HITT – Maximizing Growth Opportunities Through Contract Renewals

Joining us, we have Graeme Scott, our VP of advanced networking and mobility. Graeme, welcome back to the Tuesday call.

Thanks for having me. It’s always great to be here, and I love, the beginning there seeing all the familiar names. Great for you guys. Really appreciate all the shout outs and, let me know you’re on.

It’s always good to see someone. I will be, I loved how we started with some Halloween music too, by the way. That was really cool because, of course, Halloween right around the corner. And for those of you guys in the Orlando and Tampa area, we are heading…

I’m heading from here right down to Orlando for a Beyond the Solution tomorrow where we’re also gonna do Hollywood horror night. So Halloween theme in full swing. Hope to see those of you guys in that area at that event. Let’s go ahead and kick things off.

As I always do with CAS, I feel bad about this. I changed my title of my presentation, but it is kinda related. I always, at the last minute, do that to you, CAS. I’m sorry.

So if you read the LinkedIn promotions, you’re looking at this going, hey. That isn’t what he said he’s gonna talk about. I will get to that, but I kind of in the process of building this out. I came up with some kind of different ideas and some other things I wanted to talk about.

So, basically, what if I told you that the biggest growth opportunity in your book of business isn’t a new product or isn’t a new supplier. It isn’t even a new customer. It’s a contract that’s about to expire, and I touched on this a little bit during our, our panel where we did some pack insights, and I wanted to dive into a little more depth. Right?

The best thing about that, of course, is it doesn’t even have to be your contract. Right? That in two sentences is basically the thesis for today’s session, and I’m gonna dive in here and give you the longer version. Right?

Because I could see some of you guys doing the math on whether that’s a good thing or a bad thing. And the answer is, well, it really depends on what side of the contract you are sitting on. If you already own the relationship, a renewal is your chance to defend the account, find out what’s changed, and grow into the parts of the customer’s business you’re not touching yet. And if you don’t own the relationship, a renewal is that one time that the customer stack is actually open for discussion.

It’s another reason to walk into an account that until now, you may not have been able to get a meeting with. So it’s the same date on the calendar, two completely different opportunities. We’ll call them the incumbent when you’re the one who has the account agreement and the challenger. And I’m gonna walk through both, and talk the whole way through.

Now if you’re sitting in the middle, congratulations. You’re probably both depending on the account. So here’s what today’s…

On today’s agenda. First, we’re gonna talk through the Telarus tech trends report and the research that told us why this conversation is worth having right now. Then what each of you does with it. That’s the important thing.

Right? What a good renewal review tends to uncover in network and mobility, including, yes, sometimes fewer vendors, which is, of course, what the original title of this was. And then I’ll finish with a little bit of a playbook that you guys can put to work.

Okay. So let’s go ahead and get into it. Let’s go to our next slide.

Telarus tech trends survey, which Redpoint insights ran with 503 US mid market and enterprise IT buyers. Hopefully, you guys have checked that out. It told us that 84% of respondents said they are open to switching vendors at renewal. That’s a big number.

Right? 84. It sounds like a stampede for the exits, but, really, it’s not. It doesn’t mean that 84% of customers are about to switch.

Those are survey responses, not observed churn. Open to switching doesn’t mean they’re going to switch. But what does it mean? Well, it means that as an incumbent, you can no longer assume that your customer is staying.

Right? And it means as a challenger, you should not assume that the door is closed. Same data point, two very different opportunities. Now I wanna give you some small honest analogy that I’m gonna flag it as one.

You know, Market Force, which is a company that we have used before, surveyed 1,647 consumers about wireless. Only 42% said they were satisfied with their provider, and yet 81% said they weren’t thinking about switching. So how do those two things add up? Well, that’s in the consumer side, not business.

So, obviously, a little bit of a different cadence, but it honestly tells you what loyalty means. Loyalty is often inertia. Right? And inertia is actually easy to break because all it takes is somebody asking a better question at the right time.

