“Anyone can sign a client. What matters more is if you can keep them.” I tell myself this regularly as a business owner. I’ve managed to have many of the same clients for years, and have worked very hard to avoid operating a churn and burn company with more clients going than staying.
What Is a Contract Renewal?
A contract renewal is the procedure between parties to review an existing agreement and come to terms with continuing the arrangement. During this process, both parties have the chance to extend the contract, amend it, or renegotiate the terms to align with priorities, market conditions and other factors.
Contract renewals can strengthen your business relationships, bring in repeated revenue and be a testament to the quality of work you produce. They’re an important part of being a successful entrepreneur.
The return on investment with existing clients is much higher than trying to acquire and get new ones. Here’s what to consider and prepare for if you want your current clients to continue their partnership with you.
Understand Why Contract Renewals Are Important
A contract renewal is the procedure between parties to review an existing agreement and come to terms with continuing the arrangement.
During this process, both parties have the chance to extend the contract, amend it or renegotiate the terms to align with priorities, market conditions and other factors. This is usually carried out actively by one or both parties in order to prolong the terms of the contract for a new period of time before it expires.
An important lesson I learned early on as a business owner is that renewing a contract is different from extending a contract, even though they may sound like the same thing. A contract renewal involves ending an existing agreement and replacing it with a new one. In contrast, a contract extension retains the terms of the original agreement but lengthens the duration of the partnership. Don’t confuse the two. Both are important, but renewals really fuel growth.
Demonstrate Your Value
Document everything. Keep a tracker, updated in real time, that logs what you’re doing for your clients. For instance, I track media placements, interviews, sentiment and increasing market share for my clients’ brands. And come to the table with data and results that you’ve generated for the client.
Highlight the value that you’ve delivered since you’ve begun working together and focus the discussion on your wins. It’s important to show, not tell. Capture what you’ve achieved, the positive impact you’ve had and quantify your results whenever possible. Analyze KPIs and show how you’ve met or exceeded expectations.
Quarterly planning is a great time to demonstrate the benefits of your services in front of an entire team of decision makers. This strengthens your case in renewing the contract by reminding your client that it’s best to keep you on the team in order to maintain the momentum versus terminating your work. Not only do they maintain momentum — keeping you on board saves them the time and trouble of finding a replacement for your services.
Proactively Communicate
Good communication is key to successfully renewing contracts. Don’t just wait to interact around the expiration date — you must be diligent about getting feedback all the time and checking in on how the relationship is going.
Open and consistent communication is necessary for a long-standing client relationship. Set up a weekly or monthly check-in, as business needs are constantly changing. This gives you enough buffer to address any concerns or objections early on. Be ready to address questions, brainstorm new ideas and show that you are a valued partner who cares about your clients current needs. Understanding your client’s viewpoint can help pave the way for a smooth renewal.
This is also a chance for you to communicate how your business has evolved since you first started working together. It offers you a chance to discuss the scope and anticipates future growth and contingencies. You’re risk-proofing your business.
Expect to Negotiate
Be ready for some pushback. And ask yourself where you can be flexible or adaptable and what your non-negotiables are. For instance, your client might want you to travel more for them; a compromise might be splitting the difference between in-person travel and video appearances. Knowing this ahead of time will help you set clear boundaries, which will lead to successful compromises.
Negotiations set the tone for your future interaction with the client so it’s important to understand the goals and know what you really want. If you want to adjust the pricing or increase your fees, then you should also consider upselling with additional services. Your client needs to feel they’re getting value from you, and you have to keep an eye on your ROI.
Contract renewals are great for making sure that you and your client are getting the most value in your collaboration. Contract renewals need constant attention and when they are managed correctly can lead to business growth and long-term partnerships. Applying the above tactics can land you a signature as well as a deeper level of trust between you and your client.
