Renewal

What is a renewal?

A renewal is a customer extending an agreement for another term. Some agreements renew only when both sides sign again. Others carry an automatic renewal, or evergreen, clause that extends the term unless one party gives written notice by a set date. In commercial services, renewals of inspection, testing and maintenance agreements are the base that recurring revenue and repair work sit on.

Why it matters to a revenue leader

Forrester data shows that renewal and expansion from existing customers account for 61% of B2B revenue. In services, a lost renewal costs the agreement plus the repair and project work that came with it. Automatic renewal is less safe than it looks: some states set notice rules for automatic renewal of service, maintenance or repair contracts, and a customer who feels trapped is more likely to leave at the next chance. The revenue leader should know every renewal date in the next twelve months, its value and who owns it.

A fire protection company has 450 agreements renewing next year, worth $3.6 million. About half carry automatic renewal clauses. When the CRO lays renewals out by month, $700,000 falls in a single quarter at sites where the customer contact has changed since signing, and no one on the account team has met the new contacts.