So let’s go ahead and move on to the next slide.

Chandler. Yep. So why now? Why does this matter? Right? Same survey that I just referenced here earlier.

Eighty seven percent of those buyers reported higher renewal costs in the last twelve months, and one in three regretted a major technology purchase in the last twenty four months. Now put those two together with that eighty four percent that we talked about earlier, higher prices and second thoughts give you a customer that is willing to consider alternatives. Right? That’s not a loyal customer base.

That’s a room full of people with one foot out the door and the keys in their hand. And it’s about to get a little more intense. Right? MPI, which is a sourcing advisory, found that 83% of enterprise IT spend is tied to existing vendor renewals with increases running from six to 25%.

So here’s how the breakup usually plays out. Right? It’s never a dramatic scene. What happens is usually some email comes in October that says, hey.

Your renewal pricing is coming, and guess what? It’s going up. The customer stares at it and says, wait. Why am I paying this?

What what am I getting for this? Asks others in the business the same question, and nobody really has a good answer. So next thing you know, they decide on an RFP. That notice is when the frustration becomes visible, but the real problem probably started months earlier.

The tech trends research, going back to that report again, lists the top reasons for purchase regret, solutions that didn’t meet expectations, business needs that changed, and vendors that overpromised on capabilities. Those are the top three. And those don’t just show up at renewal. They build up over the life of the contract.

That moment when they get the renew notice is when they really go, wait a minute. It’s time to do something about this. K? So here’s the lesson.

The renewal notice itself is the worst time to start this conversation. Your job is to start it before it arrives. So let’s go to the next slide.

So here we go. We’ve got our two pass, one opportunity. Right? On one side, we’re gonna go ahead and split the room in two.

On the left side, you’re the incumbent. Right? On the right side, you’re the challenger. And if you’re not sure where you fit, just kinda sit in the middle and look confused, which is what I usually do when I’m sitting with our sales engineers.

So…

Alright. Incumbents. Renewal is not a paperwork exercise. The days of customers just blindly renewing and moving with their service are over.

That’s what the tech trends report tells us. 84% of them are open to it. Right? It’s the one scheduled moment each year when your customer is paying attention to what they’ve bought.

Use it to do four things. Number one, defend the account by proving the value that you’ve delivered. Number two, reassess what the customer actually needs now, which is rarely what they needed when they signed.

Number three, increase your wallet share by finding the adjacent problems. And then four, introduce the additional solutions that those problems call for. Now if you’re over on the challenger side, what I don’t want you to do is walk in the door and say, hey. I can beat your price.

That’s the quickest way to get ignored. Right? And I’ll give you some data on that in a little bit. The incumbent has heard it, and they’ve already blocked their customer for it, and every customer already has a stock answer.

Open with a credible review of outcomes, gaps, and timing. A renewal is a natural opening to enter an account, challenge the status quo, and win business that previously seemed inaccessible.

And you might discover the incumbent is doing a great job. Fine. That’s still potentially a win because you’ve now earned a conversation, and you may have uncovered adjacent opportunity that the incumbent has been ignoring. So here’s a great question for both sides to kick start that conversation.

Does the business you put…

Does the technology you put in place yesterday meet the needs of your business today and tomorrow? Okay? Great conversation to kick things off. So let’s go ahead to the next slide.

Basically, the renewal is a performance review. Right? Those of us who have worked for large organizations, we know this happens every year. You gotta sit down with your boss.

They tell you what’s going on. That is the exercise with the renewal. That’s how I want you to look at it. Right?

What is a renewal really reviewing? Right? Picture a customer here. We’re gonna give you an example of a customer on this slide.

Say this customer’s got 14 locations. Right? They’ve got two at…

Tie ISPs because somebody once got burned by an outage and sworn ever again. They’ve got a backup carrier on half the sites. Maybe they’ve tested their resiliency strategy. Maybe not.

