How to Improve Your SaaS Renewal Strategy?

‍

Are you struggling to handle multiple SaaS renewals using spreadsheets? Is it challenging to control your SaaS spending due to auto-renewals? It might be hard for you to manage SaaS renewals if you still rely on old-fashioned methods.

Without a streamlined SaaS renewal system, you risk financial losses, compliance issues, security vulnerabilities, and operational disruptions. It also limits your ability to optimize contracts and secure better terms.

To mitigate these challenges, adopting industry-proven SaaS renewal practices is essential. These best practices help streamline SaaS renewal management, reduce risks. 

Keep reading to identify and enable SaaS renewal strategy for your organization.

‍

TL;DR 

• Manual spreadsheet tracking leads to auto-renewal surprises and wasted spending on unused licenses.
• Start renewal planning 90 days early to avoid rushed decisions and enable strategic negotiations.
• Audit actual usage before renewing to cut unused licenses and eliminate redundant tools.
• Research competitor alternatives and market pricing benchmarks to strengthen your negotiation position.
• Use automated SaaS management platforms like CloudEagle.ai to streamline tracking and renewal processes.

‍

What is a SaaS Renewal?

A SaaS renewal is the process of continuing a customer’s subscription to a Software as a Service (SaaS) product after the initial contract period ends. It’s essentially a decision to keep using the software, and managing renewals effectively is key to sustaining revenue, reducing churn, and maintaining strong vendor relationships.

It involves paying the licensing fee for the upcoming period to maintain access to the software and its features. If you don't renew, you might lose access to the software, disrupting your work and productivity.

SaaS renewals are periodic. An organization uses 300 SaaS tools on average, so you must keep track of them efficiently to avoid application downtimes or auto-renewals. Read on to learn more about improving your SaaS renewal strategy.

‍

Benefits of Creating SaaS Renewal Strategy?

A strong SaaS renewal strategy is essential for long-term growth, helping reduce churn, boost revenue, and strengthen customer relationships. It focuses on proactive steps to ensure customers renew their subscriptions, driving predictable income and greater overall profitability.

Better Cost Control

Instead of blindly accepting price hikes or unused licenses, a strategy helps you review actual usage before renewal. That way, you can downgrade or cut licenses you don’t need, saving thousands annually.

Improved Vendor Negotiation Power

When you’re informed about your usage and market alternatives, you’re in a much stronger position. Vendors are more likely to offer discounts, better terms, or feature upgrades when you show you're ready to negotiate.

Elimination of Redundant Tools

By reviewing tools systematically, you’ll spot overlapping functionalities across your stack. This allows you to retire unnecessary tools and consolidate where possible, making your tech environment leaner and more efficient.

Stronger Alignment with Team Needs

A renewal strategy forces you to pause and check if the tool still meets the current workflow. Team feedback during this phase ensures you’re only keeping what’s actually useful and aligned with business goals.

Reduced Risk of Auto-Renewal Surprises

No one likes surprise renewals, especially at increased prices. A defined process means you’ll be alerted ahead of time, with space to make changes or cancel before you're locked in.

‍

Primary Goals of SaaS Renewal Process

The primary goals of a SaaS renewal process are to maximize customer retention, drive recurring revenue, and optimize overall SaaS spending. A well-managed SaaS renewal process ensures timely renewals, streamlines contract management, and identifies opportunities for upselling and cross-selling. 

It also plays a key role in maintaining strong customer relationships and long-term engagement. By prioritizing the SaaS renewal process, businesses can boost retention rates, reduce churn, and build predictable revenue streams.

Here are the primary goals of the SaaS renewal process:

• Reduce Customer Churn: A consistent SaaS renewal process helps identify at-risk accounts early and take proactive steps to retain them.
• Drive Recurring Revenue: Renewals create a steady revenue stream, and an efficient SaaS renewal process ensures contracts are extended without disruption.
• Improve Customer Lifetime Value (CLV): By securing long-term commitments, the SaaS renewal process increases overall customer value and business profitability.
• Strengthen Customer Relationships: The renewal process opens doors to meaningful conversations, feature feedback, and opportunities for upselling.
• Ensure Contract Visibility and Compliance: A clear SaaS renewal process helps track contract terms, renewal dates, and compliance, reducing last-minute surprises.

A streamlined SaaS renewal process allows companies to focus on strategic growth while ensuring existing customers remain engaged and satisfied.

