Recurring revenue is critical to the success of a business, as it is predictable and can account for a large portion of overall sales. However, managing recurring revenue – in particular, renewals – can be a long and laborious process, taking up an inordinate amount of time and resources.
This can be especially true for OEMs in the IT networking industry, as they work daily with a long channel of stakeholders (distributors, resellers, end-customers) in order to close renewals cycles quickly.
Here are 3 ways an effective renewal management program can lead to increased revenue and an improved bottom line for your OEM:
1. No money is left on the table.
Without an effective renewal management program, you could be missing out on renewals opportunities that have the potential to generate revenue and increase cash flow. In an effective renewal management program, renewals managers ensure that your recurring revenue streams are maximized by capturing all renewals opportunities. They may do this by tracking every account (especially those that may have been lost in the shuffle in the past), and by following the quote all the way through to renewal.
2. Improved annual forecasting and budget planning.
Faster time-to-renewal events and better organized renewal management processes can result in more accurate annual forecasting, better budget planning, and a higher recurring revenue.
Effective renewals managers identify and fill in the gaps as soon as they find them, to bring each renewal to a close. They follow the journey of each quote and focus on building relationships along the channel in order to streamline your renewals processes. For example, for those quotes that are taking longer (maybe there were multiple revisions and one part of the channel isn’t responding, or there was a miscommunication along the way), they identify where and why the quote stalled and then remedy the situation as quickly as possible.
These types of practices lead to more reliable recurring revenue and thus more accurate financial forecasts.
3. Resources and time to focus on new sales opportunities.
An effective renewal management program is a well-oiled machine that requires minimal up-keep, freeing up the company to focus on core business goals and growth. It enables you to more closely monitor your customer relationships and indirect channels and improve the stakeholder experience. And ultimately, it allows you to focus on what you do best – innovate and bring new products to market.
Check out the next blog in this series, where we provide some tips to help you implement an effective renewal management program.
Contact RAY ALLEN today to learn how your company can benefit from RAI’s Recurring Revenue Management (RRM) solution. (RAI’s RRM solution is designed to meet the needs of OEMs, Service Providers, and Value-Added Resellers).