They’ve got an SD WAN vendor that they put in place in a project in 2019. They’ve got a totally different security vendor that they put in place in a project in 2021 and three mobile contracts because the sales team, the field techs, and the executives each had their own idea. And then, of course, if you look at that renewal calendar, it looks like a Jackson ******* painting. Right?

All over the place. Nobody designed that mess. It just accumulated over time one urgent decision at a time. And I wanna be clear.

This is not a failing of a customer, but this is what we see within a lot of customers, especially small and mid sized businesses that are so busy keeping pace with their customers’ demands that a lot of this stuff just kind of, you know, builds up over time in response to something that’s going on. So at renewal, you as an adviser needs to learn three things. Number one, is the solution delivering what was promised? Number two, is it still the right fit?

And number three, what changed in the business since we signed those contracts? Okay? Whether you’re on the incumbent side or the challenger side, that is great information to have. Those three questions turn a contract date into a strategic checkpoint, and they work together whether it’s your contract or not.

K? If it’s yours, that’s how you find out what you’re missing. If it’s not, that’s how you find out what the incumbent never talked about. Okay?

Now ask the same questioner…

Customer one more question. When something breaks, who do you call first? A lot of times the answer is, well, it depends. Right?

That pause is what the renewal review is for. Okay. Let’s go to the next slide there, Chandler.

Here’s, another thing that we learned from the tech trends report, and where the adviser’s role really is. The adviser has a role beyond procurement. The tech trends research research showed us that customers value adviser involvement during delivery. Right?

Where have their advisers delivered on them? Here’s the things that they told us. Number one, project management, implementation support, both at 48%. Stronger vendor vetting at 48%.

Notice I didn’t say procurement. I said vetting. Right? Integration planning at 43% and faster decision making at 41%.

Cost savings, 26%. Okay? Now be careful, right, before we start to lean in and say customers don’t care about cost. They absolutely do.

Those are reported priorities, not a claim that price doesn’t matter. Price absolutely matters. Every customer in the room has a CFO or a finance guy that they have to run that stuff by, a finance person, I should say, that they gotta run that things by. But the higher value conversation is about making the technology work and making the decisions stick.

There’s a second data point that points this to…

Gives us kind of a credence to this, and I’ll give you a a little upfront there. It’s it’s from 2022, so it’s a little dated, but it’s a Gartner survey of 418 people. Only 29% expected lower licensing costs from consolidating security vendors, while 65% expected a better risk posture. Again, focused on that outcome, not necessarily cost savings.

So when a customer goes looking for change, they’re not just hunting for a lower number. They’re hunting for fewer headaches and less complexity. So that’s how you compete with a quote, and it’s why a challenger can win credibility before the con…

Incumbent’s contract is even open. Okay? Let’s go ahead to the next slide.

Now if you guys saw that earlier title, right, consolidation was something I was gonna talk about a lot today. But as I dug into this and started looking at it, what I learned really was consolidation is just one outcome. It’s not the goal. Right?

The session started as, I think I was gonna call it more from less about helping customers buy fewer things. And, look, I still believe in that. I think there’s still some credence there. But, again, I really kinda just changed my mind about what I wanted to focus on here.

Consolidation for the sake of consolidation is not the goal. It’s one of the things that a proactive renewal can uncover, however. Some renewals will reveal real complexity. Too many invoices, too many different tools that overlap, unclear escalation paths, separate owners for services that obviously depend on each other.

When you find those kinds of things, consolidation can really help. And customers are clearly thinking about this. Right? Lot of you guys have heard me quote this stat before, but NPI, the group that I quoted earlier, found that 82% of large enterprises are actively pursuing supplier reduction, and 66% already concentrate 80% of their IT spend with five…

25 or fewer vendors. Now that’s across large enterprises. Right? Most of your customers aren’t $5,000,000,000 companies.

They’re SMB and they’re mid market. And if they have an IT team at all, it’s one or two people and a very help…

Patient help desk. So they have that exact same instinct. And in fact, I would argue, it’s much more urgent for them because they have about a tenth of the staff to to act upon that. But, again, notice the goal isn’t fewer vendors.