‍

7 Ways to improve your SaaS renewal strategy

To strengthen your SaaS renewal strategy, emphasize proactive planning, timely customer engagement, and consistent value delivery. Begin preparing for renewals at least 90 days before the contract ends. Reach out to customers early, offer responsive support, and tailor the renewal experience to their specific needs.

Review product usage data to spot any issues or drop-offs in engagement and resolve them ahead of time. Consider disabling auto-renewals to encourage customers to make conscious, informed renewal decisions. This creates opportunities to reinforce the product’s value and build stronger customer relationships.

Analyze your current strategy (Challenges and pitfalls)

To create a robust SaaS renewal strategy, analyze your current approach. Look closely at what's working well and where improvements are needed.

You might face challenges like unclear renewal terms, difficulty tracking usage, and poor vendor communication.

These issues can slow the renewal process and prevent you from getting the best results. Your current process might include spreadsheets to keep track of renewals, which should be replaced using a sophisticated renewal management system.

So, you should carefully evaluate your current strategy to identify areas that need attention. After the analysis, come up with solutions to make things better.

Assess current usage and future requirements

To effectively improve renewals, assess your current resources, usage and anticipate future requirements. Conduct a comprehensive analysis of your existing SaaS license usage patterns.

This analysis will reveal how teams utilize the application and the number of licenses. You can develop a strategic plan for renegotiating license renewals by understanding usage patterns.

• If usage is low, consider reducing the number of licenses during renewals.
• Conversely, you may need additional licenses to meet demand if usage is high.

This proactive approach ensures your organization optimizes its SaaS investments while aligning licensing with usage needs.

Adopting this forward-thinking approach ensures that your SaaS application management and license usage align with your organization's evolving needs.

Prepare a renegotiation plan (don’t wait till last minute)

When managing SaaS contracts, it's important to prepare a renegotiation plan backed by proactive analysis and clear usage data. Understanding your SaaS license utilization allows you to renegotiate terms more effectively, whether it’s pricing, usage caps, or added features, during the next renewal cycle.

When negotiating software contracts, avoid waiting until the last minute. Start the process early to allow ample time for preparation, usage analysis, and informed decision-making. Early engagement leads to more strategic negotiations and better outcomes during renewals.

Here's how you can improve your renegotiation plan:

‍

‍

‍

Analyze vendor performance during the previous contract period

You should not forget to analyze your vendor's performance during the previous contract period.

If the vendor fails to address your inquiries or the application promptly encounters compliance or integration issues without adequate vendor support, you can terminate the contract instead of renewing it.

However, evaluating the vendor's performance is the only way to discern this.

Analyzing vendor performance with key metrics thoroughly provides insights into reliability, support quality, and innovation commitment. This historical data will help you make informed decisions during renegotiations.

You need to assess how effectively your SaaS vendors have delivered on their promises and maintain open communication with them. Also, you must consider their uptime, customer support responsiveness, and the timeliness of updates or feature releases.

• Firstly, uptime measures the vendor's ability to maintain system availability, which is crucial for minimizing disruptions to business operations. Reviewing historical data helps gauge reliability and ensure minimal downtime.
• Secondly, evaluating the responsiveness of the vendor's customer support team is vital. Assess how promptly and effectively they address issues and resolve queries to ensure a positive user experience.
• Lastly, consider the timeliness of updates or feature releases. Regular updates indicate a commitment to improving the product and meeting customer needs. Evaluate if updates align with organizational requirements.

Keep your BATNAs and price benchmarks ready

‍You must keep your BATNAs (best alternative to a negotiated agreement) and price benchmarks ready for an effective SaaS renewal negotiation.

BATNA serves as your backup plan in case your license renewal negotiations fail. By knowing your BATNA, you can confidently negotiate licensing costs, knowing you have options if the current agreement doesn't meet your needs.

Considering alternative vendors or solutions gives you an advantage to leverage during renewal negotiations. You can instill FOMO in vendors by using your BATNA efficiently. No vendor would like to lose a paying customer like you. This can help you negotiate a sweet deal with the vendor.

You can negotiate more effectively by knowing what similar vendors offer and the market rate for the SaaS license you seek to renew. It will give you leverage and prevent you from accepting unfavorable terms out of desperation.

Use a SaaS management platform to track applications and renewals

When managing contract renewal, it's important to look beyond just completing the SaaS renewal. Focus on automating the process to eliminate the inefficiencies of manual SaaS management. Automation reduces errors, improves visibility, and boosts overall organizational productivity.

