As the new year gets into full swing, businesses are hard pressed to secure contract renewals. Contract renewals are essential to success in any business. It is far more difficult to sell to a new client, than to maintain (and upsell) to an existing client. Customer retention is king – and, thankfully, there are some tips and strategic moves that can drive up sound renewals.
Research conducted by Markingblog shows that “the probability of selling to an existing customer is 60 to 70 percent, while the probability of selling to a new prospect is only five to twenty percent”. Essentially, it costs up to seven times more to acquire a new customer than to retain an old one.
Carrie Peter, Managing Director of Impression Signatures – an EOH Company – offers four vital tips on how to secure contract renewals.
Firstly, businesses should consider the quality of their printed contracts and whether a digital contract would be a better fit. “For example, in the medical sector medical aids are clawing back as much as 30 percent of claims paid to pharmacies which do not use eScripts,” says Peter. “This is the cost of non-compliance; a consequence of accepting scripts that are not advanced electronic signature (AES) signed.”
Secondly, Peter warns against using consent alone for renewal when a contract should be used. “Consent will only get you so far,” she adds. “Where a contract is used, a closed loop process must be followed. With digital signatures, intent can be proven with a sound chain of custody that effectively restricts alteration or repudiation after signature.”
Certain contracts are regularly repudiated, such as cellphone or gym contracts. The issue here is the lack of evidence that customers consented to specific clauses (the period of 24 months of the contract in particular). “A large telco lost a key case against the ombudsman, confirming people should not be subject to the cancellation fee related to the contract, because the telco couldn’t prove that the customers had specifically consented to the clause,” recalls Peter.
Thirdly, the success of contract renewals will largely depend on the type of contracts being issued. In highly regulated markets, contracts often face severe scrutiny. “The ability to prove both the integrity of the contract and the integrity of the signatures attached to that contract is a non-negotiable requirement. In many instances, this becomes a hornet’s nest – yet it’s one that’s easily cleaned up with a digital approach.”
Lastly, the onus of proof of compliance can be delivered against with a digital trail. “This is the beauty of a sound digitally signed contact; turning the contract into a tangible piece of evidence that can prove its own integrity at any time. Essentially, this is the true value of a PDF. It becomes an immutable format; a piece of evidence that can and will testify to itself. Digitising contracts through eSignatures is also an effective, further step of compliance allowing for easy storage and retention of contracts for the legally required period.”
Peter concludes with a final piece of advice, confirming that businesses should not be afraid of contracting in an effort to enforce renewals – nor should they fear proving intent in the process. “Good fences make good neighbours. A good contract makes sure everyone stays friends throughout the process.”