Renewal management for annual contracts: three calls, in this order

The renewal invoice went out with a higher rate, nobody replied, and eleven months later a cancellation letter arrived. That is a common shape for a lost annual contract: the user was unhappy, the payer saw only a bill, and nobody on your side spoke to either. Renew by speaking to three people in a set order before any paper goes out: the person who uses the service, the person who pays, and the person who decides. The first call tells you what the other two will say.

Why three calls and not one?

In a very small business all three are one person, and then you need one call with three parts. In anything bigger they are different people with different questions. The user wants it to work. The payer wants to know why the amount changed or stayed. The decider wants to know whether you are still the right supplier.

A renewal letter answers almost none of those. Keep a record per contract with three name columns, and leave blank any you cannot fill. A blank name is a risk you can now see.

Call one: the person who lives with it

Ask this person first, because they give the plain version. Put four questions. How has it gone since we started? What has been a nuisance? Is there anything you do by hand that you thought we would do? If you were buying again, what would you change?

Write the answers in their words. Do not defend. If there is a complaint, fix it, or give a date for the fix, before you speak to anyone else, because the decider will hear of it.

Call two: the person who pays

Accounts staff see the contract as a line. Ask when their approval has to start, who signs, and whether they need a fresh purchase order or only an extension of the old one. In some firms the purchase order, not the contract, controls payment, and a renewal without a new one stalls in accounts.

Tell them beforehand if the price will change and by how much. Give a reason the payer can repeat upstairs in one sentence, such as "spare parts have gone up and we held the rate for two years". The new amount should never be a surprise on a document.

Call three: the person who signs

This may be the owner, a director or an operations head. The call is short and has one purpose: review what the contract delivered, confirm they want to continue, and agree changes. Bring a one-page summary of call one: what was done, what was fixed, what you propose.

Raise the price here, after the review and before the paper. The same rise explained against a year's work gets a different answer from the same rise delivered on an invoice.

What do you write down after each call?

Three lines, the same day. What they said, in their words. What you promised, with a date. What it changes about the next call. If call one produced a promise and the date passes, tell the user before the user has to ask. The decider may well hear about that at the review.

The generator-servicing firm that billed first

Here is an invented case. A firm in Bhopal services diesel generators for offices and small hospitals' non-clinical blocks on annual contracts. Its owner sent a trading office a renewal invoice at a higher rate and heard nothing.

What the owner missed: the office manager, who dealt with the engineer, had reported two breakdown call-outs that never reached a log. The office manager told the proprietor to look at other firms. The accounts clerk paid the higher invoice without a murmur, so silence looked like agreement.

The owner changed the order. A coordinator now calls the office manager first and reads out the engineer's log against what the manager remembers, then calls accounts about the purchase order. The owner calls the proprietor with a one-page review. At the next renewal a missed call-out had already been put right and the price talk was about diesel and spares. The proprietor still asked for a smaller rise, and the owner gave way on half of it.

What does the tracker hold?

One row per contract: customer, end date, the three names, three tick columns for the calls, the price change proposed, and the outcome. Sort by end date. Any contract ending inside the next quarter with a blank tick goes to the top of your day.

How early to start is your call. Choose a lead time that lets you fix a complaint before the decider hears of it, and test it against your last five renewals. The ones you nearly lost will show you how long you really needed.

When letting go is right

Not every renewal is worth a fight. Say so if the customer pays late every time, or if the work costs more than it brings at today's price. Say so too if the user's complaint is something you cannot fix, and offer a clean exit with a handover. A contract kept at a loss is a cost, not a customer. If they want to leave anyway, a call asking why is worth more than another proposal. Our post on how to identify customers at risk of leaving helps you spot them before the date.

Start with the five that end soonest

Take the five contracts ending first, add the three names to each, and make call one this week. If you cannot name the user, find that person before anything else. Keeping contracts is as much a selling job as a service one, and sits under sales. If you want help setting up the routine, tell us what you need.