notes, and the chart illustrates, renewals are vital to SaaS success. Very few companies earn back their customer acquisition costs with only one year of subscription revenues.

More commonly, the customer will delay renewal. And in the SaaS business model, where so much depends on velocity, delayed renewal is foregone cash flow.

A poor renewal process can also cost the provider money. To get back to my story, somewhere in the midst of the "re-evaluate and resist phase," I ran short of time and patience and dropped out of the online renewal process altogether.

Instead, I picked up the telephone support line, where a very pleasant agent talked me off the ceiling, and set me up with another year of service. While the renewal over the web would have cost the SaaS provider a few cents, handling my transaction over the phone with a live agent I'm sure cost them considerably more.

If you're losing too many customers during the renewal process and need help streamlining it, these lessons may help. But if you'd prefer to stick with the more complicated "Remember, Re-evaluate, Resist, & then maybe Renew" process, I might be able to recommend a very good graphic designer.