Contract Renewal Strategy: 5 Smart Tactics to Streamline Renewals

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Are you tired of missing out on negotiation opportunities and overspending on SaaS contracts? You're not alone.

According to G2, a staggering 69% of SaaS contracts are automatically renewed, often resulting in inflated costs and missed chances to optimize your agreements.

But there is no need to panic. Read on as we explore five smart tactics that'll help you streamline your contract renewals like a pro.

From proactive communication to data-driven decision-making, we have the insights and the best practices you need to take control of your renewals and save valuable time and resources.

So, if you're ready to take control of your SaaS renewals and maximize your returns, keep reading.

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What is a contract renewal?

A SaaS contract renewal is when you extend or continue an existing contract with a vendor or service provider for a specific period, typically after the initial agreement expires.

For businesses using SaaS applications like yours, current contract renewals are crucial for maintaining service continuity and ensuring uninterrupted access to essential SaaS tools.

The need for a contract renewal strategy

Having an effective contract renewal strategy in place has many benefits. Firstly, it helps you avoid service disruptions by ensuring seamless transitions between contract periods.

This means you can keep making use of your SaaS apps without any interruption to your operations.

Secondly, a well-thought-out renewal strategy allows you to optimize your agreements to suit your evolving needs better.

When you renegotiate terms for new contracts or explore alternative options during renewal discussions, you secure better pricing, additional features, or improved support. These help you maximize the value you receive from your SaaS investments.

Also, a good renewal strategy helps you control your budget and expenses. It also helps you to update your SLAs.

Planning and negotiating favorable terms before contracts expire will avoid unexpected price hikes or unfavorable terms that could impact your bottom line.

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5 Tactics to Improve Contract Renewal Strategy

If you are ready to upgrade your contract renewal strategy and take control of your original agreement, here are five tactics to help you streamline it and maximize value:

1. Analyze Your Current Strategy

You must start by analyzing your current approach to improve your SaaS contract renewal strategy. Take a moment to reflect on how you currently approach renewals.

Are you following a specific strategy, or is it more ad-hoc? Some people may use the "Set It and Forget It" approach, where contracts are automatically renewed without much thought.

Also, there is the "Last-Minute Panic" strategy, where renewals are left until the eleventh hour, causing stress and rushed decisions.

As you analyze your current strategy, you must also consider some of the challenges and pitfalls that come with it. One major challenge is a lack of visibility into contract terms and expiration dates, leading to missed opportunities for negotiation and optimization.

Another pitfall is relying too heavily on vendor-provided renewal terms without exploring alternative options or negotiating better deals, especially if they are not doing well.

Additionally, failing to assess current usage and needs will result in overpaying for unnecessary services or underutilizing valuable features.

Identifying areas for improvement is the first step toward building a more effective renewal approach.

2. Use a SaaS Management Platform to Track Applications and Renewals
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Are you still managing your applications and renewals using spreadsheets? Then it is high time you ditch the outdated methods and embrace modern technology.

Spreadsheets are prone to errors and lack the complexity to track multiple applications and renewals effectively. As a result, you may miss out on renewal opportunities, leading to costly automatic renewal.

So, instead, consider using a SaaS management platform like CloudEagle.

With CloudEagle, you'll gain comprehensive visibility into your SaaS landscape, making tracking applications and renewals across your organization easier.

Plus, you can automate the renewal process using customizable workflows, ensuring that no renewal slips through the cracks.

Automate Your Renewals Using Workflows

With CloudEagle's workflow automation capabilities, you can streamline the entire renewal process from start to finish.

Set up custom workflows to automatically trigger renewal reminders, gather necessary approvals, and initiate negotiations with vendors - all without lifting a finger. Workflows will also enable you to maintain successful business relationships with vendors.

When you automate your renewals, you save yourself some time and reduce the risk of overlooking critical deadlines.

CloudEagle’s Slackbot will enable you to manage renewals from Slack. You can accept or deny renewal requests through Slack and save time. You’ll receive timely reminders and the option to create a private Slack channel for further collaboration.

3. Assess Current Usage and Prepare a Renegotiation Plan

Assessing your current SaaS usage and preparing a renegotiation plan ensures you maximize your SaaS investments.

Start by digging into your usage metrics to uncover insights into how your team uses the software because, according to Flexera’s State of ITAM report, 29% of SaaS software spend is underutilized or wasted.

Are there applications that are being underutilized or features that are going unused? You must identify these areas of inefficiency to optimize your renewal agreements.

Once you've assessed your usage, it's time to prepare a renegotiation plan. Start by outlining your objectives for the upcoming negotiations.

Do you want to reduce costs, consolidate vendors, or upgrade to a more robust package? Clearly defining your goals will guide your approach and ensure you're negotiating from a position of strength.

