Part of adequately addressing a contract renewal opportunity is determining the benefits and drawbacks of renewing that contract, and then taking advantage of the opportunity that has been presented. Here are a few tips to capitalize on a contract renewal opportunity.
Renewing Contract Relationships with Suppliers and Vendors
To maintain a healthy business relationship with your vendors, it is important to keep an open channel of communication. To do this, the best practice is to get to know the company representatives individually. When you improve business relationships, both parties are much more willing to renew when that time comes around. Renewing contracts with outstanding suppliers means that your company won’t have to go out in search of a new supplier. Having a good relationship also increases the likelihood of discounts, rebates, and more mutually beneficial contracts than you could find with a first-time supplier.
Leverage CRM and CLM software
Salesforce is a useful tool for easing the renewal process, but it can also come into play before the renewal process even starts. Advanced analytics, provided by Salesforce’s platform, can help you understand the revenue that your contract is producing. Other information can be gleaned from Salesforce’s interface, as well, all of which can help you to determine whether or not a contract is worth renewing.
Salesforce can be integrated with CLM software. Working together, these two platforms will help you track the lifecycle of the contract, assess its efficacy, determine its value, and manage all of the dates and deadlines associated with the contract.
Establish Automated Alerts
While your sales team or legal department may be able to track a few dozen deadlines at a time, the typical Fortune 2000 company can have between 20,000 and 40,000 active contracts at any given moment. That is far more than a simple excel sheet will enable you to manage effectively.
Instead, use automated alerts to remind you when a renewal opportunity is approaching. Determine the amount of time that it usually takes you to complete the renewal process, say 30 days. Add a reminder to automatically alert you to the approaching deadline. Then, add a second one at a time of your choosing. That way, you will have ample time to prepare for the renewal, and nothing will fall through the cracks.
Have a Yearly Review
Every year, even if the renewal is not approaching for some time yet, have your team review the contract. This gives you the opportunity to ascertain what is going well for this particular business relationship, and what is not. It allows you to analyze the efficacy of the contract, determine how to improve the contract, and begin to make plans for when the renewal cycle actually begins. If you determine that the contract is not worth keeping, then take action to evade the renewal and locate another supplier. If, however, you find that this contract is beneficial, you now know what you could do to make it more beneficial for the next go-round.
Refine the Contract
Even if you are happy with the business relationship that you have established, you should always look to improve and update the existing contract when you intend to renew. Budgets change, products change, procurement strategies change—business is always changing. The review you conducted should have helped you to identify areas of change that have occurred within the last year. Take what you learn from the review and apply it to the new contract that you wish to establish. Small changes won’t require much legal review, but they can make a big difference in your renewal cycle.