The goal is better outcomes with less friction. Sometimes that means fewer vendors, and sometimes it me…

Means keeping every supplier you’ve got and putting one adviser led strategy around it. Right? Sometimes, us as the adviser, we can step in and limit that complexity. The customer wants less complexity, not fewer capabilities.

Okay? So let’s go ahead and move to the next slide.

Convergence creates the next conversation. Right? And this is kind of where it lands into the network and mobility sphere, of course, what I talk about. Renewals don’t happen in a vacuum because all of these technologies are converging, and every convergence is a conversation.

An SD WAN renewal is a natural time to talk about security and SASE. Right? Gartner forecast that 60% of new SD WAN purchases would come as part of a single vendor SASE offering by 2026. That’s up from 15% in 2022.

So pretty huge jump from 2026 to 2022. That’s a forecast, of course, so I won’t tell you if it came true to the decimal point. But, honestly, how many SD WAN projects have you done in the last year that didn’t have a security conversation attached? I hope none.

Right? Because they’re a big part of the same conversation. Another example of this is a mobile renewal can expose things like device management, coverage, life cycle, or IoT needs. Right?

You know, looking at mobile devices and then number of breaches that happen from there. Anytime you’re looking at your mobility solution, you’ve gotta look at a security solution as part of that conversation. Again, that’s the convergence. Right?

Pellion and ABI Research, which are two other organizations that do a lot of market research, sir…

Surveyed about 675 enterprise IoT decision makers. 47% said that juggling multiple connectivity platforms is a struggle, and more than 80% said at least one provider lacked a capability they need. So, basically, they’ve got a pile of SIM cards. They’ve got a pile of portals and a pile of invoices.

And, of course, remember our customer at the beginning of this session when I talked about with three different mobile carriers for different departments. Right? That’s the kind of thing our customers are dealing with out in the environment.

A network renewal can also uncover things like cloud access. Right? What are you using that network connection for? Well, we’re going to the cloud.

We’ve got all of our applications up there. Great. That opens up a whole another conversation to talk about, well, what’s going on over there? Is there something we can help you with?

Right? Resiliency, performance gaps, those are the kind of things we’re looking to explore.

Meanwhile, the carriers know that…

Know this. Right? They have already changed a lot of their product portfolios to meet this need. Recon Analytics, which is another company out there that does analytics, says up to 80% of fixed wireless customers take their mobile service from the same provider.

Meaning, if you have T Mobile for your, you know, your your home Internet, more than likely, you’re gonna have T Mobile as your phone as well. We are also seeing this within the cable companies. Right? Xfinity and Spectrum Mobile are seeing massive growth in those areas as customers want to buy from the same provider.

Now, again, that’s in the commercial side, but we are seeing those same trends in the business side. So the opportunity isn’t to force every product into the deal. It’s to understand the dependencies. Right?

What has changed since the last contract? Where are the users and the applications now? And what else has to work for this investment to deliver. Okay?

So let’s go ahead to the next slide.

The goal here, back to our topic of consolidation. Right? This is kind of the big takeaway. What do we wanna do?

We really wanna consolidate accountability. Okay? So we wanna have that in. Look at the left side there.

Right? We’ve got support, billing visibility, governance, one renewal calendar, one adviser of record. Consolidate all of that. Gives you one hand to shake.

Right? Now on the right side of this, we’ve got things like last mile pass into the building, carrier diversity on critical sites, wireless backup, physical diversity, and security concentration. What you need to do is evaluate those against what the business actually requires and keep the ones that matter. A single provider can coordinate multiple underlying networks.

One invoice does not mean…

Have to mean one point of failure. Right? Because if one backhoe can take down your customer’s entire business, that isn’t simplification. That’s just a very efficient way to have a bad day.

And as someone who’s been around a long time, I know backhos are undefeated. So drop drop a seven in the chat if you’ve, been victim to a backho. Those things are, notorious. Alright.

