The most common renewal mistakes waste resources
There are two common renewal mistakes teams make when attempting to increase their renewal percentage or revenues. Improperly investing limited sales and marketing resources for renewals will end up costing more to achieve less than optimal results.
The “One-Size-Fits-All” Trap
The first step in effectively leveraging your data to drive renewals is to acknowledge that there are different kinds of buyers, sellers, products, price points. Sports leagues acknowledge there are different sales skill sets for effectively selling new tickets versus renewals. Thus the reason for most teams separating sales (new business) and service (retention & upsell).
However, there are also significant differences in buyers, products and prices. Renewal efforts should acknowledge that the renewal habits of a business buyer with 4 premium seats are fundamentally different than the renewal patterns of a personal account with 2 tickets in the cheap seats. Incorporating these differences is fundamental to targeted sales and marketing approaches.
But, even if you have acknowledged these differences it is not efficient to apply the same level of renewal resources to each account. Certain buyers are inherently less likely to repurchase. Identifying those buyers early in the process positions you to devote more attention to risky accounts and save the renewal.
The Silo Trap
Another common renewal mistakes, the “silo trap”, results in a costly mistake by leveraging siloed fields of data to make targeting decisions. Many teams avoid this trap by understanding the need to identify and target their riskiest renewal opportunities. Consider the following examples for renewal targeting:
- A season ticket holder who only used tickets for 40% of games.
- A premium season ticket member filled out a customer service survey and said all kinds of terrible things about the team, their experience, etc.
- A person who has never returned a service rep’s phone call, answered an email, or had any other interactions with your service staff?
Do these people represent renewal risk? Most teams would say “yes” and would formulate renewal strategies for these customers and others who exhibit similar characteristics.
Mitigate the most common renewal mistakes by understanding risk factors
One of the most common renewal mistakes is applying the same resources to every renewing customer. The fact is, some customers will renew with some attention and/or prodding. Others will renew automatically and prefer to renew on their own. The second of the common renewal mistakes – the silo trap – involves drawing conclusions about customer outreach based on isolated data fields. Ultimately, multiple factors must be considered to understand renewal risk. Both of these mistakes can be mitigated by having a clear understanding of the risk factors for each customer.
Before we invest resources in saving these accounts, we should attempt to better understand the risk factors. That is, any other factors that quantitatively mitigate some of the risk. For example, let’s say one year, a 35 year season ticket holder only goes to 35 out of 81 games. Furthermore, they never attend more than 50 games in any season as a season ticket holder. Or, perhaps a business only uses their tickets to entertain their best clients. But, they are perfectly happy with the value they receive from their less-than-perfect attendance record. Equally important mitigating factors might be in place for the person who responds negatively to a survey or wasn’t available to speak with the team’s service rep.
Sports data will yield potentially dozens of data fields that reveal negative stories. The above factors could prove to be strong predictors of member attrition. However, it is important to understand the whole story before making assumptions and implementing expensive sales and marketing approaches that might be solving a problem that doesn’t exist (or more appropriately, exists somewhere else).