Next, gather data to support your renegotiation efforts. This could include usage reports, competitor pricing information, or end-user feedback. The more evidence you have to support your requests, the more likely you are to achieve favorable outcomes.

Finally, develop a timeline for your renegotiation process and assign responsibilities to key stakeholders. Ensure you do not wait until the last minute before you start renegotiations.

By setting clear deadlines and accountability measures, you'll ensure that the process stays on track and that all necessary steps are completed in a timely manner.

4. Analyze Vendor Performance During the Previous Contract Period

Analyzing vendor performance using key performance indicators during the previous contract period helps you make informed decisions during renegotiation discussions.

Start by gathering data on key metrics such as uptime, responsiveness to support requests, and adherence to service level agreements.

Analyze the KPIs, look closely at any issues or challenges that arose during the contract period, and assess how effectively the vendor addressed them.

Next, consider the overall value delivered by the vendor. Did they provide the level of service and functionality promised in the contract? Were there any unexpected costs or hidden fees that detracted from the perceived value of the service?

Additionally, solicit end-users feedback to gain insights into their experiences with the vendor's product or service.

Find out if they were satisfied with the performance and usability of the software. Also, check if they encountered any usability issues or roadblocks that hindered their productivity.

When you thoroughly analyze your vendor's performance, you'll be better equipped to make the best possible decisions about whether to renew your contract or explore alternative options.

If the vendor consistently delivers on their promises and provides excellent value, renewing the contract is a no-brainer.

However, if their performance falls short of expectations, it may be time to consider other vendors who can better meet your needs.

5. Seek Expert Negotiation Assistance

Seeking expert negotiation assistance is great if your organization has a lean procurement team or lacks the necessary expertise to negotiate effectively with SaaS vendors. In such cases, enlisting the support of assisted buyers like CloudEagle is all you need.

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CloudEagle's SaaS buying experts will work as an extended part of your team. They leverage their expertise, price benchmarks, and market trends to negotiate with vendors regarding renewal clauses on your behalf and secure the right deals during renewals.

When you enlist the support of SaaS buying experts, you ensure that your organization's interests are well-represented at the negotiation table.

CloudEagle's experts deeply understand the SaaS market, vendor pricing models, and contract terms. This allows them to negotiate more favorable renewal terms and agreements.

Also, they can help you identify cost-saving opportunities, optimize your SaaS portfolio, and ensure that you are getting the most value out of your SaaS investments.

By enlisting the support of assisted buyers, you will streamline your contract renewal process, optimize your portfolio, and ultimately improve your organization's overall performance.

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How CloudEagle can improve your contract renewal strategy?

CloudEagle is a SaaS, procurement, and contract management software that can significantly improve your original contract renewal strategy by providing a comprehensive SaaS management platform that streamlines the entire renewal process.

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With CloudEagle, you can leverage powerful renewal features that help you find contract renewal opportunities, stay ahead of renewals, optimize your SaaS stack, and save on spend.

One of the standout features of CloudEagle is its integration with Slack, which enables you to receive automated reminders and notifications for contract renewals.

This feature ensures you never miss a renewal deadline and can negotiate better terms with vendors well in advance. CloudEagle's renewal workflows can make renewing SaaS contracts much easier and more efficient.

You can manage renewals from Slack, create a private channel for specific renewal workflows and make collaborative decisions easily.

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The platform allows you to set up automatic reminders and notifications for contract renewals 90 days before the renewal date, ensuring you have enough time to negotiate better terms with vendors, plan your SaaS investments more effectively, and avoid unexpected costs.

CloudEagle also has a centralized dashboard that gives businesses a single view of their SaaS subscriptions. This helps you to quickly and easily manage your business’s subscriptions and view important information such as usage data and renewal dates.

Besides this, it helps you identify your business patterns in usage and opportunities to optimize your subscriptions, such as by consolidating or renegotiating pricing.

CloudEagle's contract lifecycle management feature helps you easily manage your business’s SaaS contracts and track important information, such as contract renewal terms and pricing.

This feature lets you easily upload and store your company’s SaaS contracts. This ease makes it easy to access and review the terms of those subscriptions during audits or renewals.

Explore advice from Sam Middleton, Head of IT at Bloom & Wild, on navigating challenges like acquisitions and renegotiations when selecting a SaaS vendor. Additionally, discover strategies for reducing SaaS costs through effective management platforms.

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Conclusion

Optimizing your contract renewal strategy is essential for maximizing value and minimizing costs.

When you implement the smart tactics outlined here—analyzing your current strategy, leveraging SaaS management platforms and a contract management system, assessing usage, analyzing vendor performance, and seeking expert negotiation assistance—you can streamline your renewals and achieve better outcomes.

Don't wait until the last minute - take action now to improve your renewal and contract management processes and unlock greater efficiency and savings.

Ready to take the next step? Book a demo with CloudEagle now to revolutionize your contract renewal strategy.

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