So let’s start bringing this home for you guys. Next slide, Chandler.

Here’s the play to run. Okay?

Again, going back to the tech trends report, the tech trends recommend starting renewal review six to twelve months out. And what we want you to do is take three steps, map, evaluate, improve. That is the difference between strategy and scrambling. Right?

By the time the quote arrives from the from the incumbent carrier, you’ve already lost most of your leverage. Okay? So let’s go through these in detail. Map, list the upcoming renewals and the key decision dates, including notice windows and auto renewal clauses.

Okay? What did we buy? When does it end? And when do we have to say something?

Basically, when do we have to tell them, yeah or no, we’re moving forward or not? Next step, evaluate. Does that solution still line up with where the business is heading? Where are the performance or cost gaps against the original success criteria?

When we originally looked at this, what were we trying to achieve? Have we achieved that? What are the gaps? Next step, improve.

Find better terms. And, again, this is maybe where we can find some cost savings. Right? Better terms, better performance, or a better fit before that deadline hits, not after you discover that an auto renewal clause has already limited your options.

Right? And, again, I’m gonna ask you guys to drop it in the chat. Drop a two in the chat if you’ve ever been burned by an auto renewal clause. Right?

When you wake up and you talk to your customer and find out, man, their contract has already auto renewed. So here’s the habit that I want you guys to get into. Right? Every renewal goes on one shared calendar.

Call it customer, you know, customer contract terms. My suggested cadence, and this part is mine, not the report…

The tech trends report, right, is a twelve month trigger, 180 trigger, and a ninety day trigger, and show up before the vendor’s rep does. K? We wanna make sure we do that. We’re giving ourselves those touch points to reach out to our customer.

And, again, we’re using that as a tech assessment, a performance review of what we’ve put in place. So let’s go ahead to the next slide.

Here are five questions that you guys can use to go ahead and open those doors. Okay?

These are good ones that…

You know, just to get this conversation started and and really set yourself up for that tech assessment or performance review. Number one, what has changed in your business since this contract was signed? Right? Guarantee something has, especially if they’ve had, you know, cable circuit there for five to seven years.

Something’s changed since they put that cable circuit in. Two, what is frustrating your team about the current service? Anything that they’re upset about, right, we wanna find out. Three, who owns the outcome when something goes wrong?

Right? That’s that who do you call first question that I talked about earlier. Number four, what would an outage or a failed implementation cost you? So how much are you looking at?

What kind of dollars are on the line? And five, when is the next decision point including the notice and auto renewal deadlines? Okay. Now notice what’s missing here.

I haven’t asked what’s your rate, what’s your price. Right?

That’s the important thing. We, you know, we wanna get out of those price conversations when we’re talking renewals. If you’re the incumbent in this deal, right, those questions uncover ways to improve the service and close some of those gaps. Right?

If you’re the challenger, they tell you whether there’s a real problem we’re solving here. And sometimes the answer is no. Right? And that’s useful to know because we don’t wanna be chasing those deals, finding out that, hey.

Look. There’s really nothing for me to do here. They’ve got an incumbent that’s in place and is doing a really good job.

If you want a bonus question, what…

Always love giving you guys little bonus questions here. This is a good one here. If you had your choice, which vendor would you drop tomorrow if the replacement was painless? Okay?

Watch what happens. Watch what they give you. If it it didn’t…

If it was painless to get rid of one of your vendors, which one would it be? That’s a great question that often opens up some opportunity where there is pain. So let’s go to the next slide as we wrap things up here. This is just an example of how you can do this.

Now this is a, obviously, a a a fake account that I made up. I’m just trying to use this to kinda illustrate this process. But, basically, the exercise, take one account and put everything on a single page. K?

Not just the vendor name and the monthly bill, but you wanna capture that business capability. K? What is that product in place to achieve? You wanna basically capture who’s the the owner of that product or the decision maker, the intended outcome, the renewal date date, the notice deadline, and any dependency on another service.

