RESOURCES / SOLUTION SPOTLIGHT
SMART RENEWALS MANAGEMENT
The buzzword in Marketing today is “maximizing” customer lifetime value. Maximizing customer value begins when customer continues with your services and renews his subscription. Also, the cost to serve a customer is typically upto 6 times lower than acquiring a new customer, which puts additional onus on renewal management efforts to retain your existing customer base.
Current State of Renewals Management:
Currently, Renewal Management processes focus their renewal dollars on reaching out to all customers who do not renew. When they are constrained on the number of customers they can contact due to cost pressures, clients use metrics like contract value to prioritize accounts for treatment.
Additionally, renewals management would happen through different treatments such as email, sms, phone or direct contact. The treatments would be applied in a manner such that the customer is contacted in order of the value of the treatment. For example, a customer would be contacted by an email for renewal and if he doesn’t renew, he would then be sent a hard copy (mail) for renewal.
The Approach listed above is suboptimal
Analytics Based Renewals Management
LatentView has developed a propreitary solution framework, Renewal Management DSSTM, which helps renewal managers develop answers to three key questions.
Renewals Management DSSTM Solution Framework
The framework uses the Predictive Analytics platform to identify the following.
The solution would require data on the following dimensions.
The above scores will help us determine the Value at risk (without any treatment) and Potential renewal value that can be generated by applying each treatment (Value generated by change in likelihood of renewal on applying treatment). The Optimization module of the Renewals management would then take in the constraints in terms of the resources for each treatment, the overall renewal effort spend etc. and for each account that is coming up for renewal, determine the appropriate treatment / action at the appropriate time.
Benefits
The Renewals Management solution would help the client focus its renewal dollars by applying the right treatment(s) to the right accounts and thereby maximize the overall revenue that would be collected through the renewal management effort.
SMART RENEWALS MANAGEMENT
The buzzword in Marketing today is “maximizing” customer lifetime value. Maximizing customer value begins when customer continues with your services and renews his subscription. Also, the cost to serve a customer is typically upto 6 times lower than acquiring a new customer, which puts additional onus on renewal management efforts to retain your existing customer base.
Current State of Renewals Management:
Currently, Renewal Management processes focus their renewal dollars on reaching out to all customers who do not renew. When they are constrained on the number of customers they can contact due to cost pressures, clients use metrics like contract value to prioritize accounts for treatment.
Additionally, renewals management would happen through different treatments such as email, sms, phone or direct contact. The treatments would be applied in a manner such that the customer is contacted in order of the value of the treatment. For example, a customer would be contacted by an email for renewal and if he doesn’t renew, he would then be sent a hard copy (mail) for renewal.
The Approach listed above is suboptimal
With lack of insight into customer behavior, all new customers are treated alike. However in reality, customers are inherently different and respond differently to different actions / treatments.
Since focus is on customers with higher value, we maybe contacting customers who would anyways not renew (even if not contacted) multiple times through different treatments and in the process, we may miss out contacting lower value customers who would renew.
Analytics Based Renewals Management
LatentView has developed a propreitary solution framework, Renewal Management DSSTM, which helps renewal managers develop answers to three key questions.
Which Accounts should I contact
What Treatment should I apply to the accounts based on their efficacy
How do I optimize my renewal effort under the constraints of renewal effort (resources, time etc)
Renewals Management DSSTM Solution Framework
The framework uses the Predictive Analytics platform to identify the following.
Customers likelihood of renewing a service / subscription.
Contact efficacy on each treatment – How much does the likelihood of renewal change on applying each treatment.
The solution would require data on the following dimensions.
Historical Data – Demographic, Transactional, Behavioral and Attitudinal
Data captured through Design of Experiments(used to capture valuable data in cases where clients have not varied their contact / treatment strategy, and hence, data would not be available on treatments and their efficacy on different customer segments)
The above scores will help us determine the Value at risk (without any treatment) and Potential renewal value that can be generated by applying each treatment (Value generated by change in likelihood of renewal on applying treatment). The Optimization module of the Renewals management would then take in the constraints in terms of the resources for each treatment, the overall renewal effort spend etc. and for each account that is coming up for renewal, determine the appropriate treatment / action at the appropriate time.
Benefits
The Renewals Management solution would help the client focus its renewal dollars by applying the right treatment(s) to the right accounts and thereby maximize the overall revenue that would be collected through the renewal management effort.
