Dear SaaStr: what are your thoughts on incentivizing reps to handle repeat business vs focusing solely on new business with an account management team for repeats (when you are still under $10m)?

At the end of the day if your product is SUPER sticky and doesn’t need a big procurement battle to renew, then just have finance or ops handle it.   Basically, automate it as much as possible.  Don’t make the renewal an unnecessary source of friction.

I asked Nick Mehta, CEO of Gainsight, the same thing the other day and he agreed:

  • If your renewal rate is high, and
  • the product isn’t so expensive procurement reviews it for cuts every year — then
  • Maybe just have the finance department send the renewal notice,

That’s what I did all the way to $20m+ ARR and beyond.  CS would still get involved on a few occasions, but in general we focused on upgrades happening outside of renweal times.

if you have high churn, then it’s more complicated.  Finance / ops isn’t the right choice.  A renewal now is real work.  Who is it better to give to:

  • sales, who may never have talked to them in a year
  • a renewals team who may never have talked to them ever at all, or
  • customer success who ideally has talked to them a few times, and even more ideally, has added some value?

There is no perfect answer. But .. but ..  if you put sales on it, they will sell less net new and spend more time on renewals. that’s natural. in the end, usually not best use of time.

That’s why I usually think having sales handle renewals is a bad idea.  It’s better for sales to just go sell new accounts.  Otherwise, you sell less.

(image from here)

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