For instance,

• Managing hundreds of SaaS contracts with spreadsheets is time-consuming and error-prone.
• It poses a risk of sensitive documents getting lost and causing privacy breaches and security concerns.
• Manual contract tracking leads to limited visibility and missed renewal dates.
• Auto-renewals often lead to missed negotiation opportunities and excessive costs.
• The absence of a centralized system and reliance on manual processes hinder collaboration, waste time, and result in inefficiencies.

Thus, there arises a need for an alternative approach. Automating SaaS renewal processes through workflow automation tools saves time and minimizes the risk of missed deadlines.

With these tools, you can configure workflows to send renewal reminders, initiate contract reviews, and prepare negotiation plans based on predefined criteria.

Automating SaaS renewals using workflows

Automating SaaS renewals using a SaaS management platform brings the mentioned benefits to the organization.

• Streamlined Tracking: SaaS management platforms offer real-time visibility into application usage, aiding in identifying underutilized tools.
• Efficient License Management: Automated provisioning and tracking of licenses ensure optimal allocation and compliance, minimizing costs.
• Automated Renewals: With automated workflows and reminders, platforms facilitate timely contract renewals, preventing service disruptions.
• Data-Driven Decisions: Insights into application utilization enable informed decisions on which licenses to renew or cancel, optimizing the software portfolio.
• Improved Efficiency: These platforms enhance operational efficiency and vendor relationship management by centralizing SaaS management tasks.

You can utilize CloudEagle.ai, a comprehensive SaaS management and procurement platform that is equipped with a dynamic contract management module, to optimize your SaaS renewal process.

Here's how CloudEagle.ai can enhance your SaaS renewal process:

Seamless Integrations: CloudEagle.ai boasts extensive integration capabilities, featuring over 300 direct integrations with popular SaaS applications, including Single Sign-On (SSO), finance, HRIS, and direct API integration.

This broad spectrum of integrations allows CloudEagle.ai to provide complete visibility into your SaaS stack, even identifying applications procured without IT approval.

‍

‍

Usage Insights: Through system integrations, such as SSO, finance, and HRIS, CloudEagle.ai furnishes a comprehensive overview of your SaaS stack, including spending and user metrics.

Direct integrations check into each application, offering granular usage data from purchase to present and insights into license provisioning.

‍

‍

Centralized Management: CloudEagle.ai aggregates all application, user, and usage data in one centralized location.

It eliminates the need to navigate multiple platforms for information retrieval. With insights into license usage and application performance, you can make informed decisions regarding renewals.

Contract Management: CloudEagle.ai facilitates streamlined contract management. It extracts and organizes contracts and sensitive documents from applications into a centralized repository.

Even if your team uses spreadsheets for contract tracking, CloudEagle.ai can seamlessly integrate this data, automating the extraction process for renewal-related details.

‍

‍

Renewal Calendar and Workflows: CloudEagle.ai generates a renewal calendar based on contract dates, enabling you to track upcoming renewals efficiently.

Workflows will be triggered 90 days in advance, sending renewal reminders to relevant stakeholders. You can analyze the usage, collaborate with the team, and renew the contract or unused licenses through negotiations.

CloudEagle.ai sets itself apart by continuously escalating renewal processes to relevant stakeholders until contracts are successfully renewed.

Through automated Slack, email, and in-app notifications, CloudEagle.ai ensures persistent engagement until renewal completion, fostering collaboration and timely decision-making.

‍

‍

‍

You can boost the SaaS renewal efficiency with Slack integration. Tracking renewals for hundreds of SaaS apps is a daunting task. There is the risk of missing out on SaaS contract renewal deadlines and suffering service disruptions

CloudEagle.ai’s Slackbot will enable you to manage renewals from the messaging app without visiting our platform.

You’ll receive notifications on whether to stop or renew the license, and you can approve or deny the request from Slack. Additionally, you can create a private Slack channel to communicate with relevant stakeholders and make the right renewal decisions.

Seek expert negotiation assistance

‍To cut costs, negotiate with the vendor to align your SaaS licenses with application usage, thus effectively reducing your SaaS costs. While vendors may attempt to persuade you to upsell their product, you should assertively maintain your position. Avoid being swayed by these tactics; renegotiate your contract efficiently to downsize it.

If your procurement team lacks time and bandwidth, you can seek help from our SaaS negotiation experts. The experts will work closely with your team to understand the contracts and requirements and negotiate accordingly. They will help you confidently navigate negotiations, ensuring you get the best deal possible.