Right? So sometimes you can’t make a change here because you’ve got something over here that impacts that. Right? And, again, this one is a made up customer.

They have 12 locations, seven vendors, and nine renewal dates scattered all across the all across the year. Okay? So here’s a couple that, you know, are are typical of the kinds of things that, you know, we find. Look at the security vendor.

Right? Who owns it at the customer? Nobody knows. Right? Sometimes you see that where there’s a vendor that’s in an in an environment, and it’s like, well, who’s in charge of that relationship within your company?

I don’t know. Nobody knows. Right? There’s an opportunity there. You may have discovered an orphan security contract.

Right? Looking at wireless plans, hey. Maybe they no longer fit the, the workforce. And we’ve talked about backups.

Right? On previous, sessions, I’ve talked about resiliency as a strategy.

Have you ever tested your backup strategy to see it’s there? So we’ve got a backup, but have we ever tested what happens if it goes down? Right? At this…

The point here is not to count how many vendors you can eliminate. It’s to reveal the decisions you should be helping your customer with. Right? Most of you will build this map and find out you know half of it.

That’s not a failing. That’s the opportunity. Right? Because the customer doesn’t know the other half either.

So coming in with something like this and sitting in front of your customer shows them that you are serious as an incumbent. And as a challenger, it shows them that, hey. You’re somebody that they should take a look at. K?

So let’s go to our next slide.

And this was kinda where I fell out of love with my original topic. Right? It’s this idea that do fewer vendors mean fewer commissions. Right?

Sometimes I hear I hear you guys. I have these conversations with you, and I hear things like, hey. Look. If I help my customers buy fewer things, won’t I make less?

And, honestly, sometimes that’s a fair question. Right? Sometimes we look at these renewals and we’re bringing contracts down, and and sometimes that can that can hurt us. But, of course, we’re doing what’s best for the customer.

Right? Sometimes consolidation can reduce line items and compensation. Right? So you gotta run your own numbers.

I’m not gonna promise you that consolidation raises your commissions because I know sometimes it does. I’d be making that up. But here’s what I do know. Okay?

A renewal review is rarely just about saving money. I think we built a case for that earlier. Right? It tends to uncover things that the customer actually needs.

Things like managed security, a true resiliency strategy that’s been tested, things like mobility management. Do they have any IoT in their environment? Cloud connectivity. Right?

All those kinds of things are there. You’re not shrinking the opportunity. You’re replacing a pile of disconnected transactions with a broader relationship within the account. Okay?

Which is better, of course? The one…

You know, we wanna do that. So what’s a better account? The one with seven vendors who’s annoyed at all of them and is going to bid it out in the spring, or the customer that trusts you, renews on your calendar, and calls you before they call anyone else. Right?

That’s the customer we want. Fewer things doesn’t mean less. It means stickier. And I think that’s really where that consolidation conversation makes a lot of sense.

Next slide.

Alright. So here’s where we put it back together. Right? That we’re gonna bring back to where we started.

We’ve got a contract that’s about to expire, and it doesn’t have to be your contract. Right? Let me bring it back there. So here’s the assignment.

Pick three of your accounts this week. As an incumbent, choose three three customers whose contracts you need to revisit before the base supplier does. Right? If you’re prospecting, choose three target accounts where a contract review could create a legitimate opening.

Then do three things. Build that one page map. Right? Identify the decision dates and ask for a strategic conversation, a technology assessment, not a quote request.

That’s it. Three accounts next week. It’s the smallest possible version of the whole session, and it’ll tell you more about your book than any pipeline pipeline report. So if you remember nothing else from this whole session, right, remember this.

Customers are now open to change. K? 84%. They’re under cost pressures, and they’re second guessing every previous decision that they’ve made.

That’s what the tech trends report tells us. A renewal isn’t the end of the sales cycle. It can be the beginning of your next opportunity. And, again, your next opportunity is already contract, and the contract doesn’t have to be yours.