CloudEagle.ai's experts have years of negotiation experience. They will conduct market research, leverage price benchmarks, and negotiate the best deals for you.

Ultimately, bringing in expert negotiators from CoudEagle will save you time, money, and stress while ensuring you get the most value for your SaaS investments.

An example of CloudEagle.ai's success is seen with Sophie Wang's finance team at Wefunder, who achieved significant savings with their assistance.

‍

How Does SaaS Renewal Process Involve?

The SaaS renewal process consists of key steps to extend a software subscription, ensuring uninterrupted access and, if necessary, revisiting the terms. It involves reviewing usage data, assessing the software’s value, and making any needed adjustments before renewal. 

For businesses, this process is vital for preserving revenue, reducing churn, and nurturing strong customer relationships.

Next comes usage analysis. Look into how many seats are actually being used, which features are in demand, and whether the app is still essential. After that, you assess alternatives, benchmark pricing, and prep for negotiation. 

Finally, you either renew with confidence, downgrade based on usage, or replace it with a better fit.

Key steps in the SaaS renewal process include:

• Usage audit – Are teams using the tool?
• Contract review – What terms or renewals are baked in?
• Price benchmarking – Are you overpaying compared to similar companies?
• Stakeholder feedback – Does the tool still meet business needs?
• Negotiation or decision – Renew, renegotiate, or replace?

‍

Consequences of Poor SaaS Renewal Process

An ineffective SaaS renewal process can cause several issues, such as overspending on underused tools, overlooked chances to optimize costs, and heightened security or compliance risks. It may also lead to operational disruptions, lower productivity, and weakened customer relationships.

Wasted Spend on Unused Licenses

Auto-renewing 50 licenses when only 20 are active? That’s money lost. Without tracking usage, teams pay for empty seats across tools, month after month, adding up to thousands in avoidable costs.

Missed Negotiation Opportunities

Vendors are open to negotiation, but only if you come prepared. Waiting until the renewal date or being unaware of your leverage (like reduced usage or better competitors) means you're stuck paying list price, with zero wiggle room.

Compliance and Security Risks

Expired contracts or unmonitored SaaS tools can quickly become security risks. Without clear offboarding or renewal workflows, access may stay open for former employees or compliance terms may go unchecked, opening the door to data breaches or audits.

Operational Disruptions and Poor Planning

Last-minute renewals lead to rushed decisions. Teams may face tool outages, loss of access, or forced transitions without time to onboard a replacement properly. A lack of planning throws workflows into chaos.

‍

Conclusion

Opting for an advanced solution to streamline SaaS license renewal in your organization? Look no further than CloudEagle.ai. You can automate and optimize SaaS renewal processes, reducing the risks associated with manual tracking and inefficiency, with CloudEagle.ai's contract renewal management solution.

With CloudEagle.ai's user-friendly renewal management module, you can ensure timely renewals, minimize financial losses, enhance security measures, and increase user satisfaction within your organization.

The tool provides access to the latest price benchmarking data from previous transactions and thorough market research, helping businesses get the best deals from the vendors.

So, if you want to enhance your organization's operational efficiency by streamlining the SaaS contract renewal process, you should opt for the right tool and leverage its capabilities. It will help you transform how your organization keeps track of and manages SaaS licenses.

So, book a demo with CloudEagle.ai to optimize SaaS license renewal strategies and enhance your organization's efficiency.‍

‍

Frequently Asked Questions 

1. What are SaaS renewals?
   SaaS renewals are recurring agreements where users continue their subscription to a SaaS product after the initial term ends, usually monthly or annually.
2. What is the process of renewal of agreement?
   It involves reviewing the contract, usage, pricing, negotiating terms if needed, and confirming the extension of the SaaS subscription before it expires.
3. What is the 3 3 2 2 2 rule of SaaS?
   It’s a growth benchmark suggesting 3x revenue growth for the first two years, followed by 2x growth for the next three years in a SaaS business.
4. What is the SaaS billing process?
   It includes subscription setup, pricing configuration, invoicing, payment collection, and renewal tracking, automated through billing platforms.
5. How is SaaS renewal rate calculated?
   Renewal Rate = (Number of customers who renewed ÷ Total customers up for renewal) × 100.
6. What is the contract renewal process?
   It’s the formal review and extension of an existing contract, including evaluating performance, renegotiating terms, and securing approvals.
7. What is the 80/20 rule in SaaS?
   It means 80% of revenue often comes from 20% of customers, emphasizing the importance of retaining high-value clients in SaaS.

‍